Addressing mental health as a driver of productivity losses

Addressing mental health as a driver of productivity losses

When discussing economic productivity, the subject of mental health does not usually enter the discourse but evidence suggests it may be worth some consideration. Recent studies indicate that Canada spends $50 billion treating mental health illnesses (MHIs) annually. Approximately $44 billion is spent on healthcare, while $6 billion is the result of losses in worker productivity.[1]

How can Mental Health affect the Economy?

Evidence has shown that poor mental health is associated with a loss of productivity in the labour market.[2] Workers with MHIs are likely to work fewer hours and be less productive during those hours. In Canada, absenteeism due to mental health accounts for about 35 percent of lost productivity from mental health. In addition, it has been a determined that MHIs can have adverse effects on human capital accumulation.[3] For example, MHIs can negatively impact skill acquisition and educational outcomes. The effect is particularly strong for children with undiagnosed MHIs. The lifetime economic cost in lost income for a child with an undiagnosed MHI is estimated to be $0.3 million.[4] Together, the loss of labour market productivity and decrease in human capital acquisition resulting from MHIs can have detrimental effects on overall prosperity.

Another way that mental health impacts the economy is by increasing the costs of healthcare provision. Children and young adults are increasingly turning to emergency departments to receive care for mental illnesses, such as anxiety disorders, mood disorders, and depression.[5] This places more pressure on emergency departments that are already overcrowded and costly.[6] In addition, studies show that triaging patients with MHIs is often more complicated and may take longer than it would for other patient cohorts. Not only do these patients take longer to treat but they tend to have longer lengths of stay in the hospital and are often recurring patients.[7] Longer lengths of stay mean higher costs for hospitals, and therefore, a higher cost for Ontarians.

Mitigating the Economic burden of Mental Health

Fortunately, there are steps that policy makers and employers can take to mitigate the economic burden of MHIs. In addressing the human capital cost of mental health, efforts should be made to intervene in children's mental health as early as possible. Earlier intervention will allow children to be properly diagnosed and treated for mental illnesses before there are any deleterious effects on skill acquisition and the negative effects on educational outcomes.

Another solution is to provide mental health services through community programs. These are a broad range of facilities designed to meet a variety of needs, including addictions support, advocacy, case management and therapy. They are optimal for treating MHIs because they provide more accessible treatment than hospitals, have specially trained staff who can triage these patients faster, and are up to five times more cost effective than hospital treatment.[8] These services will relieve the pressure on emergency departments and decrease wait times for other patients as well, which will lead to savings for hospitals.

In the workplace, a more open dialogue surrounding mental health needs to take place. Currently, 40 percent of Ontario workers would not tell their managers if they were experiencing a mental health problem.[9] By decreasing the stigma attached to mental health, employers can open a forum for building a workplace environment that promotes healthy minds. In addition, further research into the work related aspects of mental health should be undertaken.[10] While there is evidence associating a fall in productivity with MHIs, the causal relationships have not yet been determined. More research would equip managers and human resource professionals with the knowledge to begin building better workplace policies.

Mental health is one avenue through which productivity in Ontario can be enhanced. MHIs are the most prevalent disease in the province, and are costing Ontarians a lot through an inefficient use of resources and loss of effective human capital. Consideration should be given to the economic benefits of improving the mental health of Ontarians.

[1] MHCC, Making the Case for Investing in Mental Health, 2012; Lim KL, A New Population-based measure of the economic burden of mental illness in Canada, Chronic Diseases in Canada, 2008 23(3):91-98 ; The loss of worker productivity captures absenteeism, presenteeism and turnover.

[2] Mental Health Commission of Canada, The Facts, 2013: accessed at

[3] Currie J., Stabile M., Mental Health in Childhood and Human Capital, NBER, working paper 13217, 2007


[5] Canadian Institute for Health Information, Care for Children and Youth with Mental Disorders: Data Tables, (Ottawa: CIHI, 2015)

[6] Auditor General, Annual Report: MOHLTC, Chapter 4, Section 4.05, Hospital Emergency Room Departments, 2012; Canadian Institute for Health Information, Hospital Cost Drivers, (Ottawa: CIHI, 2011)

[7] Stephens R. et al.,  Factors associated with Longer Length of Stay for Mental Health Emergency Department Patients, The Journal of Emergency Medicine, 2014

[8] Mental Health Commission of Canada, The Facts, 2013

[9] Centre for Addiction and Mental Health, Mental Illness and Addictions: Facts and Statistics, 2014 : accessed at

[10] Dimoff J., Kelloway K., Bridging the gap: Workplace mental health research in Canada, Canadian Psychology, 2014  54(4): 203-2012

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Category: Health Care, Public Policy