Australian businesses lose $6 billion in productivity to workplace drug and alcohol issues, report warns

Australian businesses are being urged to act now to counter the effects of drugs and alcohol in the workplace, with experts saying businesses are losing more than $6 billion annually in lost productivity and absenteeism.

The Australian Drug Foundation’s latest PolicyTalk report released today focuses on the impacts of alcohol and drugs in the workplace, with The ADF’s head of workplace services, Phillip Collins, telling SmartCompany the impact on small business is most significant.

“I come from a small business background and the impact is magnified,” he says.

“If someone has a really big, charged up weekend and takes a sickie on the Monday, the small business has to try and find someone to cover for the person – and businesses with three to 10 people usually don’t have the resources to source an extra employee,” he says.

In the 2004-05 financial year, researchers from Macquarie University and the University of Queensland and the University of New South Wales found businesses lost $5.2 billion in lost productivity costs from alcohol and drug use.

Alcohol absenteeism was estimated to have cost between $437 million and $1.2 billion alone.

Collins says these amounts have since risen, with the most recent data suggesting the cost to businesses is now around $6 billion per year.

“For a small business, I would recommend setting up the expectations of employees… Communicate what it is that you feel about alcohol and drugs in the workplace and put it into the employee’s mind.”

“Look at the business and think about how alcohol is used in the business – are there Friday night drinks? Do you go out and celebrate people’s birthdays at lunch times and have a few drinks,” he says.

Collins says businesses need to “start the conversation” with employees about the impacts of drugs and alcohol on productivity and also consider if there other ways to celebrate success than going out for drinks.

“Generally a small business doesn’t have any kind of policy in place because they believe it’s an at-home issue and not a workplace issues because it predominately takes place in out of work hours. But it can have real consequences for the business,” he says.

The ADF policy report found 5% of all Australian workplace deaths and up to 11% of non-fatal injuries were a result of alcohol.

A 2010 report commissioned by the Alcohol Education and Rehabilitation Foundation into the hidden costs of alcohol found alcohol misuse costs Australia approximately $36 billion annually. It found people who drink while at work were estimated to cost businesses $801 million a year in lost time.

Collins says talking about alcohol and drug use can be a “taboo” subject in the workplace because businesses see it as an out-of-work issue, but in order to limit the impact of these substances on workplace productivity and employee sick days, he says businesses need to establish clear policies.

“A lot of organisations out there put a comment about alcohol and drugs in their behaviour expectations section of their workplace policy, but generally it’s really light on, about one or two lines.

“We’re trying to encourage businesses to make their policy really robust with clear objectives, consider how these can be communicated to the employee base and also how the policy will be implemented,” he says.

This time last year the Federal Court upheld an employer’s right to subject workers to mandatory drug and alcohol tests.

The business at the centre of the court case was Wagstaff Piling, an engineering contracting business, which had been working on Melbourne’s Ring Road improvements and had agreed to comply with road-building firm Thiess’ “fitness for work” policy, which included random testing.

The decision was welcomed by business groups including the Australian Industry Group, which said occupation health and safety was “the highest priority” for responsible employers.