The economic and social costs of mental illness are enormous – for individuals and their families, for the purse and for employers. Indirect costs in the form of lost employment and reduced productivity are much higher than the direct healthcare costs: indirect costs, direct medical costs and direct non-medical costs amount to 53%, 36% and 11%, respectively, of the total costs of mental disorders for the economy. The high cost of mental illness is a direct consequence of its high prevalence in the population. On average, around 20% of the working-age population experiences a mental health problem at any one moment in time, and as many as one in two are likely to be affected in their lifetime.
There are three key labour market challenges facing OECD countries which should become a key priority of public policy. First, persons with mental health problems need to be better integrated into the labour market in view of the underlying long-term labour market challenges caused by population ageing, including a shortage of skilled labour. Employment rates of this group are low, and unemployment rates very high. Secondly, social security systems do not appear to be working well for people with a mental disorder and fail to keep or reintegrate those people into the labour market. Today, mental ill-health accounts for one-third of all new disability benefit claims and is a key barrier of many of the long-term unemployed. Thirdly, mental health problems drive labour productivity downwards with major implication on competiveness and long-term economic growth. People with a mental disorder are both absent from work more often than others and report productivity losses while at work more frequently.
While concerns about the adverse effects of mental ill-health are rising in most OECD countries and recognised as one of today’s biggest challenges for social and labour market policy, problems are far from being understood or yet addressed comprehensively and sufficiently. Rising unemployment in many OECD countries in the course of the recent jobs crisis has potentially increased the problem.