Poor employee health is costing the UK economy an estimated £138 billion every year, according to new research highlighting a growing wellbeing gap among small and medium-sized businesses.
The study, published by Hussle, suggests that many SME leaders recognise the importance of supporting employee wellbeing but struggle to put effective support in place.
As a result, organisations risk declining productivity, rising absenteeism and increased employee turnover.
Rising stress and burnout across SME workforces
The report, The SME Wellbeing Gap, found that 71% of SME employers are seeing increasing levels of stress, burnout and absenteeism among employees.
Despite this, only 33% currently provide subsidised fitness access, even though physical activity is widely linked with improved health, engagement and workplace performance.
This mismatch between awareness and action is becoming a growing concern for employers.
Why the wellbeing gap matters for the UK economy
Small and medium-sized businesses play a critical role in the UK economy, accounting for more than half of private sector turnover and employing millions of people.
However, many SMEs are still relying on benefits models originally designed for larger, office-based organisations.
As work becomes more distributed and hybrid, these traditional approaches are becoming less effective — creating operational risks linked to fatigue, disengagement and talent loss.
SMEs feel pressure to compete with larger employers
The research highlights growing pressure on smaller businesses to keep pace with the benefits offered by larger organisations.
- 92% of SME leaders say improving employee wellbeing is one of the most effective ways to retain staff
- 76% say they feel pressure to compete with companies offering more comprehensive benefits
However, cost pressures, administration requirements and inflexible legacy systems are preventing many from taking action.
Hybrid work is widening the challenge
The shift towards hybrid and remote work is also exposing weaknesses in traditional wellbeing approaches.
Around 64% of SME leaders say they struggle to deliver benefits that work equally well for office, remote and distributed employees.
Location-based solutions such as office perks or single-site gym memberships often fail to reach large parts of the workforce, reducing engagement and limiting return on investment.
Limited HR capacity holding SMEs back
Another barrier facing many smaller organisations is a lack of internal resource.
Unlike large corporations, SMEs often operate without dedicated HR teams. Instead, founders, operations staff or office managers are responsible for implementing wellbeing initiatives alongside many other responsibilities.
This can make complex or time-consuming benefits programmes difficult to manage.
The hidden business cost of poor health
Employee health issues contribute directly to absenteeism, presenteeism and reduced productivity.
Taken together, these factors create measurable costs not only for individual businesses but for the wider economy.
Preventative approaches — particularly those encouraging regular physical activity — are increasingly seen as a practical way to improve workforce resilience while reducing long-term costs.
2026 could mark a turning point for SME wellbeing
Despite the challenges, the research suggests attitudes may be shifting.
Three quarters of SME employers say they are more likely to explore new wellbeing solutions during 2026, reflecting growing recognition that employee health is closely linked to organisational performance.
As labour markets remain competitive and expectations around workplace wellbeing continue to evolve, organisations that close the implementation gap may gain a significant advantage.
Businesses that invest in preventative wellbeing strategies are likely to be better placed to improve productivity, strengthen retention and support long-term growth.
You can download the full report here.
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