The economic costs of sexual harassment in the workplace

The Australian Human Rights Commission undertook a national inquiry into sexual harassment in Australian workplaces and released its report Respect@Work in March 2020. The report covers a wide range of topics providing understanding of the nature of such harassment, legislation, prevention, responses and advocacy.

Deloitte Access Economics’ analysis, which we completed for Treasury in 2019, forms an appendix to the Respect@Work report. We used a bottom-up approach, first establishing the number of people who have been sexually harassed in the workplace, by the severity of that harassment (graded as 1 – least impact - to 4 – most impact). We used data from the AHRC’s national survey in 2018 to estimate costs in 2018 and also costs that extended into 2019.

Costs included short term absence from work, reduced productivity while at work, increased staff turnover, and the opportunity cost of manager time responding to complaints. We also modelled health and justice system impacts, the impacts of reduced taxation revenue, and the lost wellbeing for victims, measured using disability adjusted life years (DALYs) and converted to dollars using the value of a statistical life year.

In 2018, workplace sexual harassment cost $2.6 billion in lost productivity and $0.9 billion in other financial costs. Each case of harassment represents around 4 working days of lost output. Employers bore 70% of the financial costs, government 23% and individuals 7%. Lost wellbeing for victims was and additional $250m, or nearly $5000 per victim on average. The methodology for the report is a global first, as the cost of workplace sexual harassment has not previously been estimated anywhere in the world.

Find out more about the Respect@Work report here.