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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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http://osha.europa.eu

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]

http://osha.europa.eu/

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