$180 billion: Cost of Canada’s mental health crisis

Canada’s mental health crisis is costing the economy an estimated $180 billion a year, with employers shouldering roughly $110 billion of that burden through disability claims, benefits, lost productivity and related costs, according to a new report.

The CSA Public Policy Centre estimates that if current trends continue, the annual cost of poor mental health could climb to $600 billion by 2050, nearly 20 per cent of projected GDP.

The previous national estimate — released by the Mental Health Commission of Canada in 2011 — placed the cost at $50 billion (about $67 billion today). However, it used a slightly different methodology, with a “life at risk” simulation model projecting prevalence and costs to 2041. The 2026 CSA study applies a “prevalence-based, bottom-up approach grounded in recent Canadian data” that integrates medical, non-medical, employer and individual costs, as well as costs related to productivity.

“With careful safeguards to avoid double-counting, this report provides a picture of the system-wide impact of the mental health crisis,” says The Economic Cost of Mental Health in Canada.

Most spending goes to crisis, not prevention

Lead author Olga Morawczynski says that a substantial share of the $110 billion cost is linked to the fallout of mental illness in the workplace — rather than preventing it in the first place.

Only about $15 billion — roughly 14 per cent — or “a tiny proportion” is directed toward prevention, including mental-health benefits and training, she says. The remaining 86 per cent is spent by employers after harm occurs, on disability leaves, accommodations, turnover, overtime backfill and legal and compliance costs.

Across the economy, only a small share of mental health-related spending is directed upstream. The report finds that just $23 billion of Canada’s $372 billion in total health spending in 2024 went to mental health, about seven per cent, falling short of OECD benchmarks where many countries dedicate 10 to 15 per cent of health spending to mental health.

Governments across Canada spend more on reacting to the consequences of mental illness — about $28 billion annually — than they invest in mental health care and prevention combined, the report says. Much of that public spending is concentrated in homelessness services, incarceration, police and emergency departments.

Presenteeism and stalled productivity

Mental health challenges are also weighing on Canada’s productivity performance. The report estimates presenteeism — when employees are at work but unable to fully contribute due to mental health challenges — costs $12 billion annually, nearly 90 per cent of all indirect costs.

Morawczynski says that while the research team captured a portion of lost productivity through presenteeism, “it’s much higher… but it’s very difficult to measure” given gaps in available data.

“When people are mentally healthy and well, and they show up for work, they’re able to produce and engage much more effectively,” she says.

Canada has long struggled to match peer countries in output per worker, says the report, trailing the United States, United Kingdom, Australia and several other OECD nations.

“While the relationship is complex, mental health challenges are one of several factors that may contribute to workforce performance as nearly one in three Canadian workers report that their performance is directly affected by mental health challenges.

“At scale, this erosion of workforce effectiveness may be connected to Canada’s broader productivity problem and warrants closer examination.”

Workplace conditions and psychosocial risks

The CSA report emphasizes that workplaces are also contributors to mental health problems through psychosocial risks such as excessive workload, poor leadership, bullying, low job control and exposure to trauma.

The report finds that many mental disorders, including mood, anxiety and substance use disorders, begin in adolescence or young adulthood and can shape long-term employment trajectories and income stability, according to the report.

The issue is not going to go away, says Morawczynski, and younger workers “are demanding more in terms of services and supports and they’re more likely to leave a workplace if the conditions aren’t conducive.”

Morawczynski says every organization should conduct a basic assessment around psychological health and safety to understand how psychosocial hazards are showing up for workers. She says employers can do this within an employee engagement survey if they know what to look for, pointing to the existing “Psychological health and safety” standard as a helpful tool.

“It doesn’t have to be expensive or a crazy process,” says Morawczynski. “Getting started and getting an understanding of what’s going on is critical.”

What prevention can look like for employers

The report identifies two foundational reforms to reverse the cost trajectory: achieving mental health parity, so that mental health receives funding, coverage and accountability equal to physical health; and reorienting the system toward prevention by shifting resources upstream into workplaces, schools, primary care and community settings.

For employers specifically, Morawczynski points to three “baseline foundation” steps that organizations should have in place as a minimum to control costs. First is adequate support within the context of benefits so not simply $500 a year, she says, ensuring that mental health benefits are sufficient, in place and well communicated.

Second is conducting psychosocial hazard assessments “to understand within the context of your work environment what hazards are impacting your people and how and who,” says Morawczynski, recognizing that different hazards affect different individuals in different ways.

She notes that Canada is moving toward integrating psychological safety into occupational health and safety legislation, with most provinces starting to update their OHS laws to protect not just physical but also psychological safety.

Third is training managers so they understand how to identify signs of distress and offer support and what resources exist, such as an EAP, says Morawczynski.

“I did not find that a lot of organizations really invest in training their leaders around mental health and ensuring their leaders know how to support employees… [and] a lot of them didn’t know exactly what types of resources companies were paying for.”

She says properly investing in prevention, innovating around new preventive mental health services and tracking outcomes such as disability leaves, turnover and workers’ compensation claims are key steps if employers want to move more spending upstream and “get some of these costs down.”