The Cost of Disengagement: What Unhappy Employees Really Cost Your Business

In 2014, BusinessNZ estimated that absenteeism was costing New Zealand businesses around $1.3 billion per year. At the time, the average employee took about 4.5 sick days annually. 

By 2022, that number had climbed. The Southern Cross and BusinessNZ Workplace Wellness Report recorded the highest absence rate ever at 5.5 days per employee. That translated into almost 10 million working days lost across the workforce, up from 7.3 million the year before. 

With today’s average earnings sitting at $41 per hour, the cost of absenteeism now runs into several billion dollars annually. Employers can quickly calculate what this means for their own workforce by using Lifecare’s free Absenteeism Calculator. For many businesses, the results are eye-watering, showing six-figure losses even in medium-sized teams. 

While absenteeism gets the headlines, presenteeism quietly does more damage. According to the Umbrella Wellbeing Report, more than a quarter of New Zealand employees regularly worked while mentally unwell in the past month, and one in five worked while physically unwell. On average, these employees operated at 33 percent below peak performance. 

The cost is massive. The report estimates a loss of more than $2,000 per employee each month, adding up to around $46.6 billion a year across the economy. Unlike absenteeism, presenteeism is harder to see. On the surface, employees are still showing up. But they are less focused, less safe, and more prone to mistakes. 

In warehousing and logistics, presenteeism increases the likelihood of forklift near misses, incorrect picks, and shortcuts around safety protocols. It also undermines the return on investment in automation and new warehouse management systems, because disengaged staff are slower to adapt. 

Absenteeism and presenteeism drain productivity, but turnover magnifies the impact when disengaged employees eventually leave. MBIE reports that the national average turnover rate is 30.4 percent, with logistics, retail, and hospitality often much higher. 

Replacing staff is expensive. Factoring in recruitment, training, lost productivity, and management time, the cost of replacing an employee is typically 20 to 30 percent of their salary. With the average annual wage sitting at $62,000, that equates to $12,000 to $18,000 every time someone leaves. If only ten percent of the workforce leaves due to disengagement, the cost to New Zealand businesses is between $3.5 and $5.2 billion every year. 

Employers can calculate turnover with a simple formula (Employsure, 2025): 

Formula	Turnover Rate = (Number of Staff Who Left ÷ Average Number of Employees) × 100
Example	Start of year = 100 employees End of year = 110 employees 15 staff left during the year Average staff = (100 + 110) ÷ 2 = 105 Turnover Rate = (15 ÷ 105) × 100 = 14.29%

A turnover rate above 15 percent is typically considered high. Many logistics and warehousing operations sit well above this threshold. 

For a more detailed calculation of costs, Imago Wellness Coaching offers a free Retention Calculator that estimates the real cost of replacing staff, including lost productivity, cover, and training. 

The impact of disengagement is not just financial. In high-risk sectors like warehousing and logistics, it shows up in safety statistics. Between 2019 and 2025, there were 50 fatalities in transport, postal, and warehousing. More than 80 percent were linked to vehicle incidents such as truck crashes, forklift accidents, and rollovers. 

WorkSafe data also shows thousands of serious injuries each year requiring more than a week away from work. The most common causes are muscular stress, slips and trips, being struck by moving objects, and machinery incidents. When workers are tired, distracted, or mentally checked out, they are more likely to cut corners, skip safety steps, or make errors that put themselves and others at risk. 

The costs of these incidents add up quickly. Employers must pay the first week of wages at 80 percent before ACC begins cover. For a warehouse worker earning $30 per hour, that is about $960 per injury. A business experiencing a dozen workplace injuries in a year would face more than $11,500 in direct wage costs alone. Once you add lost productivity, temporary cover, overtime, administrative time, and potential fines, the true cost is often three to five times higher. That means the same 12 incidents could realistically cost $30,000 to $50,000 annually. 

Disengagement does not just cost money, it increases the likelihood of accidents, claims, and serious harm. In industries where vehicles and machinery are part of daily life, the financial and human costs are simply too high to ignore. 

For businesses, knowing the cost of disengagement is only the first step. The real power comes from measuring it accurately and benchmarking year on year. Healthy workplaces typically aim for absenteeism below five days per employee annually, turnover below 15 percent, and employee engagement above 70 percent. Falling outside these benchmarks is often a warning sign of deeper cultural or operational challenges. 

The problem many warehouses face is not just absenteeism itself but the quality of the data being captured. Most operations have accurate records of hours worked, yet the reasons behind staff absences are often poorly recorded. This makes it difficult for managers to distinguish between genuine illness, burnout, disengagement, or other issues like family responsibilities. Without that clarity, businesses risk treating the symptoms rather than the cause. 

While there are free absenteeism calculators available online, most are quite basic. They provide a headline figure but rarely break down the drivers of absence in a meaningful way. This leaves businesses with a partial picture of the problem. To truly understand engagement and absenteeism, employers need systems that capture not just how often people are away, but why. 

For leaders who want to get serious about reducing disengagement costs, the first step is building better measurement frameworks. That means tracking absenteeism and turnover rates consistently, recording reasons for absence in a structured way, and comparing performance to industry benchmarks. With this information, businesses can design targeted solutions rather than blanket policies, and over time, they can prove the return on investment from wellbeing initiatives and better hiring decisions. 

The financial drain of disengagement is not inevitable. Research shows that businesses that invest in mental health and wellbeing not only see happier staff but also deliver measurable financial returns. A Deloitte study found that poor mental health costs UK employers between NZD 3,340 and NZD 3,531 per employee annually. Employers who invested in wellbeing programmes saw an average return of $5.30 for every $1 spent. 

Preventative measures such as wellbeing workshops and awareness campaigns deliver the highest return, averaging $5.60 for every $1 invested. Proactive interventions like coaching and manager training return $5.00 for every $1, while reactive measures such as Employee Assistance Programmes still deliver $3.40 for every $1. In other words, wellbeing is not a cost. It is one of the smartest investments a business can make.

At Indus Recruitment, we see every day how disengagement translates into absenteeism, presenteeism, turnover, and safety risks. That is why our recruitment model goes beyond filling vacancies. We focus on finding people who are engaged, safety-focused, and ready to adapt to modern warehousing environments. 

We screen for cultural fit and motivation, not just technical skills. We look for operators who take pride in doing things safely, who will not cut corners around forklifts or machinery, and who thrive in team environments. We also partner with our clients on workforce planning, helping them reduce churn and avoid the hidden costs of disengagement. 

Our goal is simple: to build future-proof warehouse teams who stay longer, perform better, and support a safer, more productive workplace. 

Disengagement is costing New Zealand businesses more than $50 billion every year. Absenteeism has risen, presenteeism is a $46 billion drain, turnover runs into billions, and safety incidents continue to climb. But the solution is clear. Employers who invest in engagement and wellbeing not only reduce costs but gain stronger, safer, and more resilient workforces. 

For warehousing and logistics leaders, the stakes are even higher. Disengagement does not just slow productivity, it increases risk. The time to act is now. And at Indus Recruitment, we are ready to help employers find the people who are engaged, safety-focused, and ready to thrive.