Employers’ role in addressing Australia’s $220 billion mental health issue


The Productivity Commission’ mental health inquiry report recommends stronger WHS guidelines and changes to workers compensation.

Warning: this article discusses mental illness and suicide. 

$220 billion. That is what mental illness and suicide costs the Australian economy every year according to the Productivity Commission’s recent mental health inquiry report.

To put some context around that, $220 billion is more than what the federal government pledged for COVID-19 recovery. It’s more than Bill Gates’ net worth

The report estimates the direct cost to the economy is between $43 and $70 billion with an additional $151 billion due to disability and premature death. However, the commission’s recommendations to tackle the issue would cost around $4.2 billion and are estimated to save the government $1.7 billion annually. 

Many of the Productivity Commission’s recommendations involve engaging those beyond the health sector, including employers. One recommendation is to “equip workplaces to be mentally healthy”. 

Mental health has been forced to the forefront for many workplaces this year as employees have struggled through the stress of the pandemic and subsequent lockdowns. Employment Assistance Programs (EAPs) have played a particularly important role, something which was recognised in the commission’s report. 

The report’s recommendations

The report estimates 2.8 million Australians have a mental illness, while a further 440,000 care for someone with a mental illness. This has a huge cost, with the resulting absenteeism costing workplaces an estimated $17 billion a year. Employees with mental illness take on average 10 to 12 days off a year due to psychological distress. 

When it comes to workplaces, the report’s priority recommendations place the onus back on governments and workers compensation schemes. The report suggests federal, state and territory governments promote psychological workplace health and safety as important as physical health and safety. It also recommends updating compensation schemes to fund clinical mental health treatment for all work claims for up to six months, regardless of liability.

The additional reforms are where workplaces will play a greater role.

The first asks WHS authorities to develop codes of practice to help employers identify, eliminate and manage psychological risks. Currently workplaces must provide psychologically safe work environments. According to Safework this means designing work, systems and workplaces to eliminate or minimise risks to their mental health.

However, many employers are still unclear on exactly what that means since identifying psychological risks is much harder than physical ones. The report suggests demystifying this for employers and providing clear guidance on eliminating workplace mental health risks, particularly now employers need to assess psychological risks to remote workers. 

This crosses over with another recommendation to provide flexible workers compensation for workplaces which implement initiatives to reduce psychological risks. The report suggests this would increase the number of employers implementing effective initiatives. Which initiatives are appropriate would be decided by WHS authorities.

One initiative most employers consider essential is EAP services. However, the report suggests greater regulation of EAPs since there is currently little external evaluation or benchmarking. The report recommends a minimum standard be developed to help organisations understand the value EAPs provide to employees and what level of service they require to suit their workforce. The report noted that EAPs are often the initial point of contact for employees with mental health problems so their importance in the long-term management of mental health cannot be understated. 

Good leadership can build a mentally healthy workplace

All of the report’s workplace recommendations boil down to creating mentally healthy workplaces. Mental health organisation Heads Up gives nine key attributes of a mentally healthy workplace. They include:

  1. Prioritise mental health – this includes having open discussions about mental health and educating staff about mental health issues.
  2. Create a trusting, fair and respectful culture – cultivate a culture of trust among employees and ensure everyone is treated fairly.
  3. Open and honest leadership – good culture comes from the top down.
  4. Good job design – ensure roles suit employees’ abilities and skills. Job crafting is a good example of this.
  5. Workload management – make sure employees’ tasks are achievable and that they have the resources to complete them.
  6. Employee development – regular development training and feedback can help employees feel more secure in their role.
  7. Inclusion and influence – encourage employee input in business decisions.
  8. Work/life balance – encourage employees to take breaks and offer opportunities to balance their personal life with work.
  9. Mental health support – ensure employees have access to EAPs or other mental health  services when needed.

Margo Lydon, CEO of mental health organisation SuperFriend, points to attribute number three – open and honest leadership – as vital to the success of any mentally healthy workplace.

Lydon and her team have just completed a study into workplace mental health and she says leadership comes up time and time again as the most important factor. 

“If we’re educated in the signs and symptoms of mental illness and have the tools and resources to support people early on in their struggles, we have a much better chance of improving their outcomes,” she says.

The productivity commission’s report also noted the importance of good leadership. The report’s authors noted that improving workplace mental health was intrinsically linked to how interested leadership was in mental wellbeing and their willingness to increase the visibility of mental illness in the workplace. 

Lydon agrees. 

“Any workplace that is committed to the mental health and wellbeing of its people should be ensuring its leaders have at least basic competencies in workplace mental health. We spend most of our waking hours at work, so workplaces have a huge part to play in keeping people mentally healthy,” she says.

If you or anyone you know needs mental health support you can contact Lifeline on 13 11 14 or Beyond Blue on 1300 224 636


Leaders need effective tools to support the wellbeing of their staff. Check out AHRI’s webinar on Managing The Psychology Sustained Disruption.


