THE World Health Organisation (WHO) defines mental health as “a state of mental well-being that enables people to cope with the stresses of life, realise their abilities, learn well and work well, and contribute to their community. Mental health is more than the absence of mental disorders” (“Mental health: Strengthening our response”, WHO, June 17, 2022).

Mental health encompasses psychological, emotional and social health. In 2015, it was reported that 29.2% of individuals aged 16 and above had mental health problems in Malaysia (“National Strategic Plan for Mental Health 2020-2025”, Health Ministry, 2020).

East Malaysia had the highest prevalence rate of a population meeting the criteria of mental disorder at 43%, followed closely by Kuala Lumpur at 40% (“Mental disorders in Malaysia: An increase in lifetime prevalence”, Raaj et al., British Journal of Psychiatry International, 2021).

As Malaysia develops from a middle- to
high-income country, levels of stress are also increasing.

Mental health in the workplace

Increasing demands of workload, competition and globalisation have been associated with rising mental health conditions (“Struggle over employees’ psychological well-being. The politicisation and depoliticisation of the debate on employee mental health in the Finnish insurance sector”, Koukkanen et al., Management and Organisational History, 2020).

Last year, it was reported that 51% of our workforce had work-related stress (“Mental health protection for the workforce”, The Star, Aug 16, 2022). However, it was estimated that only 20% of Malaysians with mental health issues received the treatment they needed (“Workplace mental health: The business costs”, Relate Mental Health Malaysia, 2020).

High prevalence of mental disorders translates into increased costs to organisations and puts severe strains on the economy.

Lower productivity and increased absenteeism are the leading causes behind these financial losses (“Exploring mental illness in the workplace: The role of HR professionals and processes”, Hennekam et al., The International Journal of Human Resource Management, 2021).

Poor mental health is seven times more likely to make an employee unproductive. According to an Australian study, psychological distress can decrease productivity by 26%.

In the UK, the statistic was around 40%. Depression alone accounts for over 15% of loss in productivity.

WHO estimates that poor workplace mental health costs the global economy US$1 trillion (RM4.33 trillion) annually. In Malaysia, poor mental health in the workplace cost the country around RM14.46 billion or 1% of the gross domestic product.

Given such drastic financial losses, it does not make sense to not invest in mental health of
our workforce. There are many things an organisation can do to boost their employee’s mental health, and thereby productivity, such as providing flexible working hours, respecting non-office hours and promoting a healthy
work culture. While such measures are useful in improving mental health conditions, therapy is also an indisputably critical aspect.

Lack of laws

The Malaysian Mental Health Act (2001) and the Mental Health Regulation (2010) make no provisions regarding mental health in the workplace (“Mental Health Issues at Workplace: An Overview of Law and Policy in Malaysia and United Kingdom”, International Journal of Law, Government and Communication, 2021).

The Occupational Safety and Health Act (Osha) 1994 posits that employers are liable “to ensure, so far as is practicable, the safety, health and welfare at work of all his employees”. However, the Act primarily focuses on the physical safety of the employees and has no explicit provisions regarding an employer’s duty towards mental health, especially depression, anxiety and stress.

Scarcity of insurance plans

Most employers provide health insurance as an incentive and in line with good practice. However, currently there are no laws in Malaysia that require employers to provide health insurance to employees, let alone mental health insurance.

There is a lack of employee mental health coverage plans offered by insurance companies. Along with this, there is poor awareness among employers about the availability of mental health coverage.

In August 2022, AIA was the first to launch a mental health employee insurance programme in Malaysia in collaboration with ThoughtFull, a digital mental health organisation.

The insurance plan offers unlimited daily digital one-on-one therapy with professionals, 24/7 wellness hotline and mental wellness programmes. It includes coverage for employee consultation, medication and treatment as provided by a psychiatrist (“Mental Health Protection for the Workforce”, AIA, Aug 16,

The key question for employers in providing mental health insurance for their employees is whether it is worthwhile?

Importance of mental well-being in the workplace

Mental well-being is linked to increased creativity, motivation, curiosity, cognitive flexibility, broader array of ideas and problem solving, improved ability to consider numerous options and increased resilience.

All these skills are instrumental for the growth of a company.

