Friday, March 29, 2013

Is now a good time to invest in greater occupational illness and injury prevention?

The global economic crisis brought terms like Gross Domestic Product (GDP) from the financial section of your weekend paper to the lead headlines on the evening news.    Even the non-economists among us are more in touch with the standard definition of a recession (a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP) because of what it means in real, everyday terms to our communities and our families.
In the current environment where economic growth is being measured in parts of single percentage points of GDP, many are searching for ways to stimulate growth.   Some argue for cutting red tape and reducing “impediments” to business.  A few even suggest cutting safety and health rules, inspections or enforcement.  It begs the question, is now the time to reduce our focus on OH&S?

A few years ago, the Australian National Occupational Health and Safety Commission (NOHSC) estimated the total direct and indirect cost of workplace injury and illness to the Australian economy at 2000–01 reference year to be $34.3 billion.  That is the equivalent of 5 per cent of Australian GDP.  I was taken aback by the size of this estimate. It made me wonder what the estimate might be for other jurisdictions. 

Last month, László ANDOR, European Commissioner responsible for Employment, Social Affairs and Inclusion, spoke at the Institute of Occupational Safety and Health 2013 conference in London.  His talk separated the myths from the facts about OH&S.  He noted a recent study by the European Agency for Safety and Health and Work that puts the occupational injury and disease loss to the European economy at between 2.6 and 3.8% of GDP.

The International Labour Organization (ILO) in its 2003 Safety Culture at Work study pegged the cost of work-related injury and illness at 4% of the global GDP.  Estimates put the figure at about 3% for the largest economy on earth, the United States. 

These estimates converge on about 3% of GDP average.  Economic growth at that level would be considered healthy in most developed economies.  Recent estimates of current annual growth rates for Canada, Australia and the US are all under that level.  If we could eliminate the direct and indirect costs of workplace injury and illness, the benefits are obvious. 

If more evidence is needed, another study (the Socio-economic costs of accidents at work and work-related ill health [European Commission 2011]) study found, the median value of the profitability index for investments in occupational safety and health (the ratio of pay-off to investment in a particular project ) ranges from 1.29 to 2.89.  Fabulous results for any investment!

Working toward greater health and safety particularly in the low growth, post recessionary period, is not just good for workers, it is good for the economy.  


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Steve Lucci said...

Could not agree more Terry. Here in the states the hard costs associated with poor Work Health systems continue to rise - fueled by the continued occurrence of preventable injuries - disconnected and inefficient SAW/RTW stakeholder groups- fee for service models that drive services vs. evidence based solutions - and a disability system that too often focuses on what people CAN'T do vs what the CAN DO!

(Terry- Thanks again for your great work on the blog! I would love to chat sometime if your schedule permits!)