SINGAPORE - Singapore productivity loss due to sickness absenteeism may reach S$3.3 billion by 2030, says Mercer in a study released on Wednesday (Oct 25).
The study reveals that an ageing workforce and medical cost inflation in Singapore are projected to drive up average medical costs per employee by 108 per cent to S$1,973 per year in 2030, representing a mounting financial burden for employers.
Mercer, together with Marsh & McLennan Companies' Asia Pacific Risk Centre (APRC), issued the report on Aging Workforce: Cost And Productivity Challenges Of Ill Health In Singapore.
The segment of Singapore employees aged over 50 is projected to increase by 55 per cent, and to represent 40 per cent of the workforce by 2030. With an increase in demand for medical services, the ageing demographic will contribute to 41 per cent of the escalation in medical costs, as it will drive a rise in the utilisation of healthcare services, which together with healthcare cost inflation, will result in a significant surge in overall costs.
"With improved management of health conditions permitting individuals to stay in the workforce longer, increasing financial needs in retirement, as well as more flexible employment options, such as working from home, and on-demand jobs in the gig economy, there is a growing trend for Singapore employees to postpone their retirement," said Neil Narale, Singapore business leader for Mercer Marsh Benefits.
"However, health risks increase with age, ranging from diminishing motor and sensory functions to a greater incidence of chronic diseases, which will create challenges for employers."
In Singapore, societal ageing is estimated to drive the prevalence of chronic diseases such as cancer and diabetes by up to 200 per cent by 2030, which means Singapore will face the challenges of stagnating productivity growth through increasing rates of absenteeism and presenteeism, said the report.
Based on current trends, productivity loss due to sickness absenteeism per employee is projected to increase by 25 per cent based on GNI (gross national income). With an ageing workforce, at the national level this represents a cost of S$3.3 billion by 2030, a 43 per cent increase from 2016.
What is worth noting is that 60 per cent of all medical claim costs will be attributable to 10 per cent of claimants, said Mercer.
This highlights the value of interventions for high-risk groups, such as health and wellness programmes to reduce the incidence of disease, and screening for earlier detection of disease, it added.
But while an ageing workforce may present challenges related to higher healthcare needs, older workers are associated with advantages such as greater firm-specific knowledge and lower turnover rates, Mercer noted.
"If managed properly, diversity of age at work can serve to improve productivity and reduce the need for governments to tax corporates and the next generation to support the elderly," said Mr Narale.