COVID,  Research,  Wages

10 Paid Sick Days Would Have Little Impact on Business Costs

A proposed 10-day paid sick leave policy in B.C. will increase overall business costs by just one-fifth of one percent. That’s the finding of new research from the Centre for Future Work.

The new report, by Centre Director Jim Stanford, calculates the impact of the proposed policy on sick leave entitlements, absences, replacement staff costs, and bottom-line business expenses. The ultimate impact of paid sick days is estimated at just 0.21% of existing business expenses, and will have no measurable impact on overall competitiveness or profitability.

The findings discredit claims by some business lobbyists that 10 days of paid sick leave would cause widespread bankruptcies and job loss. Moreover, these small estimated impacts do not consider the benefits which also flow to businesses from the policy: including reduced contagion among a sick worker’s colleagues and customers, better staff retention, and stronger customer confidence. On a net basis, the cost impact of paid sick days will be negligible.

The report shows the cost of paid sick days is muted by several factors:

    • Not all workers will qualify for 10 days paid leave (since the benefit is phased in as a worker gains experience in a job).
    • Many employers already offer paid sick leave, and hence will experience little or no increase in compensation costs.
    • On average, not all entitled paid sick days will be claimed by workers.
    • Not all sick workers are replaced by alternative staff during their absence.
    • Labour compensation is a relatively small share of total business expenses in most industries.

“The claim that an increase in business costs of this order of magnitude could cause widespread bankruptcy is simply not credible,” said Dr. Stanford.

Please see the full report, Estimates of the Gross Cost of Paid Sick Day Provisions in British Columbia.

Jim Stanford is Economist and Director of the Centre for Future Work. He divides his time between Sydney, Australia and Vancouver, Canada. Jim is one of Canada’s best-known economic commentators. He served for over 20 years as Economist and Director of Policy with Unifor, Canada’s largest private-sector trade union.