Revealed: the huge cost of New Zealand’s workplace bullying and harassment

‘Counting the Cost: estimating the economic cost of workplace bullying and harassment on New Zealand employers’ has been published today – to mark Pink Shirt Day – by Te Kahui Tika Tāngata Human Rights Commission and KPMG.

The report estimates the cost of bullying and harassment to New Zealand employers is around $1.5 billion a year, which is considered conservative because not all potential costs are included.

“Ending bullying and harassment in the workplace is vital because it harms us as people, and stands in the way of all of us living healthy lives and contributing to our workplaces in the ways we aspire to,” says Kaihautū Ōritenga Mahi | Equal Employment Opportunities Commissioner Saunoamaali’i Karanina Sumeo.

She says the report is a stark reminder to all employers of the need to provide safe and supportive workplaces.

“Failing to do so prevents people from progressing in the workplace, impacts productivity, and places a huge financial burden on workplaces, workers, their households, and the country,” says Dr Sumeo.

“Being safe at work is a human right for all of us, and under Te Tiriti o Waitangi the dignity and mana of Māori must be upheld at all times including in the workplace.”

The report highlights that proactively addressing workplace bullying and harassment will boost worker productivity, bring economic benefits to employers, and make Aotearoa a better place in which to work and live.

It uses data from the Commission’s 2022 report ‘Experiences of Workplace Bullying and Harassment in Aotearoa New Zealand’ which surveyed 2500 workers across Aotearoa.

The KPMG study looks at the costs of impact on workplaces from increased leave, decreased work performance, higher turnover and time spent on addressing internal complaints.

It estimates the 2021-22 costs to workplaces was $1.34 billion, and that it could be $1.5 billion in 2023 because of increases in nominal wages and working population.

The report finds that 58 per cent of this total cost of ($780m) in 2021-22 arises from impacts on female workers, highlighting that women are disproportionately affected.

The 2022 report showed a higher proportion of Māori respondents experienced bullying or harassment compared with other respondents.

“In understanding the economic impact on employers, we must not forget the effect it has on those directly experiencing bullying and harassment and their dependents, including on their income security, mental health, careers, and household wellbeing,” says Dr Sumeo.

The Commission’s 2022 report was based on research into the prevalence of sexual harassment, bullying, and racial harassment in the workplace.

Due to small sample sizes, the KPMG report has not been able to reliably estimate the cost of bullying and harassment on groups of workers that the Commission identified in 2022 as experiencing higher rates of bullying and harassment. For example, the 2022 report highlighted a disproportionate prevalence for Tangata Whenua, Pacific peoples, Asian workers, new migrants, disabled workers, and bisexual workers.

The report demonstrated a concerning prevalence of these behaviours and differences in experiences between people of different age groups, genders, across industries, and different personal characteristics.

The IoD’s Four Pillars of Best Practice Governance provides advice to directors on this topic (3.7.7 – Mental health and wellbeing of workers; 2.2 – Ethics and organisational culture; and 2.16 Human Capital).

Counting the Cost - Key findings

• $1.34 billion – the overall cost to New Zealand employers over a 12-month period from June 2021 - June 2022.
• $1.5 billion – an estimate of the total cost for 2023, which is likely around 15% higher due to inflation, increase in nominal wages and the working population.
• $1,618 – the average cost to employers for every worker impacted by bullying and harassment.

Impact categories	Annual cost estimate: Central scenario	Range estimate
Absenteeism	$178 million	$147 million - $415 million
Presenteeism	$369 million	$54 million - $1,124 million
Turnover and replacement	$568 million	$195 million - $1,290 million
Internal procedures	$226 million	$64 million - $608 million
Total	$1,341 million	$461 million - $3,436 million