Economic costs of poor PSC manifest in sickness absence and voluntary turnover

Abstract Work-related stress is a major occupational health and safety (OHS) issue that has industrial relations origins. Aside from the moral and human rights imperatives to improve the corporate climate for worker psychological health (as per psychosocial safety climate, PSC), there are strong economic costs for not doing so. PSC refers to worker perceptions of the corporate safety system to protect and promote workers’ psychological health and wellbeing. It is a leading indicator of working conditions, which in turn affect workers’ health and work engagement. In this study, we estimate the attributable economic cost of low PSC due to sickness absence and turnover. Data were collected from a multinational company using survey at Time 1 (T1) and objective company data (i.e., sickness absence and turnover) after one year (T2). Using regression analysis and a matched sample of 617 responses, PSC was negatively related to future sickness absence. A binomial logistic regression with 1268 respondents (i.e., all responses at T1) showed that PSC was negatively related to future voluntary turnover. An economic analysis suggests that improving OHS via PSC could save an organisation with 5000 employees USD 0.6–2.7 million per year. Building PSC to protect and promote workers’ psychological health is a likely economic saving on organisational productivity.