One approach advocates often take in calling for better worker protection is to point to the high costs of work-related injuries and illnesses—whether borne by injured workers and their families, employers or society at large. For employers, the financial consequences are tied to lost productivity, staff replacement, property damage, higher insurance premiums or workers’ compensation surcharges, to name only a few.
It’s a compelling argument, and estimates of the costs of work-related injuries and illness are readily available. A 2013 literature review by Quebec’s Institut de recherche Robert-Sauvé en santé et en securité du travail (IRSST), for example, found 40 studies (the first going back to the 1930s) that estimated the costs of work-related injuries using empirical data.
Not as easy to find are estimates of the amount employers spend to control or eliminate the causes of these work-related injuries and illnesses. When a team of researchers at the Institute for Work & Health (IWH) recently set out to conduct such an estimate, it found limited information on what employers spend on average on occupational health and safety (OHS).
This information is important to better inform public policy aimed at influencing employer investments in OHS, says Dr. Cameron Mustard, president and senior scientist at IWH and lead investigator on this project.
It was remarkable to us that estimates of employer expenditures to protect the health of workers were not widely available.
As a result of the team’s work, estimates of employer OHS expenditures are now available for 17 sectors in Ontario. The cross-sector average in 2017 was $1,303 per worker per year. OHS expenditures per worker per year were three times higher in the goods-producing sectors ($2,417) than in the service sectors ($847). These results are reported in an open-access paper published online in October by the Scandinavian Journal of Work, Environment and Health (doi:10.5271/sjweh.3778) and summed up in a recent IWH Issue Briefing.
Five areas of OHS spending calculated
To gather data on employer investments, the research team recruited more than 300 employers with more than 20 employees from 17 economic sectors, taking care to ensure that the sectoral make-up of the participating employers roughly mirrored the make-up of the province’s economy.
At each organization, the team asked a representative knowledgeable about the organization’s OHS programs to complete a workbook. Based on a method developed and tested by the International Social Security Association (ISSA), the team asked the representative about staff time commitments and financial expenditures in five areas: organizational management and supervision; staff training in health and safety; personal protective equipment; professional services provided by external organizations; and the share of new capital investment attributed to OHS improvements. Not included in these estimates are employers’ workers’ compensation premiums; these are not strictly related to OHS prevention but, rather, are costs related to wage-replacements, Mustard explains.
The results show that the share of spending in each of the five categories was roughly the same across sectors. Across all sectors, the largest share of OHS expenditures went to organizational management and supervision, accounting for about 55 to 62 per cent of total OHS spending. What’s more, JHSC activities accounted for a third of the payroll costs captured in this category.
These findings show the importance of employer investments in the overall worker protection system, says Mustard. If the average estimate of $1,300 per worker per year is extrapolated to all employers in Ontario with 20 or more employees, then employer spending on workplace health and safety is somewhere in the range of $5 billion dollars a year in the province, he notes. That’s well above the yearly amount of $200 million spent on government prevention services, including labour inspection and enforcement services. The aggregate OHS expenditure for employers in the Ontario economy is also greater than the annual benefit payments of $2.7 billion provided by the Ontario Workplace Safety and Insurance Board to workers who have experienced a work-related injury or illness.
A clearer understanding of employer expenditures to protect the health of their workers can help us better understand the significant progress made over the past decade in workplace injury prevention, adds Mustard.