Commentary: Smoking is lowering your productivity and killing the economy
Two experts quantify the loss in productivity at work to show why companies have an incentive to end the scourge of smoking.
SINGAPORE: Tomorrow marks World No Tobacco Day, a day on which we remember the health risks of tobacco use and think about how we can reduce smoking in particular.
It bears repeating that smoking remains one of the unhealthiest addictions prevalent in today’s society: Smokers suffer and die from lung and related cancers, heart diseases, chronic bronchitis, stroke and more.
But what is not said is the cost to society – which can be measured in dollars and cents. A study a few of us at NUS did back in 2002 found that a conservative estimate of medical costs for smoking-related diseases in 1997 alone stands at more than S$70 million.
The high medical costs aside, it was also reported that Singapore’s total social cost of smoking in the same year amounted to a much larger sum – of about S$700 million. This is because smoking not only incurs direct medical costs, but also indirect costs in terms of productivity losses.
LOST WORKING HOURS AND PRODUCTIVE YEARS
Workplace absenteeism is generally more common among smokers. In one study conducted in Sweden in 2006, Swedish smokers on average take 7.7 more days of sick leave annually relative to their non-smoking colleagues.
It seems that time spent treating smoking-related illnesses translates into lost working hours, and consequently lost production for the employer and the economy.
In a less apparent form, “presenteeism” is expected to be more pervasive among smokers as well. Presumably, there is a higher chance that smokers are present at the workplace despite being ill, since smokers are more likely to be ill to begin with. We have all, at some point, experienced dragging ourselves to work with a sinus, headache or a throat irritation.
Yet, more often than not, it is difficult to focus and function in such a state. Again, productivity suffers.
Smoke breaks also constitute working hours not spent working. If a smoker were to spend 10 minutes every hour travelling to designated smoking areas and puffing away, he or she would be working 17 per cent less than his or her non-smoking colleagues, which could be deemed as unfair.
This is of course an exaggerated illustration since everyone takes breaks, although it can also be argued that smokers set the precedence for breaks for non-smokers. Smoke breaks, which are driven by addiction, tend to be more indispensable.
A dilemma arises – removing smoke breaks is not an option either, now that smokers are used to taking smoke breaks, and since doing so could decrease their productivity even more in the short run.
Smokers may claim that the allure of lighting up provides motivation to work more efficiently, that nicotine as both a stimulant and relaxant boosts work performance, that smoking provides time for reflection, or that gatherings in smoking rooms generate not only gossip but also intellectual and productive discussions.
Perhaps they are not wrong. Nevertheless, there are plenty of other healthier alternatives.
LARGE COSTS BORNE BY SOCIETY
The ugly truth is that the above-mentioned productivity losses are in fact largely incurred by employers. A 2013 study by Ohio State University estimates that the excess annual cost of a smoking employee in the US stands at US$5,816 (S$8,050), including medical fees which companies have to bear.
In addition, negative health externalities imposed on passive smokers can also lead to further productivity losses. This may explain why numerous companies all over the world refuse to hire smokers, aside from negative health and public image considerations.
Taking a broader perspective, smoking depreciates human capital in the long term, and has even greater implications for the macro-economy, especially in countries highly dependent on human capital such as Singapore. Smokers have more years lost due to ill health, disability and younger mortality, decreasing the effective labour force a country possesses.
If smokers don't die prematurely from smoking-related diseases, they would still be productive and be able to contribute to national output. Smokers’ forgone future production stream is extrapolated to cost Singapore close to a billion in current dollars annually.
As cold as this may sound, we can go on forever identifying each and every economic impact of smoking because the effects of smoking are far reaching: Lower-income workers who spend a large portion of their income on cigarettes will naturally spend less on better alternatives such as a healthier diet or their children’s education.
Smokers have lower fertility rates, physiologically or through diminished marketability in the marriage market.
Time and resources also have to be devoted by family members to care for their loved ones suffering from serious smoking-related diseases.
LONG-TERM PRODUCTIVITY LOSSES
To examine the overall mid- to long-term macroeconomic impact of smoking, a 2005 study conducted by one of the authors investigated the correlation between 14 OECD countries’ economic growth and their respective per capita cigarette consumption.
Results again show that the costs of cigarette smoking in the form of productivity losses is considerably large, going up to US$4 to US$6 per worker per hour in some countries.
Therefore, we might want to rethink tobacco to be a cause of preventable productivity loss, in addition to being the world’s largest cause of preventable death. The gains of curbing tobacco abuse might be larger than preconceived.
Smokers often claim that as long as they are not smoking in the presence of others, their choice to smoke is not harming others. This is factually erroneous, since the immediate loss of productivity, and the long-term burden on society in the form of morbidity and premature mortality are significant.
Over the years, Singapore has invested significantly to ameliorate the problem of smoking, and has achieved considerable success through legislation, for instance, restricting the use of public space for smoking, raising the minimum legal age for purchase, and implementing a ban on point-of-sale display, as well as public education, among other measures.
More can be done to stamp out smoking, for instance limiting the places where cigarettes can be bought and increasing the tax on tobacco.
But it will be prudent to return to our focus on productivity.
CUSTOMISE SOLUTIONS FOR SPECIFIC INDUSTRIES
For smokers, quitting will take time, attention, effort and concentration from work, especially when withdrawal symptoms are severe. Nevertheless, evidence have surfaced that productivity gains after quitting could outweigh the costs even in the short run.
Currently, most programmes helping smokers kick the habit in Singapore are initiated by the Government and interest groups. We reiterate that employers should have the same, if not larger, incentive in advocating a smoke-free working environment. This also suggests that policy measures, such as services or education to help smokers kick the habit, could be targeted at and customised for specific industries and employees.
Employers could provide incentives to employees to ditch the habit. They could publicly acknowledge employees who have achieved success in giving up smoking, and set aside a special fund for employees to join clinics or undergo treatment and medication to overcome their smoking addiction and withdrawal challenges.
Employers could also organise workshops conducted by experts to learn how to quit smoking and other health matters, as well as enforce a non-smoking environment on company premises.
In all, companies could mount a strong campaign against smoking, emphasising the harmful effects of smoking, by themselves or in partnership with the Government.
This is especially so for industries with a high proportion of smokers, such as the construction industry, or for industries in which the costs of smoking may be higher, such as food services where having employees who smoke could have health implications for patrons.
Discriminating against smokers when hiring may be a harsh intervention. Government, employers and society at large need to unite against smoking, not smokers.
It is a delicate balance of creating a health-conscious society that frowns upon smokers on the one hand, and on the other, offers smokers a gentle nudge and encouragement to quit, that our society should strive towards.
Moreover, we need to reflect on the increasing and sustained harm brought about by cigarettes, and recognise the health, economic and social costs. We also need to take stock and evaluate the effectiveness of existing and suggested interventions.
It is about time that we as a society put an end to the lucrative tobacco industry and the scourge of smoking.
Euston Quah is Professor and Head of Economics at Nanyang Technological University. He is also the President of the Economic Society of Singapore. Tan Tsiat Siong is a researcher at the same university.