Whilst half of businesses (52%) agree that in general the mental health of employees has worsened since the pandemic, a similar number (53%) also feel that mental health of employees has worsened as a result of the cost of living crisis.

The research comes as data from the ONS shows that long-term sickness is driving economic inactivity and around 185.6 million working days were lost due to sickness in 2022, which is the highest level on record.

Three in five employers (59%) agree that employee health has an impact on the economic performance of the business- with a quarter (25%) strongly agreeing.

Whilst 41% of respondents have seen an increase in changes to people’s working patterns, for example more people working part-time or reduced hours, due to ill health compared to before the pandemic.Just over one third (35%) of employers have seen an increase in the number of employees with complex health needs or multiple long-term conditions since before the pandemic, with this particularly being felt by small to medium sized businesses (up to 999 employees). Almost half (48%) of smaller businesses have seen an increase in the number of employees with complex and long-term health conditions.

Similarly, nine in ten businesses (90%) have seen up to a fifth of their employees (between 6-20% of the workforce) take short-term sick leave in the last 12 months, with almost half of businesses (47%) seeing an increase in employees requesting flexible working patterns, including returning from maternity and paternity leave, compared to before the pandemic.

Anthony Bruce, chair of Health Industries at PwC, commented: “It is no surprise to see the mental health of the UK’s workforce has suffered from the strain of the pandemic. Although employers are getting much better at recognising the importance of employee health, they need to ensure wellbeing remains a key priority and fundamental to their overall business strategy, especially as employees return to the office and embrace hybrid working.

“Increased sick leave means lower business productivity and high stress levels, and when not managed properly or supported, the risks, costs and disruption can be far greater.

“Helping employees to stay productive in work not only benefits organisations, it promotes the employee’ mental wellbeing and financial security at a time when stress and economic hardship are a worry for many.”

Over half of businesses surveyed (55%) agree that they have a role to play in supporting employees’ health at a time of unprecedented pressure on health services. When asked about increasing their health and wellbeing package offered to employees, just under half (44%) already offer their employees private health insurance, with a fifth (21%) intending to extend their benefits to offer private health insurance in the next two years.

In response to supporting their employees’ health and wellbeing, increased annual leave or wellbeing days and the introduction of health technology apps were the most popular employee benefits businesses have introduced in the last two years, with 38% and 32% of businesses respectively introducing them. This compares to gym membership (19%), onside doctor/nurse and onsite health and wellbeing services (all 21%).

Looking ahead, businesses said they are most likely to introduce physio/rehab (27%) and an inhouse doctor/nurse as part of their health and wellbeing package to employees in the next two years.

Since the pandemic, over half of businesses (54%) have implemented a hybrid working policy, compared to 15% having one pre-pandemic. One third (33%) of respondents chose that non-hybrid working best reflects their organisation, requiring their employees to be in the office all/ majority of the time.

Businesses with a hybrid working policy have increased their support for employees health and wellbeing. With flexible working policy (65%), guidance to managers (60%), increased promotion of wellness benefits (47%) being the most popular initiatives.

According to businesses surveyed, six in ten (60%) businesses are concerned about the impact of the cost of living crisis on their employees’ mental health, with over half (55%) agreeing they have a role to play in supporting their employees.

Over the last 12 months, over three quarters (77%) of employers have given their employees increased financial benefits, such as a pay increase or salary bonus. Furthermore over half (59%) have given employees one-off financial payments, for example energy support and cost of living bonus.

Retaining employees and talent within organisations (54%) and the cost of living crisis (49%) were the key drivers for employers offering additional financial support in the last 12 months.

Alastair Woods, Workforce transformation partner at PwC, added: “Remote working did bring productivity benefits. It changed ways of working and freed up time. But there have been other consequences to the workforce such as mental health and some of the initial productivity benefits have fallen away.

“So employers need to continue to support employees and demonstrate their commitments to wellbeing but also find innovative ways to unlock productivity — and we are seeing this in different ways from training and upskilling, performance management and investments in technology”