Sunday, January 11, 2009

Workers' Compensation and Recession

The current economic situation is having a significant impact on workers' compensation systems as well as the workers and employers they serve. The obvious impacts are straightforward:
  • fewer people working means fewer injuries and claims
  • lower revenue due to lower payrolls and more business failures
  • fewer jobs to return to adding pressure to claim duration
On the finance side, lower returns on investments put pressure on investment returns and reserves. Assuming injury rates remain constant in all sectors, past recessions have seen pressure on safety training budgets, equipment maintenance and investment in new, safer equipment. These may increase risks... but may not increase injury rates.

In both union and non-union firms, the first to be laid off during an economic contraction are often new workers--workers who tend to be young. We know that injury rates (for males, at least) generally decline with age. Younger workers are more likely to be injured than older workers but older workers are more likely to be off for longer periods of time. This makes sense since older bodies take longer to heal from similar injuries and older individuals often have co-morbidities--conditions (diabetes, obesity, high blood pressure, etc.) that may prolong recovery.

Despite the bad news, it is important to keep focused on the task and mandate of workers' compensation. Even as unemployment rises, the vast majority of those in the labour force are still employed. They continue to need the services of prevention, compensation and rehabilitation organizations.

Economic cycles will ebb and flow; work-related injuries may occur at any point in that cycle and last a lifetime ... or end one. Workers' compensation systems must be vigilant, responsive and committed to their mandate throughout economic booms and recessions.

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