$500 Million Saved By Reducing Absenteeism

July 23, 2009

550,000 More Work Days And $500 Million Saved Just By Reducing Workplace Absenteeism

If work injury days lost could be reduced by an average of 20 percent, some $500 million would be returned to the country’s economy, according to a leading New Zealand workplace injury management company.

Commenting on the Prime Minister’s call last week for greater productivity, the Chief Executive of Wellnz Ltd, Brian Blackman, says that workplace absenteeism is costing the country at least 550,000 work days per year.

“To put this in context, if work injury days lost could be reduced by an average of say 20% i.e. 16 days per claim, with 34,231 annual work injury entitlement claims, that would result in 550,000 additional days being available for productive endeavour. The loss of these days is currently costing up to $500 million productivity to New Zealand per annum. These are compelling figures,” he said. “This can also be applied to the earners account where there are least twice the claims and cost and the benefits become even more significant.

“We have been concerned about this for several years now, particularly in our sector which sees workplace absenteeism costing the country and employers huge money every year.”

Wellnz Ltd, is a third party provider of injury management and rehabilitation services for employers who have joined the ACC Accredited Employer Programme. With 40 clients, we handle over 7,500 claims per year from a combined workforce of over 80,000 employees.

“We have been trading for the past decade, and the results we are currently achieving highlights what a specialist claims management company can deliver,” he said.

The recent 2009/10 levy consultation document released by ACC stated that for the workers account ACC predicts that the average entitlement claim (one or more days off work) would increase from $15,190 to $17,117 (which excludes the first weeks wages) - a 13.9% increase on the previous year, and based on an average wage of $104.50 per day ($38,142.50 pa) results in lost days of 81 days per claim.

“Compare this to the Wellnz performance - 12 months to 31 March 2008 - $5,000 (which includes the first week’s wages) per entitlement claim and 12.2 lost days. Put simply, private management of work injuries through Wellnz is out performing ACC by a factor of at least 3 times. This of course excludes all the indirect benefits that accrue – i.e. productivity, better individual financial management, improved self esteem, good morale, and a better place to work.

“The ACC system in New Zealand is a lamentable state, and we are delighted to see the review (or stock take) of ACC is now getting started,” Mr Blackman said. However, there were some simple measures which could be introduced now, without the need for legislative change. These include…

1. Make entry to ACC Accredited Employer Programme easier by reducing the bureaucratic process.

2. Allow Employers to purchase stop loss protection from the private market now.

3. Allow Employers to manage non-work inquiries for their employees as soon as is practical.

4. Give Accredited Employers the option to manage their residual “tail” claims as soon as possible.

5. Make ACC more accountable and subject to normal corporate governance management. i.e. - being in position to audit all third party administrators and have access to confidential competitor information when they own and cross subsidise a direct competitor in CRM Ltd is just unacceptable.

6. Introduce contestability for bundled Employer and Earner cover

7. Introduce contestable Motor Vehicle cover

8. Sell the balance of Residual Claims account

Mr Blackman said that with the present tough economic environment within New Zealand, the focus must move to increasing productivity and reducing bureaucratic control.

“Presently New Zealand is among the lowest productivity rates in the OECD but we claim to work the second longest hours to achieve this performance. How can that be? New Zealand will not start to prosper and the Government will not be able to deliver their social agenda unless the underlying wealth of the country improves significantly, and the first place to start is an improvement in productivity,” he said.

ends

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