Inadequate sleep leads to productivity losses of $17.9 billion

Wednesday, 16 August, 2017 - 11:15
Industry news

Inadequate sleep in Australia was estimated to cost $66.3 billion in 2016–17 – and of this there were $26.2 billion in financial costs (including productivity losses of $17.9 billion, or $2,418 per person with inadequate sleep) and $40.1 billion in the loss of wellbeing, according to a new report.

The $40.1 billion in loss of wellbeing is estimated using World Health Organisation and Australian Government metrics which assess the loss of productivity due to healthy life lost due to disability and premature death.

Inadequate sleep is highly prevalent in Australia with an estimated 39.8 per cent of Australian adults experiencing some form of inadequate sleep, according to the Sleep Health Foundation report, which was conducted by Deloitte Access Economics.

Inadequate sleep can lead directly to fatality or work-related accidents, according to the report, which said two examples include falling asleep while driving, and medical staff making medication errors when on shifts.

The report found that sleep deprivation was linked to 3017 deaths in 2016-17.

There are 394 deaths a year from falling asleep at the wheel of a vehicle or from industrial accidents due to lack of sleep, while the remaining deaths are heart disease and diabetes deaths linked to sleep disorders.

“Inadequate sleep can have a substantial impact on an individual’s ability to engage and

attend work,” said the report, Asleep on the Job: Counting the cost of poor sleep.

“Primary impacts on work include reduced chance of employment, early retirement, or exit from the workforce due to premature mortality.

“As such, inadequate sleep may impose a range of productivity costs which affect not only individuals, but also their employers and government.

“These costs are real costs to the economy.”

For example, if worker productivity is lower for people with a condition caused by excessive daytime sleepiness and sleep debt, a firm’s output may be reduced, resulting in a cost to the firm and to government through reduced taxes.

For the purposes of the report, a human capital approach was adopted to estimate productivity losses.

This involves the calculation of the difference in employment or production of people with inadequate sleep compared to that of the general population, multiplied by average weekly earnings.

Productivity losses from premature mortality are estimated in terms of the net present value (NPV) of future income streams lost.

The four potential productivity losses are:

  • Premature workforce separation, which is classified as early retirement or other workforce withdrawal;
  • Temporary absenteeism where a worker may be unwell more often than average and taking time off work, while remaining in the workforce;
  • Presenteeism, or lower productivity at work, where a worker produces less due to lower capacity while at work; and
  • Premature mortality, where for a person who dies early due to lack of sleep would no longer receive future income streams.

“A strong case exists for implementing public preventive health measures to promote healthy sleep, as has been done in other areas involving lifestyle choice, such as smoking cessation, alcohol moderation, diet and exercise,” said the report.

“Work health and safety authorities should tighten regulation in work sectors where sleep is irregular but responsibility is high, such as defence, transport and health.

“Changes to shift work scheduling that use evidence-based principles minimising disruption to the circadian and sleep wake systems need to be promoted.”