Investing in Better Mental Health in Australian Workplaces

by Liam Carter and Jim Stanford

Australian society is experiencing an epidemic of mental illness that imposes enormous costs on individuals with poor mental health, their families, and the broader economy. There is no doubt that the stress, isolation and disruption caused by the COVID-19 pandemic has made this crisis even worse.

Unsafe workplaces contribute significantly to the incidence of mental illness and injury. Workplace factors which contribute to mental health problems include unreasonable job demands, exposure to violence and trauma, long or irregular working hours, an absence of worker voice and control, and bullying and harassment.

New research from the Centre for Future Work suggests that by requiring stronger monitoring and prevention measures in Australian workplaces, a significant share of mental illness and injury could be avoided. In addition to reducing the toll of mental illness for workers and their families, these measures would also generate substantial economic and fiscal benefits.

Even before the COVID-19 pandemic, one in five Australians reported mental health challenges of some sort. And the total costs of poor mental health on Australia’s economy, government, and society were estimated by the Productivity Commission (2020) at a staggering $200-220 billion per year.

Studies indicate 15% to 45% of mental health problems experienced by employed people are attributable to conditions in their workplaces. This suggests that the costs of workplace-related mental illness and injury are enormous.

Our new report surveys the range of different costs arising from workplace-associated mental ill health: including reduced labour force participation, absenteeism, reduced productivity, high employee turnover, workers compensation costs, and others. Total costs to society from workplace-associated mental illness (including direct costs to victims and their families, as well as economic and fiscal costs) are estimated at $15.8 billion to $17.4 billion per year.

Preventing mental health problems caused by work-related factors and stressors would expand Australian GDP by $3.5 billion per year, and reduce government expenses (for health care and other services) by $2 billion per year.

Unfortunately, Australia’s system of work health and safety laws does not treat workplace mental injuries with the same rigour and oversight as physical injuries. The current regulatory system does not specify explicit, enforceable requirements compelling employers to take mental health risks equally seriously – nor does it equip workers, their representatives, and regulators with the tools needed to ensure employers live up to those responsibilities.

It is past time for Australia’s WHS policy-makers to address the mental health crisis in Australia’s workplaces head-on. Upcoming state-Commonwealth policy dialogues regarding reforms to Australia’s Model WHS Laws are a crucial opportunity to modernise Australia’s practices, and catch up with other industrial countries.

The economic and fiscal benefits of preventing workplace-associated mental illness and injury are substantial – and would be shared by employers, governments and workers alike. But the human benefits of preventing needless mental health illness and injuries, for affected workers and their families, are priceless.

Full report