A recent report from Safe Work Australia has put forward the economic case for good work health and safety (WHS) systems and practices, suggesting a strong link between business success and investment in WHS.
“There is a strong case to be made that Australian businesses need to invest more to protect employees from accidents, and to protect themselves from the costs associated with workplace injury,” Professor Peter Gahan, author of the report and director of the Centre for Workplace Leadership told HealthCanal on October 24.
The report was commissioned by Safe Work Australia and put together by the Centre for Workplace Leadership, a joint initiative of the federal government and the University of Melbourne. It may contain some essential insights for industry leaders, regardless of what industry they are in.
The economic case for improved WHS
The Australian economy could be paying a high financial price due to otherwise avoidable workplace fatalities, injuries and illnesses, according to the report.
“Although Australia’s WHS performance rates favourably internationally, the costs to the Australian economy associated with work-related death, injury and illness are significant,” stated the report.
Many of the figures compiled by the report are striking. For example, the most recent estimates put the cost of workplace injury and illness at 4.8 per cent Australian GDP – in other words, more than $60 billion a year.
The costs of poor safety practices and low-quality equipment are not simply measured by money, however. According to the report, safety issues can have a significant effect on the competitiveness and economic performance of national economies. The International Labour Organisation, a UN body cited in the report, found a correlation between workplace fatality rates and a country’s position on the World Economic Forum’s Global Competitive Index.
Making the business case for WHS
The report notes the importance of re-framing WHS as a business issue, arguing that this would lead businesses to invest more in improving WHS processes and highlight the impact of poor WHS on a company’s finances.
It noted that the economic cost of work-related fatalities is somewhere between $11 million and $19 million annually. Not only that, but a number of studies cited in the report suggest that even this number may be a conservative estimate due to uncompensated injuries and illnesses, hidden costs and the widespread underreporting of WHS incidents.
Apart from monetary values, however, WHS was also linked to a number of more intangible workplace benefits, such as productivity.
“In the Australian context, a study conducted by Medibank Private in 2005 reported survey data that found the healthiest employees in the sample were three times more productive than the least healthy,” the report stated.
This was part of an effort to re-orient discussion of WHS toward a more positive direction.
“This report lifts the debate from the traditional but understandable focus on the costs of workplace incidents to also recognise the benefits to business productivity of good work health and safety,” Safe Work Australia Acting Chief Executive Michelle Baxter told HealthCanal.
Other benefits associated with improved WHS were increased shareholder value and reduced public scrutiny.
This is certainly reflected by the ongoing public and media focus on the Pike River Mine accident in New Zealand, which took the lives of 29 miners. The accident, which happened back in November 2010, remains a highly publicised and contentious issue in the industry.
The mine went out of business shortly after the accident and its current owner, the state-owned Solid Energy, has surrendered the permit to the mine after purchasing it in mid-2012.
Not all workplace accidents in resource mining or other industries are as likely to receive such media attention. This case and the report, however, suggest that there is certainly an advantage to be gained by firms who optimise their safety practices and make use of quality materials handling equipment.