Select Committee on Public Accounts Fiftieth Report

1 The levels and cost of sickness absence

1. In 2001-2002 almost 40,000 working days were lost due to sickness absence in Roads Service and Water Service. This is an average of 20 days per employee or almost 9% of available working days. This compares with an average of 12 days in the industrial Civil Service in Great Britain and comparisons with a range of public and private sector organisations in Northern Ireland and Great Britain indicate that both Agencies are at the higher end of the range.[2] Benchmarking undertaken by Water and Roads Services confirms this, indicating much lower levels of absence in comparable organisations.[3] Absence has reduced somewhat since the C&AG's Report, to an average of 17 days per employee in 2003-2004, however, at over three working weeks per person, this is still disgracefully high and clearly a huge step change in the management of absence is required to reduce this to an acceptable level.[4]

2. The C&AG has estimated that sickness absence in Water and Roads Services is costing around £2 million a year in direct costs alone and reducing absence to the same level as the industrial Civil Service in Great Britain could save £840,000 a year. These estimates do not take into account indirect costs such as overtime, staff time spent in the management of absence or loss of productivity and the Cabinet Office suggested that the damage caused through sickness absence is closer to twice the level indicated by direct costs alone.[5]

3. We were told that the level of medical retirements in the Northern Ireland Civil Service is comparable to the rest of the United Kingdom at around five retirements each year per 1000 employees.[6] In contrast the DRD industrial workforce, with 34 retirements in 2001-2002 among only 2000 staff, has a rate which is three times higher and which has risen steadily in recent years to a point where medical retirements account for 60% of all retirements[7]. Medical retirements generate very significant additional costs to the taxpayer because pensions are paid earlier than normal and at enhanced rates. The Department of Finance and Personnel estimate that additional costs of £17.6 million were accrued due to medical retirements in the Northern Ireland Civil Service in 2003-2004 alone.[8]

4. It is simply not credible that levels of medical retirement are so much higher among DRD industrials than the rest of the population. It seems more likely that the very lucrative retirement package available, coupled with very poorly applied controls over sickness absence, have created a situation in which early retirement on medical grounds is becoming the norm rather than the exception. It may also be the case that medical retirement is being used inappropriately to get rid of bad attenders rather than pursuing dismissal on grounds of inefficiency.[9] This is expensive both in its own right, due to the high cost of medical retirement and because of the incentive it provides to take long periods of sickness absence.

5. The Department is confident that rigorous application of inefficiency procedures which was absent in the past will result in a reduction in the level of medical retirements in future and there is some indication that this is beginning to happen. However, it is indicative of the Department's failure to address the whole issue of absence seriously, that it does not know what an acceptable level of medical retirements would be or when it could be achieved.[10] We recommend that the Department establishes specific time limited targets for reducing medical retirements in line with comparable public sector organisations.

2   C&AG's Report, paras 1.1, 1.8 and Figure 4 Back

3   ibid, para 1.6; Qq 6, 46-47, 135; Ev 20 Back

4   Qq 41-43 Back

5   C&AG's Report, paras 1.12-1.15 Back

6   Q 156 Back

7   C&AG's Report, para 4.22 Back

8   ibid, para 4.23; Q 133; Ev 20 Back

9   Q 156 Back

10   Qq 17-24, 33 Back

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