Safety and health at work is everyone’s concern. It’s good for you. It’s good for business.
Benefits of OSH for small businesses
Dr. Dietmar Elsler, EU-OSHA
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Why focus on small and medium-sized enterprises?
Small and medium-sized enterprises (SMEs) are the backbone of Europe’s
economy
They are responsible for 67 % of employment
Unfortunately, their workers are disproportionately likely to suffer as a result of
poor occupational safety and health (OSH)
82 % of occupational injuries and 90 % of workplace fatalities happen in
SMEs
SMEs face particular challenges when it comes to OSH. An SME is likely to
have more difficulties in resourcing and implementing a safety and health
policy than a larger company
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Business case at enterprise level
Return on prevention (ISSA, 2011)
2.2 EUR return for every Euro invested in OSH
BenOSH (2011): cost-benefit ratio 1.36 – 2.70
Economic benefits of workplace health
promotion and prevention (IGA, 2009):
cost-benefit ratio 2.3 – 5.9
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Looking at the business case for OSH
Profit alone is rarely a motive for implementing an OSH initiative
As well as looking after the employees, reputation and compliance with the law
are bigger factors for businesses
SMEs tend to see OSH as a burden on operating costs
However, greater awareness of the link between improved OSH and higher
productivity/cost savings could help to encourage SMEs to take action
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The new case studies
For this reason, EU-OSHA worked with partners across Europe to develop 13
new case studies looking at OSH initiatives in SMEs
A business case was put together for each intervention, examining all the costs
and benefits directly attributable to the changes made
This meant that they could be assessed from a purely financial point of view
11 of the 13 interventions studies were profitable by the end of the five-year
period chosen for evaluation
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Case study 1: The company and the issue
Statga, in Lithuania, manufactures office furniture
The company employs around 90 people
The workers complained that the ventilation system and respirators in use
were inadequate
The company investigated and found that the workers faced occupational risks
such as:
inhalation of dust, fumes and metal particles
injury to the face and eyes from metal particles
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Case study 1: the intervention
The management and the workers worked together to solve the problem
Research was undertaken and various safety systems were tried out until a
preferred option was found
Individual air cleaning and supply systems with face shields were the solution
that was arrived at
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Grinders (left) and painters (right) before and after the
implementation of new system
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Case study 1: The results
From a purely economic point of view:
The new equipment saved money on spare parts and accessories
An average annual saving of just over €450 per worker was achieved
The payback period was one year.
Even without taking into account less direct or harder to calculate effects such
as increased motivation and productivity and decreased sick leave, the
initiative was financially beneficial
From an OSH perspective:
The workers felt safer and more comfortable
Morale improved
The intervention was nominated for a national good practice award
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Case study 2: The company and the issue
Kwekerij de Lindenborg is a cucumber cultivation company in Breda, the
Netherlands, employing 3 permanent workers and seasonal staff
Picking and processing cucumbers is physically demanding. Before the
intervention, it involved:
lifting and moving heavy containers
adopting awkward postures
performing repetitive movements
With workers getting older and the firm planning to expand, the owner, fearing
an increase in musculoskeletal disorders among his employees, decided to
tackle these issues, which lowered productivity and resulted in high rates of
sickness absence
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Case study 2: The intervention
The company worked with a supplier to develop a new system to make the
work easier
Prototypes were tested and the old trolley system, which involved heavy work
and awkward postures, was replaced
The new system eliminated much of the bending and lifting that had previously
been required
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Case study 2: The results
From an economic point of view:
Sick leave caused by work-related MSDs was reduced by 20 %
Picking became 15 % more efficient
Sorting became 5 % more efficient
The investment was earned back in a little over four years
Fewer cucumbers were damaged using the new system
The intervention enabled the company to grow sustainably
From an OSH perspective:
The work became less physically demanding
Sustainable employability improved
Employees reported feeling more comfortable during their work
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Case study 3: Backing healthy backs
Issue
Fußboden Brandenburg is a parquet reclining company with six employees
Laying carpet, laminate or flooring is heavy work
Long sick leaves can threaten the existence of the business
Action
Specialists of IKK Nordrhein developed a back pain prevention programme
workers were trained in better manual handling of loads and in respecting their individual limits to avoid overstrain
In addition, various lifting aids were purchased
Results
Doing back exercises has become routine in the company.
A before / after comparison in the guided intervention showed positive training results of all workers.
Since five years, the workers have not missed a single day because of back ache or muscular complaints.
