Learning about safe work methods, duty of care, and conducting hazard assessments is part and parcel of working in the construction industry, with decades of Government regulations and industry reforms pushing the sector to adopt higher standards to ensure employee safety. We all know what a safe workplace looks like, and the vast majority of us constantly work hard to keep our offices, sites, depots and workshops safe for our employees.
However, in our notoriously high-risk industry, accidents are still frequently happening, at a significant cost to individuals, businesses, and the economy.
Whether it’s a minor musculoskeletal injury or a tragic fatality, the immediate impact of workplace injuries on staff is plain to see. The hidden costs, on the other hand, do not get as much airtime.
Let’s take a look at the aspects of your business that are negatively impacted by workplace injuries, and the knock-on effects on the overall economy.
$400 Million Productivity Cost
Safe Work Australia reports that there were 6.9 million work-related injuries and illnesses that occurred between 2008 to 2018. This caused a 2.2 million FTE productivity loss between 2008 to 2018, and on top of this, employers incurred $49.5 billion in productivity and efficiency losses following work-related injuries.
The report goes on to note that in the construction industry alone, well over 50,000 work hours were lost, at a cost of nearly $400 million.
These employer overheads were incurred from both paying out workers’ compensation claims, and the costs incurred from hiring and training new staff.
What Are The Impacts?
Along with the direct costs of workers compensation and insurance premiums, there are several areas that experience a negative ripple effect whenever an employee is injured.
- WHS Authority Fines – potential fines for breaches of safety legislation, unsafe equipment or procedures, or failure to meet duty of care responsibilities
- Additional Administrative Resources – legal counsel, medical advice, 3rd party consultants, additional HR costs
- Economic Losses – inability to meet customer deadlines, or project delays and blowouts due to lower staff capacity
- Efficiency Losses and Lower Margins – hiring and training new workers, reduced quality and productivity due to the loss of experienced staff and accommodating an injured workers’ physical limitations can all affect your bottom line
- Increased Insurance Premiums – workers compensation insurance premiums are likely to increase
- Equipment Damage – often injuries can involve plant and equipment that then needs repair or replacement, such as bent pallet racking from a forklift accident, or a rollover of an EWP
- Lower Staff Engagement – serious injuries to workmates can be particularly hard on your workforce, causing additional distraction, worry and stress about their injured colleague and their own safety
- Damaged Reputation – high profile injuries quickly reach the media. Bad publicity can damage your brand and potentially impacting future sales
- Productivity Cost for Safety Officers – don’t underestimate the time and effort required to manage an injury! From phone calls to paperwork to meetings to consultation with other staff and advisors – even minor injuries can drag your focus away from your core work.
What Can Businesses Do?
Any time an employee is injured on site, expenses begin to mount, the cost of doing business increases, admin increases, and productivity drops.
And, when a worker experiences a work-related injury or illness, it is not only the individual and their community that suffers, it is the wider Australian workforce that loses the opportunity to access more and better jobs with higher wages.
The Safe Work Australia report goes on to note that by removing work-related injuries and illnesses, Australian wages increase, with productivity gains driving a broad uplift in income to labour across all occupation types. This is particularly revealing given we often lean on the industrial relations framework to tackle issues relating to wages and productivity growth. This suggests that work, health and safety (WHS) has a substantial role to play in contributing to Australia’s economic prosperity.
At the individual level, every business or PCBU has a duty under WHS law to properly protect their worker’s health and safety on site. From early identification of hazards to providing adequate training – including refreshers to avoid complacency – knowing what’s at stake gives us all a strong motivation to minimise risks and reduce the staggering costs of workplace injuries and illnesses.