Implementing sound occupational safety and health policies makes good economic and business sense. A number of large and small companies, particularly multinational companies, have found that the economic benefits of being certified on safety, health and environmental management systems outweigh the costs involved.
Column by NSSA
Millions of workers all over the world are diseased, maimed or die every year as a result of workplace hazards. The suffering is enormous. The economic costs of failing to ensure occupational safety and health are so great that they may undermine national aspirations for sustainable economic and social development.
Improving occupational safety and health is in the best interests of governments, employers and workers.
Successful safety and health practice is based on collaboration, dialogue and goodwill of management, workers and other stakeholders concerned.
A significant reduction in the incidence of occupational accidents and diseases over a reasonable period of time produces valuable economic benefits.
Paying attention to occupational safety and health should therefore be given a high priority not only on moral but economic grounds.
There is a clear business case for action on safety and health at work. Studies carried out in the developed world have shown that for every dollar invested in occupational safety, health and environmental management there is two dollars return on business.
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Good management of employees’ safety and health reduces the number of mistakes and the cost of correcting problems. It also reduces the level of risk and ensures compliance with safety and health legislation.
Improved safety and health performance reduces the costs associated with accidents.
Improved awareness of regulatory requirements reduces the likelihood of contraventions of the occupational safety, health and environmental laws in every sector of the economy.
By non-compliance, a business runs the risk of litigation and can pay hefty fines.
Taking risks is part of running a business. However, risks should never be taken with the safety and health of workers as every human being is entitled to only one life on earth.
If employees see that their employer is actively looking after their safety and health, this is good for labour relations and for employee morale.
When a serious accident or fatality occurs in the workplace, a negative message is sent to employees that management does not care.
The more frequently accidents occur the greater the likelihood of this negative message taking root in workers’ minds and adversely affecting morale.
Where worker morale suffers this usually has a negative impact on the quantity and quality of the work they perform. Employee turnover often increases after a serious accident and almost always after a fatality.
Serious work accidents, particularly where deaths occur, also have a negative effect on a company’s image.
On the other hand where members of the public see that a company is taking a responsible attitude towards its workers, this helps generate a positive image for the business. Company reputation is an important factor in a company’s long-term success.
Where it can be demonstrated to insurers that risks are being effectively controlled, this helps lower insurance premiums. Banks and investors are also likely to be more willing to finance a business that can be shown to be well managed. Business partners will also have more confidence in the business.
Large companies and government agencies may only buy from businesses that can show effective management systems.
Certification to recognised international standards such as Occupational Safety and Health Assessment Series 18001 (OHSAS 18001) and ISO 14001 on environmental management gives increased access to new international markets and customers.
When it comes to safety and health, you can pay now or pay later with interest. It is smart business to invest in safety and health prevention before an accident occurs.
For every reactive dollar spent on the direct costs of a worker’s injury or illness, much more is spent to cover the indirect and unknown costs associated with the injury or illness. This is explained by the iceberg theory illustrated below:
- Compensation insurance
- Medical expenses
- Indirect costs
- Production down-time including startle time.
- Productive time lost by an injured employee.
- Productive time lost by workers and supervisors helping the accident victim.
- Clean-up and start-up of operations interrupted by an accident.
- Time to hire or train workers to replace the injured or killed workers to suitable competence levels.
- Time and cost for repair or replacement of damaged equipment or materials.
- Cost of continuing all or part of the employee’s wages, plus compensation.
- Reduced morale and lower efficiency.
The direct costs of accidents, the tip of the iceburg, are usually considered those costs covered by workers’ compensation insurance and other minor medical expenses for the accident. The company pays insurance to cover these costs.
The indirect costs are usually greater than direct costs; from two to 50 times as costly. Unlike direct costs, indirect costs are uninsured.
They come right out of the corporate pocketbook. These are the costs that can drive a company into the red.
An example of safety issues negatively affecting business is Mhunga Bus Company, which was one of the biggest bus operators in Zimbabwe before a series of bus disasters claiming hundreds of lives drove the company into the red.
Companies reluctant to invest in safety
DESPITE the damage that accidents can do to a company’s business prospects, many companies are reluctant to spend the money needed to promote safety and health. Such expenditure may range from purchasing protective clothing to hiring a safety, health and environmental professional or creating a safety, health and environmental department.
Occupational safety and health budgets may be substantial. However, the expenditure is likely to result in long-term benefits and may turn out to have been essential for a company’s business growth and survival.
- Talking Social Security is published weekly by the National Social Security Authority as a public service. There is also now a weekly radio programme, PaMhepo neNssa/Emoyeni le NSSA, discussing social security issues every Thursday at 6.50 pm on Radio Zimbabwe. Readers can e-mail issues they would like dealt with in this column to [email protected] or text them to 0735 041 278. Those with individual queries should contact their local NSSA office or telephone NSSA on (04) 706517-8 or 706523 5.