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Business case: Fußboden Brandenburg
Average absence figures due to work incapacity in the German crafts
(2003):
Workers were on sick leave for 14.9 days, of which ¼ were attributed to
musculoskeletal disorders (MSDs), making 3.7 days or 29.6 hrs
For the company Fussboden Brandenburg this means:
• 3 skilled workers (35€/h) 2664.00
• 1 manager (100€/h) 2960.00
• 1 apprentice (23€/h) 681.00
• 1 office worker (30€/h) 888.00
• Reorganisation 150.00
• SUM: 7243.00 Euro
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Investment for training and equipment
Investment costs at fußboden brandenburg:
• Training: paid by health insurance association IKK
• Exemption from work 0,5 h x 24 d:
• Skilled workers (3, 30€/h)
• Apprentice (1, 23€/h)
• Office worker (1, 30€/h)
• Owner (1, 100€/h)
• SUM: 2916,00
Work equipment:
• High rack storage: 1500
• Used fork lift with thorn: 5000
• Crank lift: 200
Recurrent costs:
• Annual refresher training (ca. 1500)
• Breakfeast for all (no additional costs)
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Economic benefits
A cost-benefit analysis, calculated for four years at a
discount rate of 4% gave the following results:
• Pay-back period (years) 2.16
• Return on investment 31.00%
• Net present value 6,864.50 Euro
• Profitability index 1.71
• Benefit-cost ratio 1.80
Pure consideration of health costs makes
intervention already profitable
Non-tangible costs, such as improved motivation and
increased productivity have not been considered
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Conclusions from the new case studies
When all the costs and benefits are taken into account in a business
case, OSH interventions are often shown to be highly profitable
Wide ranging scope interventions, transferable to a broad range of
risks, appear to be more profitable than those tackling a highly specific
problem
In general, interventions consisting mostly of training and
organisational change tend to be particularly profitable
Further research on successful, widely applicable interventions would
be of value
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How to motivate employers?
How to reach the workplace?
Regulation: Command and control• Only guarantees a minimum level
• Problem of enforcement, not enough inspectors
• Costly to take companies to court
Information about good practice• Preaching to the converted
• Does the SME around the corner look on our
website every day?
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Incentive model in German butchery sector
Preventive approach
Tangible measures
Bonus Points (can reduce premium by 5%)
Technical measures
Use special safety knives
8 points
Organisational measures
Road safety training for drivers
8 points
Individual measures
Use skin protection agents
6 points
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Incentive model in German butchery
sector
50
60
7080
90
100
2001
2002
2003
2004
2005
2006
2007
year
accid
en
ts p
er
1000
FT
E
participants ca. 8000 non-participants 12000
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A review of case studies evaluating
economic incentives
Butchery sector incentive scheme leads to
ca. 1000 accidents less/year
Costs for incentives € 8.32 Mio Euro
(6 years, 2002-2007)
HSE estimates 6670 € costs for each
reportable accident
Business case
• 6000 accidents X 6.670 € = 40.02 Mio €
4.81 € savings for
every 1 € invested
Elsler D, Treutlein D, Rydlewska I, Frusteri L, Krüger H, Van Den Broek K, Veerman T, Eeckelaert L, Roskams N,
Taylor TN (2010). Scandinavian Journal of Work, Environment & Health
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Society perspective:
Who pays the cost of an accident?
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Company perspective:
Investment in safer machinery
Machine A
Good performance
Fits to legal requirements
But
Is very loud
Bad usability
Cost: 10,000 Euro
Machine B
Good performance
Fits to legal requirements
But
Is more silent
Good usability
Cost: 12,000 Euro
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Who pays the difference of € 2000?
Insurance premium variations
• Occupational accidents and diseases
• Specific risk of sector
• Prevention activities such as training, investments,
personal protection measures
Tax incentives, e.g. better write-off conditions
Better banking conditions, e.g. lower interest
rates
State subsidies, e.g. for innovative investments
or reorganisation
Certification of OSH managment systems (e.g.
reimbursement of certification fees)
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Report on economic incentives
European countries could benefit from more economic incentives!
Incentive schemes can reduce accident rates significantly:• Agriculture Finland: 10 %• German butchery sector: 12 %• INAIL bank loans: 13-25%
Exchange of European experience leads to new incentive schemes
More on the web in 22 languages:http://osha.europa.eu/en/topics/economic-incentives
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Structure of Incentives Guide
Analysis of social frameworks and financial conditions
Developing a strategy for an incentive scheme
Defining target group and areas of action
Developing effective incentive schemes
Promoting incentive schemes
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Conclusions
We need both: promotion of the businesscase and external economic incentives
Make business case more clear for SMEs
External economic incentives can• Be effective in all EU countries• Be attractive for SMEs• Promote also health, not only safety
The EU-OSHA project has stimulated a mutual learning process between economicincentives organisations, e.g. Italy, France, Finland, Switzerland, Cyprus
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Thank you very much for your attention!Dr. Dietmar Elsler, http://osha.europa.eu/, [email protected]