Mental health issues, sickness absence, and work-related stress costs Sheffield's economy more than £1 billion a year, a review of how the city is performing has found.
The annual State of Sheffield report showed that the city made one of the first attempts in the country to integrate the health and employment systems more effectively.
But it said more work was needed to align the city's programme after almost 100,000 days were lost to work-related stress, depression or anxiety.
The report said: "Across the Sheffield City Region organisations have secured over £18 million to trial new ways of reconnecting sick and disabled people into the world of work. This is one of the first concerted attempts anywhere in the country to integrate the health and employment systems more effectively.
"Nevertheless sustained effort will be required in strategically aligning this programme and to make it easier for residents, clinicians, employers and communities to take advantage of
these as part of our efforts to develop an inclusive economy."
The report, published by the Sheffield City Partnership board, said health problems were also restricting the city's ability to secure an inclusive economic growth.
Greg Fell, Sheffield's director of public health, said while the figure may seem high, support services were available across the city.
He said: "The figure is taken from a piece of work commissioned by Public Health England which showed that the national cost of mental health issues was about £106 billion.
"One of the things that makes Sheffield so great is that it is home to one per cent of the UK's population so it's quite a conservative estimate that it's cost Sheffield's economy about £1 billion.
"You would never be able to count in cash the true cost because it's work that doesn't happen. The point is that the link is now being made between how healthy we are and the economy is performing."
The report also said the health of the city needed to improve if a more inclusive economy was to be achieved and changes to Sheffield's so-called 'gig economy' - a labour market made up of short-term contracts - needed to be made.
Mr Fell added: "It's all about pushing the debate from core services in health, which are undoubtedly important, to what makes us healthy and a big part of that is having a good job.
"There is never enough support out there and that is because there is such a chronic under funding in mental health issues but that's not just a Sheffield problem, it's a national issue.
"But invariably, what services we do have are very good."