In considering the economics of an unhealthy and unsafe workplace, it is necessary to identify the costs that fall upon organizations that are not keen to manage health and safety. The economic costs of work related accidents would include:
1) Costs of wages paid to an injured person who is unable to work for a given number of days.
2) Cost of wages paid to people who were unable to continue work because they relied on the injured persons aid or output.
3) Cost of wages paid to persons who were unable to continue with work as they assisted the injured person.
4) Cost of material or equipment damage resulting from accidents.
5) Supervisor’s time spent assisting, investigating, reporting the accident and re-assigning work.
6) Cost of training or instructing a replacement worker and making other necessary adjustments
7) Medical cost of the injured to the company.
8) Cost of decreased output by the injured worker after returning to work.
8) Cost of over time necessary to make up for lost production.
10) Cost associated with loss of revenue on orders cancelled as a result of the accident.
The above list of economic costs demonstrates that designing and maintaining a safe work environment can improve productivity by reducing time lost because of work related accidents as well as by avoiding the cost present in every work related accidents and illness.
Studies indicate that the cost of industrial accidents can take as much as 37% of profits and 5% operating costs.
A healthy and safe environment can reduces operating costs and improve organizational effectiveness. Managers should therefore apply the same efforts and creativity to designing and maintaining a healthy and safe work place as they customarily apply to other facets of the business.
Accident and illness prevention programs can be integrated into the overall economic activity of the firm.