The hidden cost of rising workplace sickness in the UK has increased to more than £100bn a year, largely caused by a loss of productivity amid “staggering” levels of presenteeism, a report warns.

Analysis by the Institute for Public Policy Research (IPPR) shows the cost of staff sickness has grown by £30bn a year to £103bn in 2023. The annual bill was £73bn in 2018, its study found.

Most increase in cost to businesses (£25bn) was because of lower productivity, with employees not fully functioning in the workplace because of an illness, injury or other health condition. The rest of the cost increase (£5bn) was owing to employees taking more sick days.

Employees now lose the equivalent of 44 days of productivity on average because of working through sickness, up from 35 days in 2018, according to the IPPR. Staff lose a further 6.7 days taking sick leave, up from 3.7 days in 2018, the report says.

Workers in the UK are among the least likely to take sick days, especially compared with other OECD and European countries, experts said. They are more likely to turn up at work while sick.

The enormous impact of presenteeism, where staff are unable to perform to the best of their abilities and are more likely to make mistakes, is causing a significant loss in productivity, the IPPR found.

Dr Jamie O’Halloran, a senior research fellow at the IPPR, said: “Too often, UK workers are being pressured to work through sickness when that’s not appropriate – harming their wellbeing and reducing productivity. This can be because of a bad workplace culture, poor management, financial insecurity or just weak understanding of long-term conditions among UK employers.

“Our demonstration of a ‘hidden’ productivity cost of working through sickness should catalyse a change in approach. We should strive to make sure the work we do is good for our health, that we have the time to recover when we need it, and to ensure businesses both contribute to and benefit from population health. This would protect workers, boost profits and deliver growth.”

With the right support in an appropriate job, people with some health conditions can benefit from good work, the report said. But when compelled to work despite being ill employees lose out.

Presenteeism can slow their recovery, increase the risk of getting sicker later, and spread infectious illnesses to others – all lowering productivity. This is bad for business and bad for staff, the IPPR concluded.

Tina Woods, the founder and chief executive of Business for Health, said: “The cost of employee sickness to businesses is staggering, especially the productivity loss of people working through their sickness.”

Working through poor health is more common among those from marginalised ethnic groups, people in lower quality jobs and staff lacking formal qualifications. Black or Asian employees are twice as likely to work through sickness compared to those who are white British, the IPPR said.

The study, the final interim report from the cross-party IPPR Commission on Health and Prosperity, urges ministers to clamp down on businesses that harm health and incentivise firms that improve the health of their workforce.

Kieron Boyle, the chief executive of the Impact Investing Institute and IPPR commissioner, said: “Businesses and investors increasingly see health as an asset, not a cost. This report is a blueprint for their role in creating a healthy and prosperous economy for everyone.”

Last year a separate report from the IPPR Commission on Health and Prosperity found long-term sickness, with people out of the labour market, had become a “serious fiscal threat” to the UK.

It said the number of people out of the labour market because of sickness was at an all-time high of 2.6 million, warning “there is no road to prosperity for this nation without tackling the tide of sickness head-on”.

A separate study recently found that mental health training for line managers could save companies millions of pounds in lost sick days every year.

Organisations offering managers mental wellness training experienced better customer service, improved employee retention and recruitment, and reduced long-term sickness absence, according to the study published this month in the journal Plos One.

The findings showed mental health training was associated with better business performance and may “hold strategic business value for companies”.

Prof Holly Blake, from the University of Nottingham, who led the study, said: “Mental ill health at work is costly to organisations in terms of sickness absence and lost productivity.

“To our knowledge, this is the first study to show that training line managers in mental health is linked to better business outcomes. This is an important finding that strengthens the business case for why employers should invest in mental health at work.”

About one in six people in the UK experience mental health challenges in the workplace, with 12.7% of all sick days attributed to mental ill health.