Poor Workplace Health and Safety Costing Billions

MoneyThe economic cost of work related injury and illness in Australia is estimated to be costing $60 billion a year in lost productivity or just under 5% of Gross Domestic Production (GDP).

A report released by Safe Work Australia (2012) showed the true cost to Australian business of poor HSE practices is significant.

A lost time to injury (LTI) is defined as an occurence that resulted in a fatality, permanent disability or time lost from work.

Find a copy of the Workplace Injury and Disease Recording Standard (AS1885.1-1990)

On average just 25 per cent of the total cost of work–related injury and disease is due to the direct costs of work-related incidents. The remaining 75 per cent was accounted for by indirect costs such as lost productivity, loss of income and quality of life according to the Industry Commission.

The costs associated with work-related injury and disease will vary depending on the severity of the incident. Severity can range from minor incidents involving little or no absence from work to fatalities. In addition, whether an incident results in an injury or disease will also be a determining factor on the cost structure of the incident.

Costs associated with lost time due to workplace injury are direct and indirect. They include recruitment, training and staff turnover costs; investigation, legal fines and penalties as well as overheads of rehabilitation such as medical costs and travel expenses. You can also include overtime costs, workcover deductablesa, lost production.

There are also financial imposts felt by the public purse which picks up incapacity costs such as those to fund carers, aids, medicine, hospitalisation, loss of future government income (taxes), welfare and export earnings. Generally, it is the case that the more severe the incident, the longer the time taken to recover and return to duties. Further, the more intensive the medical treatment required, the higher will be the costs associated with the incident.

The resulting impact on Australia’s international competitiveness is immense and yet largely avoidable. Australia has some of the most prescriptive, detailed and, with the new harmonisation of OHS, progressive laws in the western world.  If more Australian businesses chose to adhere to those laws and use as guides to healthy and productive workplaces rather than as simply a check list for compliance there would be a positive impact on the number of work days lost to injury or disease.


About the Author

Safety Concepts is an online resource providing up to date insights and covering issues in the field of Workplace Safety.

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