Workplace wellbeing linked to productivity, but action gap remains, major UK study finds 

A six-year study led by the Enterprise Research Centre (ERC) at Warwick Business School has found that poor workplace mental health continues to pose a serious threat to productivity across the UK – despite growing awareness among employers of their responsibility to protect staff wellbeing. 

The Workplace Mental Health and Wellbeing Practices, Outcomes and Productivity report, published in October 2025 and funded by the Economic and Social Research Council, draws on longitudinal surveys of more than 10,000 businesses across the Midlands and comparative research in Ireland and Sweden. It offers one of the most comprehensive pictures yet of how mental health and wellbeing practices influence business performance, recruitment and retention. 

Mental health issues rising as productivity stagnates 

The report links a continued rise in mental health-related absence and presenteeism to the UK’s ongoing “productivity puzzle”. Nearly one in four UK businesses reported staff absence due to mental ill health in 2025, with almost half of those employers saying it had a negative impact on operations. Repeated absences have also become more common, with the proportion of firms experiencing multiple mental health absences increasing from 40 per cent in 2022 to 47 per cent by 2025. 

At the same time, presenteeism – employees working while unwell or beyond contracted hours – has surged, now affecting almost four in ten firms. While the causes are complex, the study links this to cost-of-living pressures, job insecurity and blurred work-life boundaries caused by hybrid working. 

Professor Stephen Roper, ERC Director and principal investigator, said the findings underline “a direct relationship between mental health, organisational culture and productivity,” adding that wellbeing “must be seen as an investment in business performance, not an optional benefit.” 

Employers recognise duty but fail to act 

Although 75 per cent of businesses said they recognise responsibility for safeguarding employee mental health, only half had any wellbeing initiatives in place – a gap the report describes as a persistent “attitude-to-action divide”. 

The number of employers adopting wellbeing initiatives increased during and immediately after the pandemic, but that momentum has since stalled. In 2025, adoption fell to its lowest level since before COVID-19, with a fifth of firms still having no plans to implement mental health or wellbeing measures. 

The smallest employers were the least likely to act, citing limited resources and lack of guidance. Yet they were also the most likely to report that poor mental health was harming productivity. 

Line manager training makes a measurable difference 

The ERC’s analysis found that organisations offering mental health training for line managers reported lower long-term sickness absence, better customer service and improved recruitment and retention. Training also helped create a “psychologically safe” environment where employees felt able to disclose issues early – a key factor in reducing burnout and absenteeism. 

The research team recommends the creation of a national line manager mental health training programme, aligned with existing management qualifications, to give managers “the confidence and skills to have supportive conversations around health and wellbeing”. 

Long-term investment pays off 

Firms that consistently invested in wellbeing practices – such as maintaining a mental health budget, monitoring staff wellbeing data, or supporting physical activity – recorded measurable productivity gains. However, short-term or reactive adoption of wellbeing practices often coincided with an initial drop in productivity, reflecting the disruption of implementing new systems or responding to crisis. 

“This evidence reinforces that mental health initiatives work best when embedded into business strategy rather than added as quick fixes,” said co-author Dr Maria Wishart. 

International lessons 

A comparison with employer practices in Ireland and Sweden revealed marked differences. Swedish firms were far more likely to adopt mental health initiatives and to integrate them into formal management processes. They also reported fewer operational impacts from mental health-related absence. The researchers suggest this reflects stronger cultural norms around psychological safety, better access to government-funded sick pay and a more established wellbeing infrastructure. 

Policy recommendations 

The report calls for coordinated national action, including: 

• A business-focused campaign clearly articulating the productivity case for mental health investment. 

• A free, centralised source of high-quality guidance and evidence for employers. 

• A dedicated mental health support service for small and micro businesses, offering audits and long-term planning advice. 

• Stronger integration of psychological safety and wellbeing principles into leadership programmes. 

• Place-based and sector-specific wellbeing partnerships to share good practice. 

Building a wellbeing economy 

The findings suggest that improving mental health at work is essential to tackling the UK’s wider productivity gap. With mental ill health now accounting for more than half of all work-related sickness, the report positions wellbeing not just as a moral duty, but as an economic imperative. 

As Professor Roper concludes: “Firms that treat wellbeing as part of their business model are the ones that will grow stronger, faster and fairer. The message is simple – good mental health is good business.”