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Employers’ role in addressing Australia’s $220 billion mental health issue


The Productivity Commission’ mental health inquiry report recommends stronger WHS guidelines and changes to workers compensation.

Warning: this article discusses mental illness and suicide. 

$220 billion. That is what mental illness and suicide costs the Australian economy every year according to the Productivity Commission’s recent mental health inquiry report.

To put some context around that, $220 billion is more than what the federal government pledged for COVID-19 recovery. It’s more than Bill Gates’ net worth

The report estimates the direct cost to the economy is between $43 and $70 billion with an additional $151 billion due to disability and premature death. However, the commission’s recommendations to tackle the issue would cost around $4.2 billion and are estimated to save the government $1.7 billion annually. 

Many of the Productivity Commission’s recommendations involve engaging those beyond the health sector, including employers. One recommendation is to “equip workplaces to be mentally healthy”. 

Mental health has been forced to the forefront for many workplaces this year as employees have struggled through the stress of the pandemic and subsequent lockdowns. Employment Assistance Programs (EAPs) have played a particularly important role, something which was recognised in the commission’s report. 

The report’s recommendations

The report estimates 2.8 million Australians have a mental illness, while a further 440,000 care for someone with a mental illness. This has a huge cost, with the resulting absenteeism costing workplaces an estimated $17 billion a year. Employees with mental illness take on average 10 to 12 days off a year due to psychological distress. 

When it comes to workplaces, the report’s priority recommendations place the onus back on governments and workers compensation schemes. The report suggests federal, state and territory governments promote psychological workplace health and safety as important as physical health and safety. It also recommends updating compensation schemes to fund clinical mental health treatment for all work claims for up to six months, regardless of liability.

The additional reforms are where workplaces will play a greater role.

The first asks WHS authorities to develop codes of practice to help employers identify, eliminate and manage psychological risks. Currently workplaces must provide psychologically safe work environments. According to Safework this means designing work, systems and workplaces to eliminate or minimise risks to their mental health.

However, many employers are still unclear on exactly what that means since identifying psychological risks is much harder than physical ones. The report suggests demystifying this for employers and providing clear guidance on eliminating workplace mental health risks, particularly now employers need to assess psychological risks to remote workers. 

This crosses over with another recommendation to provide flexible workers compensation for workplaces which implement initiatives to reduce psychological risks. The report suggests this would increase the number of employers implementing effective initiatives. Which initiatives are appropriate would be decided by WHS authorities.

One initiative most employers consider essential is EAP services. However, the report suggests greater regulation of EAPs since there is currently little external evaluation or benchmarking. The report recommends a minimum standard be developed to help organisations understand the value EAPs provide to employees and what level of service they require to suit their workforce. The report noted that EAPs are often the initial point of contact for employees with mental health problems so their importance in the long-term management of mental health cannot be understated. 

Good leadership can build a mentally healthy workplace

All of the report’s workplace recommendations boil down to creating mentally healthy workplaces. Mental health organisation Heads Up gives nine key attributes of a mentally healthy workplace. They include:

  1. Prioritise mental health – this includes having open discussions about mental health and educating staff about mental health issues.
  2. Create a trusting, fair and respectful culture – cultivate a culture of trust among employees and ensure everyone is treated fairly.
  3. Open and honest leadership – good culture comes from the top down.
  4. Good job design – ensure roles suit employees’ abilities and skills. Job crafting is a good example of this.
  5. Workload management – make sure employees’ tasks are achievable and that they have the resources to complete them.
  6. Employee development – regular development training and feedback can help employees feel more secure in their role.
  7. Inclusion and influence – encourage employee input in business decisions.
  8. Work/life balance – encourage employees to take breaks and offer opportunities to balance their personal life with work.
  9. Mental health support – ensure employees have access to EAPs or other mental health  services when needed.

Margo Lydon, CEO of mental health organisation SuperFriend, points to attribute number three – open and honest leadership – as vital to the success of any mentally healthy workplace.

Lydon and her team have just completed a study into workplace mental health and she says leadership comes up time and time again as the most important factor. 

“If we’re educated in the signs and symptoms of mental illness and have the tools and resources to support people early on in their struggles, we have a much better chance of improving their outcomes,” she says.

The productivity commission’s report also noted the importance of good leadership. The report’s authors noted that improving workplace mental health was intrinsically linked to how interested leadership was in mental wellbeing and their willingness to increase the visibility of mental illness in the workplace. 

Lydon agrees. 

“Any workplace that is committed to the mental health and wellbeing of its people should be ensuring its leaders have at least basic competencies in workplace mental health. We spend most of our waking hours at work, so workplaces have a huge part to play in keeping people mentally healthy,” she says.

If you or anyone you know needs mental health support you can contact Lifeline on 13 11 14 or Beyond Blue on 1300 224 636


Leaders need effective tools to support the wellbeing of their staff. Check out AHRI’s webinar on Managing The Psychology Sustained Disruption.


Leave a reply

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