Abstract
By 2030, it is anticipated that poor mental health will cost the global economy approximately $6 trillion per year, primarily due to productivity loss. It is crucial to understand how psychological distress contributes to productivity loss in the workplace. We aim to investigate the relationship between psychological distress and productivity loss in the Australian working population. We utilized eight waves of longitudinal data drawn from the Household, Income, and Labour Dynamics in Australia (HILDA) Survey (waves 7, 9, 11, 13, 15, 17, 19, and 21). We compiled an unbalanced panel data set comprising 70,973 person-year observations from 18,729 unique working adults. We used Fixed-effects Poisson regression and Fixed-effects logistic regression models to investigate the within-person differences in the relationship between psychological distress and productivity loss (measured through sickness absence, presenteeism, and underemployment). We found that moderate and high psychological distress is associated with a higher rate of sickness absence, presenteeism, and underemployment when a working adult shifted from low psychological distress after controlling socio-demographic, health, and employment-related characteristics. Our study demonstrated that moderate to high psychological distress adversely affected employees' job productivity through increased sickness absence, a higher likelihood of presenteeism, and greater levels of underemployment. Our findings also revealed that employees with moderate and high psychological distress incurred additional annual sickness absence costs of AUD 60.66 and AUD 99.26, respectively, compared to peers with low psychological distress. Additionally, our study found that employees with moderate and high levels of psychological distress experienced significantly higher levels of presenteeism, which resulted in additional annual costs of AUD 1,166.30 and AUD 3,656.05, respectively, compared to their counterparts with low psychological distress. Psychological distress imposed significant costs on Australian workplaces. Implementing workplace health promotion programs should be prioritized as a policy to address psychological distress among employees, enhance their well-being, and improve overall productivity.