Workplace safety is a fundamental aspect of any industry. However, we often underestimate the true costs of an industrial accident. Beyond physical injuries and compensation, there are numerous hidden or indirect costs that affect businesses and society at large. In this article, we will explore the magnitude of these costs and the importance of safety technology in mitigating them.
The human and economic cost of industrial accidents.
The statistics are clear: according to the International Labor Organization, more than 2.78 million workers worldwide die each year due to industrial accidents or occupational diseases, and approximately 374 million suffer non-fatal occupational injuries. These figures represent an unacceptable human tragedy. But in addition to the human cost, industrial accidents also impose a significant economic burden. According to estimates, poor occupational safety and health practices account for about 4 percent of the world’s gross domestic product annually.
Direct and Indirect Costs of Industrial Accidents.
When analyzing the cost of an occupational accident or when considering the return on investment in safety technology, it is critical to understand that the overall costs of occupational accidents and diseases go far beyond what is seen in the short term. They are divided into direct costs, which involve immediate cash outflows, and indirect costs, which do not represent immediate expenses but impose additional outlays on the operation of the company.
- Indemnity payments.
- Medical expenses and treatment.
- Legal and general charges.
These costs are usually borne by insurance companies through compensation premiums.
Indirect or hidden costs:
- Cost of time lost by injured workers.
- Cost of time lost by other non-injured workers, who stop working out of curiosity, sympathy or to help the injured worker.
- Cost of time lost by supervisors or executives.
- Cost of time spent by first aid personnel or members of the nursing unit when they are not paid by the insurance company.
- Cost due to damage to machines, tools and property.
- Cost due to interference with production, failure to meet orders on time, loss of bonuses, payment of fines.
- Cost of continuing to pay full wages to employees even though they work for less than the full working day after returning to work.
- Loss of profit due to worker productivity and idle machinery.
Different Perspectives on Insured and Uninsured Costs.
Simonds’ (1955) approach argues that the distinction between direct and indirect costs based on the type of accident is inappropriate. Instead, he proposes to categorize them as insured costs (borne by insurance companies) and uninsured costs (covered by the company and society). This simplifies the understanding of the costs associated with occupational accidents.
The Elements of Production Method, similar to the previous one, breaks down costs into five productive factors:
- Labor cost: reflects the cost of the time of the workers involved in the accident.
- Machinery and tools cost: includes the cost of damage to machinery and tools.
- Material costs: considers losses of raw material, material in process and finished products.
- Cost of facilities and equipment: includes costs for damage to buildings and facilities.
- Time costs: represents the cost of working hours lost due to the accident.
The sum of these costs weighted by the time lost in production forms the total cost.
The cost-effectiveness of investing in occupational health and safety.
Safety technology plays a key role in reducing these costs. Investing in prevention and protection measures not only saves lives, but also improves the performance, productivity and well-being of workers.
In short, the true costs of an industrial accident go beyond injuries and compensation. They include human, social and economic costs, as well as direct and indirect costs. Investment in safety technology and accurate data collection are essential to mitigate these costs and ensure a safer and more productive work environment. Safety in the workplace is not only a moral duty, but also a smart investment.