Mental illness taking massive toll on economy

TheStar.com – Business – Mental illness taking massive toll on economy: Top economist calls for government action as ranks of unemployed swell, annual costs top $33 billion

Published On Wed Nov 25 2009.   Madhavi Acharya-Tom Yew Business Reporter

Don Drummond, chief economist for TD Financial Group, will discuss productivity and the GDP at a Toronto Board of Trade breakfast Wednesday morning, but not in the way you would expect.

His audience will be the Psychology Foundation of Canada and he will be talking about the toll that unemployment and mental illness take on the Canadian economy.

Mental illness costs the Canadian economy about $33 billion each year – about 2.1 per cent of GDP – in absenteeism and lost productivity. Disability from mental illness amounts to 4 to 12 per cent of all payroll costs, and mental health claims are the fastest growing category of disability costs for employers and insurance companies.

And yet the connection between the economy and mental health is often called into question.

“There’s still a question of whether it’s real,” Drummond said in an interview, referring to the way mental illness is viewed in many workplaces. “It’s one thing if somebody breaks their leg. For a person who has a mental health issue, someone else might think, `Is that real? Is it really different from me, I had a bad day, too.'”

Drummond believes that as the recession and resulting tide of unemployment change the face of the Canadian labour force and the economy, government can take action to protect Canadians’ mental health. Governments can focus on education and reduce drop-out rates, improve public safety nets, raise literacy rates, and improve the retirement income system.

He draws on economic data from Statistics Canada, as well as research from noted university professors John Helliwell of the University of British Columbia and Linda Duxbury of the Sprott School of Business at Carleton University.

Duxbury investigated work-enhancing technology and quality of life. She found that people who rely on technology to work outside the office report greater flexibility and productivity. But many also report feeling that they are never off duty, and that their personal time has been given over to work.

Economists typically stick to GDP as an overall measure of a nation’s health and productivity. But this is actually a poor measure of economic well-being, Drummond argues. It ignores the value of leisure and longer lifespans, and the value of accumulated wealth. But it also shows per capita GDP on average, when in reality incomes are uncertain and unequally distributed.

That’s particularly true as jobless rates climb in the current recession. “Mental health poses an economic cost that is very large and seems to be growing. One of the most devastating things for your sense of well-being is to lose your job. It’s more than just the tangible element of the money.”

But there are also effects on mental health for those still employed, particularly those overwhelmed by stress. “There’s presenteeism; your body is there but your mind is not actively engaged. So whatever the cost to people being absent, there’s an additional cost of people being not quite right in spirit and brain and showing up for work. It’s a major factor in productivity.”

More research is needed, Drummond said, particularly on the shift from permanent full-time jobs offering benefits and pension plans to short-term contract jobs that do not. “Your instinct tells you there’s a greater prevalence of short-term contract work without benefits than in the past. We can’t actually prove that one way or another.”



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