Therapy improves job performance

In 2010, a study found that access to therapy can decrease employee sick days by half. Less sick days translates into more work done for employers. Furthermore, being happy increases an employee’s engagement with their work and productivity by 12%. Google, by providing therapy, reported a 37% increase in employee satisfaction and productivity.

A study with 197 employees from two Fortune 100 companies receiving counselling through an Employee Assisted Programme (EAP) provider suggested that 90 days after starting counselling, employees showed significant decreases in absenteeism, presenteeism, workplace distress and increase in life satisfaction (“Evaluating the Workplace Effects of EAP Counseling”, Sharar et al., Journal of Health and Productivity, 2012).

Therapy is cost-efficient

Given that most organisations are private and for profit, it seems counter-intuitive for employers to invest in mental health, which is seemingly intangible and difficult-to-measure. However, research suggests that investing in employee therapy both saves and makes money for organisations (“Is Therapy an Effective Provision for your Employees”, Spectrum Mental Health, April 19, 2018).

Research suggests that it is extremely costly for employers to not invest in employee mental health. In the US, depression costs employers US$17 per employee annually, a stark difference from the next highest health cost, diabetes costs less than US$2 (“What do employers need to know about parity?”, American Psychological Association (APA), May 5, 2021).

Additionally, an increase in mental health issues have shown to increase employer expenditure on physical health problems. WHO estimates that for every USD1 spent on mental well-being, there is a US$4 return through productivity and health.

The annual estimated cost for treating depression and anxiety in Malaysia is lower than the annual cost of lost productivity due to mental health issues. The RM14.46 billion cost has increased over the past four years, especially exacerbated by the Covid-19 pandemic. This figure does not include the cost of treating physical health problems caused or exacerbated by mental health issues.

The RM14.46 billion cost due to mental
health issues at the workplace dwarfs the mere RM337 million allocated to mental health issues in the 2022 budget (“What We Know So Far: A Breakdown of Budget 2021’s Allocation for Mental Health”, Relate Malaysia, Nov 19, 2020).

Employers cannot avoid hiring employees
with mental health issues

While companies may be motivated to only hire mentally “healthy” individuals, such a strategy does not take into account the possibility of employees developing a mental health condition during employment.

An employee without any history of mental health issues is 7% likely to develop such a condition and 13% if they are stressed.

Companies cannot avoid employing individuals with mental health issues given that 51% of workers in Malaysia report high occupational stress. Hence, employers should support mental health instead of avoiding it.

While 63% of employers recognise that employee health and well-being impacts company success, only 13% are aware of potential well-being interventions. This suggests a severe disconnect between employer beliefs and the implementation of appropriate budgeting and processes safeguarding employee mental health.

Addressing mental health issues will benefit employers in other crucial ways as well, such as boosting their reputation, promoting a healthier work culture and gaining employee commitment and loyalty.

Hence, Emir Research recommends:

-> Including specific provisions regarding mental health in Osha (1994);

-> Workplaces to hold mandatory mental health awareness seminars once a year, which should
be claimable via the Human Resource Development Fund;

-> The Health Ministry and Finance Ministry to work closely with the Malaysian Mental Health Association, Malaysian Society of Clinical Psychologists and insurance companies to introduce more employee mental health insurance schemes, especially focusing on depression, anxiety and stress;

Insurance schemes should also include first line of treatment, such as initial consultations and psychotherapy, instead of only including psychiatry and medication that are mainly used for extreme cases;

-> Ensuring employer and insurer confidentiality regarding the therapy;

-> The necessity for a mental health “criterion” to prevent/pre-empt the possibility of insurers using their own pre-computed actuarial risk analysis calculations that may result in unfairly denying workers mental health treatment.

Reference can be made to the two statements/recommendations issued by the APA, namely that: “Requirements related to prior authorisation of treatment and medical necessity determinations must also be comparable and no more stringently applied to mental health coverage than physical health coverage”.

And “co-payments, co-insurance, deductibles, and out-of-pocket costs for mental health benefits cannot be higher for mental health services than the co-payments for physical health benefits”.

In conclusion, Emir Research strongly urges the government and insurance companies to work together under a public-private partnership and develop comprehensive mental health insurance plans to improve both the organisational and economic outcomes, among others.

Jason Loh and Juhi Todi are part of the research team at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research. Comments: