Portada DE-12446/2

Economic Impact of

Occupational Safety and

Health in the Member

States of the

European Union

European Agencyfor Safety and Healthat Work

European Agencyfor Safety and Healthat Work

Economic Impact ofOccupational Safetyand Health in theMember States of theEuropean Union

3

Members of the Thematic Network Group on National Priorities and Programmes

Austria: Ernst Piller Belgium: Luc van HammeDenmark: Jens Jensen Finland: Lars-Mikael BjurströmFrance: Françoise MurilloGermany: Ulrich Riese and Karl KuhnGreece: Matina PissimissiIreland: Sylvia WoodItaly: Maria Castriotta and Rita BisegnaLuxembourg: Robert KloppNetherlands: Rob Triemstra and Virginia HoelPortugal: António FonsecaSpain: Margarita Lezcano Núñez and Teófilo Serrano Beltrán Sweden: Bertil Remaeus and Elisabet DelangUnited Kingdom: Jeanie Cruickshank

Chairman: Hans-Horst KonkolewskyProject manager: Martin den HeldProject assistant: Dagmar Radler and Usua UribeAssistance was provided by NIA-TNO in the Netherlands

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TABLE OF CONTENTSPage

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Part 1. Considerations regarding the costs and benefits of OSH measures2. Topicality of costs and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143. Impact of Cost-benefit analysis in decision-making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164. Aims of Cost-benefit analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Part 2. The Economic Impact of Occupational Safety and Health Policy5. Methods and content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266. Costs of work-related illness and occupational accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287. Instruments with which enterprises can estimate costs and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Part 3. Use of financial incentives8. Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389. Financial sanctions as part of enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4210. Incentives in social insurance schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4611. Selecting contractors on the basis of OSH criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Part 4. European Level12. Initiatives at European level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Part 5. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Annexes.Annex I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66Annex II Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

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SUMMARY

Introduction

This report on the Economic Impact of OccupationalSafety and Health in the Member States of theEuropean Union summarises the second majorinformation project undertaken under the auspices ofthe Agency since it started work in September 1996.The aim of this project has been to produce anoverview of how economic factors are related to theformulation of occupational safety and health policyin the Member States.

The results from this project show that estimatingthe cost and benefits of OSH measures has becomean important issue in most Member States of theEuropean Union and that the attention paid to it isstill increasing. At the same time it should also berecognised that most Member States stress theimportance of ethical considerations when itcomes to the formulation of OSH policy.

Considerations regarding the costsand benefits of OSH measures

In some Member States the assessment of theeconomic impact is one of the standard pieces ofinformation considered in political decision-

making. However, the way economic assessmentinfluences decision-making varies from oneMember State to another. In general, in seekingconsensus with social partners, Cost-benefitanalyses (CBA) influence the solutions adopted;although several Member States clearly point outthat CBA are not the major factor in decision-making. Nonetheless it seems that the clarityprovided by economic assessments makes it easierto reach viable compromises. This methodologyserves as a quality check in which the efficiency ofa measure is considered systematically.

The Economic Impact ofOccupational Safety and HealthPolicy

In order to have information available about theeffects of measures (such as introducing new oradapting existing regulations) it is in manyMember States common to prepare an evaluationbefore introducing the legislation (ex ante). Insome Member States such an ex-ante impactassessment is done on a routine basis, andsometimes it is even mandatory. The scope of theassessments varies from country to country andmay also vary with the nature of the measure andthe severity of the problem in question.Assessment of other measures such as campaignsetc. occurs on a much lesser scale.

Measures can also be assessed afterwards (ex post).The goal of ex-post assessment can be to test theeffectivity and efficiency of the measure. The resultsof CBA after implementation can be used in adjustingthe measures in question. Usually it is legislation thatis assessed. Few countries evaluate other types ofmeasures in this way.

In ex-ante and indeed in ex-post evaluations thebenefits are hard to estimate. One of the problemsis that the benefits of prevention may only becomeapparent after a long time. In general it can be saidthat due to lack of reliable data and to difficulties inisolating relevant factors it is difficult to producethis kind of evaluation.

In addition to the approaches mentioned above it isalso possible to measure the performance of theexisting occupational safety and health systems inthe Member States. This can for instance be doneusing economic efficiency indicators.

Although this possibility exists it must be concludedthat this type of evaluation has so far not receivedmuch attention. In most Member States, no efficiencyassessment instruments for the occupational safetyand health system are available.

In order to assess the economic impact of OSHmeasures the underlying concepts of cost andbenefits have to be specified. Usually a cleardistinction is made between the costs of

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implementing OSH measures (prevention costs)and the benefits after implementation. Theapproach to assessing the costs and benefits variesfrom country to country and may also varyaccording to the nature of the measure. Avoidedcosts of illness is a common category in estimatingthe benefits. Reduction of health care costs and thecosts of rehabilitation are estimated to a lesserextent. On the whole there is little experience inquantifying effects on productivity and productquality.

In most Member States, the state or private healthinsurance organisations publish statistics on thenumber of occupational accidents and negativehealth effects on an annual basis. Usually, statisticson the numbers of working days lost and thenumber of disability pensions awarded as a resultof these occupational accidents and health risksare available too. Depending on the Member Statethere may be more information available. Althoughit is very likely that these statistics do not identifyall the costs of work-related illness completely,they are often used as a basis for estimating thecosts of work-related illness as a percentage ofGross National Product.

Some Member States themselves estimate thecosts of work-related illness as a percentage ofGross National Product. Reported percentagesrange from 2.6 to 3.8. Estimates were made forother Member States for the purposes of this

project. They are based on the total of reported dataon costs and on statistics. Percentages in thesecases ranged from 0.4 to 4.0. Regarding thepercentages mentioned it must be emphasised thatdue to differences in calculation methodscomparisons and bench marking between MemberStates is not possible at this moment.

For individual enterprises it is more important toknow if specific investment in OSH measures willlower their costs. In most Member Statesinstruments exist or are being developed that assistenterprises in these evaluations. The instrumentsused are often developed with the support ofnational administrations or with help frominsurance funds.

A specific problem has been recognised in relationto small and medium-sized enterprises. Theseenterprises mostly lack the financial and personnelresources to apply these methods appropriately.Large firms often have the resources to developthese methods themselves or have the funds to hireprivate advisory firms to develop these methods forthem.

Finally, it has to be concluded that no quantitativedata is available in the Member States about theextent to which these instruments that calculate theimpact of risks and OSH measures are used.

Use of financial incentives

Financial incentives can also be applied directly inorder to promote prevention measures. Three maincategories of financial measure can bedistinguished:

— subsidies;— financial penalties and administrative fines as

enforcement measures; — incentives in social insurance schemes.

Subsidies for individual enterprises can be used tolower the costs to employers of investing inpreventive OSH measures, and thereby promotethe development, sale or purchase and applicationof these measures. The results of the survey showthat in many Member States financial incentivesare provided by reducing the costs of technicalsupport or the establishment of subsidyprogrammes. Relatively little use is made so far oftax-based measures. However, all in all, positiveincentives to encourage the development, sale orpurchase of safe and healthy products, productionmethods, work organisation, machines etc. exist ina majority of Member States.

It also became clear that the effects of this kind offinancial incentive are evaluated in only a fewMember States. Regarding the future of subsidyarrangements, there seem to be different trends in

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Europe. In some Member States subsidy funds areunder pressure, while in others new measures arebeing introduced.

Another type of financial incentive to persuadeenterprises to undertake OSH measures involvesfinancial penalties (imposed by courts) andadministrative fines (imposed by inspectorates) aspart of enforcement. Member States have well-developed systems for the imposition of financialpenalties and administrative fines on individualenterprises. Nonetheless financial sanctions seemto be used in a rather moderate way. Compliancewith the legislation in enterprises is the mainobjective of enforcement.

There are some Member States that indicate thatthe level of the financial sanction is too low to workas a deterrent and that have taken steps to raisethese sanctions. Furthermore, there seems to be anincreasing interest in the imposition ofadministrative fines by administrations themselvesinstead of, or in addition to, bringing offences tocourt.

Insurance schemes —whether they are run bypublic administrations, social partners or privateorganisations— can play an important role inimproving occupational safety and health as theyhave a direct interest in bringing down the numberof occupational diseases and accidents. Insurancefor occupational diseases or accidents is often a

statutory obligation. This does not necessarilymean that the insurance of occupational injuries ispart of a national social security system. In someMember States private insurance companies underpublic supervision (semi-public) are responsiblefor these insurances.

Levying premiums offers the opportunity to createfinancial incentives to encourage preventive actionin companies. In a majority of the EuropeanMember States financial incentives exist inmandatory social insurance schemes. MemberStates report a variety of incentives. Differentiationof premiums for insuring against occupationalaccidents and diseases is the most commonincentives. In general the Member States do notforesee major changes in the level or nature ofthese incentives although there seems to be a trendtowards greater differentiation of premiums.

Insurance against occupational diseases andaccidents is not only provided by mandatory socialinsurance schemes, but sometimes also byvoluntary private insurance schemes. Here too themost common instrument is differentiation ofpremium. However, the scope private insuranceschemes have to improve safety and health throughfinancial incentives is limited. Especially forsmaller firms, the cost of insurance is related tosector-wide experience of claims rather thanassessment of the effectiveness of the individualfirms’ safety and health performance.

A rather new and different approach to promotingoccupational safety and health in enterprisesinvolves public organisations – in their capacity asprivate entities - in selecting contractors orsuppliers of products, goods and services on thebasis of their performance regarding occupationalsafety and health. These practices sometimes havea somewhat legalistic approach. For example, apublic organisation may require a contractor tocomply with statutory OSH provisions or it mightbe prohibited for contracts to be awarded tocompanies that have been found guilty of offencesconcerning OSH. Public organisations may evenask for OSH standards that go beyond theminimum levels set by regulations or demand thatspecific initiatives are undertaken that support thepractical implementation of safety and health at theworkplace (for example training programmes orcampaigns).

Initiatives at European level

The last issue dealt with in this survey concerns thefact that Member States were asked whichinitiatives could be undertaken at the Europeanlevel in relation to the economic aspects ofoccupational safety and health. Many MemberStates especially recognised the need for exchangeof information about estimating the cost andbenefits of measures by national administrations.With regard to methodology development at the

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national level, it is the view of many Member Statesthat a methodology is needed that would make itpossible to assess the impact of applying EUdirectives using common factors that would allowfor comparisons.

Development of methodology or instruments to beused at the company level is suggested by anumber of countries. Some stressed theimportance of simple models for cost-benefitanalysis, also to be used by SMEs in their day-to-day practice.

The dissemination of information on financialincentives is supported by most Member States.Some Member States suggest more research anddissemination of empirical evidence of theeffectiveness of insurance-based incentivesystems

1.

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INTRODUCTION

One of the main tasks of the European Agency forSafety and Health at Work is to support theexchange of information between EuropeanMember States. An important tool to be used in thiscontext is the organisation of information projectson specific issues. This report on the EconomicImpact of Occupational Safety and Healthsummarises the second major information projectundertaken under the auspices of the Agency sinceit started work in September 1996.

The report is based on the results of aquestionnaire that was drawn up in cooperationwith representatives of all European Member Statesand then answered by all Member States. In theseanswers the viewpoints of the social partners andother organisations are also taken into account.The complete replies from the Member States canbe found on the Agency’s web site.

The aim of this project has been to produce anoverview of how economic aspects are related tothe formulation of occupational safety and healthpolicy in the Member States. This report will alsobe the basis for the selection of further activities inthis area.

The issue of assessing the cost and benefits ofoccupational safety and health has raised much

interest over the last few years. A majorinternational conference on the subject wasorganised in 1997 during the Dutch Presidency ofthe European Union. Furthermore, the LuxembourgAdvisory Committee for Safety and Health at Workaddressed a related issue. It set up an Ad HocGroup on “Socio-economic appraisal ofoccupational safety and health legislation” in orderto prepare a report for the Committee. Furthermorenote was taken of the planned SHAPE projectfinanced by the European Commission in order toavoid overlap in activities.

This project of the Agency and its network took intoaccount the results from the conference and thework of the Advisory Committee but was intendedat the same time to broaden the issue for severalreasons. First, it should be recognised that theimprovement of OSH cannot simply be reduced toa technical issue about cost and benefits. Cost andbenefits can only facilitate a discussion aboutpreferences for measures. Second, many othereconomic issues are also important in relation tooccupational safety and health, for example the roleof financial incentives (subsidies and financialsanctions) and the potential role of national andother insurance organisations.

The aim of the present project is to provideinformation about the way economic factors play arole in the formulation of OSH policy at national

level. These factors can be rather diverse. In thisreport the following are highlighted:

— current considerations regarding the cost andbenefits of OSH measures, dealing withquestions such as the importance attached tocosts and benefits in the Member States andthe impact of CBA in policy development. Itlooks more in depth at the actual use of thistype of analysis in the development of OSHpolicy (the extent to which CBA is used beforeand after measures);

— secondly, it deals with the contents (that is theelements) of CBA. Furthermore, the reportprovides an overview of national practicesregarding estimates of the economic impact ofoccupational safety and health, especially thecosts of work-related health risks. It is alsointended to provide information about theextent to which CBA is used at company level;

— thirdly, the report gives an overview of the wayother financial incentives such as subsidies,financial sanctions in enforcement andincentives in insurance schemes are applied. Italso provides information about examples ofpractices in the Member States through whichcontractors are selected on basis of their OSHperformances;

— lastly, it summarises suggestions fromMember States regarding issues that could bedealt with at European level.

Part 1. CONSIDERATIONS REGARDING THE COSTSAND BENEFITS OF OSH MEASURES

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2.TOPICALITY OF COSTS ANDBENEFITS

The improvement of occupational safety and healthhas a long tradition in Europe. Measures atnational and European level have resulted inrelatively high levels of protection for workers.Economic considerations regarding the applicationof new measures are usually taken into account inone way or another, though mostly implicitly

At present there is a substantial interest inestimating the costs and benefits of OSHmeasures. Many Member States indicate thateconomic impact is a key issue at the moment. Inothers the interest in cost-benefit analysis isgrowing. Few countries indicate that it is not amajor or increasingly important topic.

Some countries seek to raise public awarenessabout the benefits of occupational safety andhealth, for instance through campaigns intended toemphasise to companies the importance of goodsafety and health at work (United Kingdom). Inseveral countries information on costs and benefitsis disseminated. It is noted that employers areinterested in instruments to assess costs andbenefits at company level. In some countries(Finland, the Netherlands) this interest isencouraged by national administrations that

support the development of instruments to assesscosts and benefits at company level.

The increased interest is not surprising, asinvestments in OSH presupposes reallocation offinancial and human resources, at company,national and international level. Considerationsregarding cost-effectiveness are therefore ofimportance. A complicating factor is that thebenefits of these measures, whether to theindividual company or to society as a whole, is notalways immediately known.

In the discussion with social partners about actionthe issue of costs and benefits is often raised. Inparticular, the anticipated high costs and the impacton small and medium-sized enterprises is a topicfor debate.

Despite the fact that CBA is generally seen asimportant in most countries of the European Union,the importance of ethical considerations is alsostressed. It is not always necessary to expect theeconomic returns from measures to exceed thecosts incurred, as in some cases the social riskscan be so great that action has to be undertaken.

Austria➥ it is not an explicit priority ➥ normally little consideration is

given to the benefits➥ the anticipated high costs for

SMEs are often addressed in thepolitical debate

➥ estimates of costs are of growingimportance

Germany➥ estimation of costs and benefits

is a major topic➥ the evidence of financial

advantages of measures in thearea of OSH will become ofgreater importance for bothindividual companies and thenational economy

Netherlands➥ estimating costs and benefits is

becoming more important. Thistrend is expected to continue(e.g. research, dissemination ofinformation, etc.)

➥ importance is twofold: – cost-benefit considerations

can encourage companies toimprove OSH

– introducing market elementscould support the aim ofreducing detailed legislationas the interest of employerswould be increased

Belgium➥ it is a key topic and will become

politically important in the future➥ financial resources are scarce,

so proof is needed thatmeasures are cost effective

Greece➥ estimation of costs and benefits

is increasingly important➥ in the future it is expected that

the results of cost-benefitanalysis will increasinglymotivate employers to improvethe working environment

Portugal➥ cost estimation is important as

this represents the burden onboth the social security systemand on companies; it may affectcompetitiveness

➥ in the discussion, the benefitsare not given due consideration

Denmark➥ two kinds of cost figures raise

interest: the overall costs ofsickness to society and costs tobusiness of new regulations

➥ costs to business ofamendments to WorkingConditions Act have beendebated in media

➥ interest of social partners isexpected to remain at the samelevel

Ireland➥ OSH only now beginning to

arouse broader public interest;attention is focused on legal &moral issues

➥ increasing attention fromemployers perspective toimportance of proper costbenefit analysis of OSH matters

Spain➥ the topic does not attract public

attention. Legal and moralarguments prevail

➥ from an employers’ point ofview, the interest in instrumentsfor economic assessment isconsiderable

Finland➥ there is increasing interest, with

the focus on the importance ofworking conditions to thenational economy

➥ discussion is encouraged by theOSH administration, by thedevelopment of models to beused by enterprises

➥ economic impact ofpsychological well-being andergonomics has raiseddiscussion on OSH

Italy➥ the topic is becoming more

important➥ research has been funded which

reveals the impact of EUregulations on SMEs (which areprevalent in Italy)

Sweden➥ there is an increasing interest

from the OSH authorities ininforming the public about theutility of improving workingconditions by using CBA

➥ employers are interested inmodels for estimating costs andbenefits

France➥ the issue is gradually gaining

importance at national level➥ cost-benefit analysis is

considered important toencourage social partners andcompanies to improve OSH. Itresults in all costs and benefitsbeing made visible

Luxembourg➥ there is increasing interest in the

estimation of the costs (notbenefits) of OSH

United Kingdom➥ it is likely to remain a topical

issue➥ cost-benefit analysis of

legislation is routine ➥ between 15 and 35 analyses are

carried out each year

Question

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Is the estimation of the costs and benefits of occupational safety and health measures a majortopic at the moment? What are the expectations for the future?Is the estimation of the costs and benefits of occupational safety and health measures a majortopic at the moment? What are the expectations for the future?

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3.IMPACT OF COST-BENEFITANALYSIS IN DECISION-MAKING

As shown in Chapter 2 there is an increasedinterest in cost-benefit analysis. Anotherinteresting issue is whether CBA has a real impacton decision-making about new measures, and inwhat way it influences decision-making. Therelevance of assessing the economic impact canonly be appreciated to the extent that it influencespolitical decision-making.

In the Member States initiatives for new legislationor changes in existing legislation usually take intoconsideration opinions of those that would beaffected. Economic considerations are usuallyinvolved in discussions with social partners aboutnew initiatives in one way or another.

In some Member States (Denmark, UnitedKingdom) assessment of the economic impact isone of the standard pieces of informationconsidered in political decision-making. However,the way economic assessments influencedecision-making varies from one Member State toanother. In general, where consensus with socialpartners is sought CBA usually influences thesolutions adopted (Spain, Denmark).

However, several Member States also make it clearthat cost-benefit analysis is not the major factor indecision-making. It seems that the clarity providedby economic assessments makes it easier to reachviable compromises (Denmark). The methodologyof assessing costs and benefits serves as a qualitycheck in which the effectiveness is reconsidered.

In some Member States economic impactassessment is specifically meant to improve theeffectiveness of legislation and to ensure that nounnecessary additional financial burden is created(the Netherlands). Using an assessment methodallows the socio-economic balance to beimproved, as economic consequences areconsidered in a systematic way.

So far the assumption has been that cost-benefitanalysis only influences decision-making if aformalised method is used. Nonetheless its impacton decision-making can be substantial even ifthere are no formalised methods (France).

Furthermore, most Member States consider thatcost-benefit analysis will continue to be animportant element in policy development and mayindeed become even more important.

It can be concluded that in most Member Stateseconomic arguments play a significant role indiscussions about new initiatives for OSHmeasures/legislation in one way or another. Cost-

benefit analysis often has a role in the draftingprocess of new legislation, in “fine tuning” the finalproposals for legislation. However, it can also bementioned that there is no indication thatintroducing legislation occurs only on the basis ofeconomic arguments.

Austria➥ due to budgetary situation

restrictive approach is expectedfor measures that imposeadditional financial burden onthe public budget

➥ cost estimates will becomemore important

Germany➥ the results have an impact

insofar as provisions in newOSH legislation are worded soas to achieve flexibility and cost-effectiveness in the companies,while at the same time ensuringthat OSH provisions are highlyefficient from the employees’point of view

Netherlands➥ results of CBA can influence

decision-making, especially ifthey allow economicconsequences to be consideredin a more systematic way,resulting in a better socio-economic balance

➥ CBA will become moreimportant in the future

Belgium➥ CBA is not a basic factor in

decision-making, priority isgiven to moral considerationsand public awareness

➥ CBA is aimed at convincingemployers to operate OSH policyand that this will not harm theircompetitiveness. It is also aimedat political decision-makers, toshow that prevention is aninvestment

Greece➥ they do not affect the decision

on introducing legislation or not,but in many cases they affectsignificantly the decision on thescope or the strictness of acertain regulation or otherinitiative

➥ in the future it is expected thatthey will have a broader impact

Portugal➥ OSH regulation development is

discussed by government andsocial partners; economic andsocial aspects are taken intoconsideration

Denmark➥ costs to industry are important

in political decision-making➥ claims that costs are excessive

have to be specified, whichmakes it easier to reach acompromise with the socialpartners

➥ the procedure is a quality checkon proposals

➥ no changes for the future areexpected

Ireland➥ CBA is not formally a part of the

decision-making process atpresent, although the economicimpact of measures doesinfluence policy formulation tosome extent

➥ it is expected that greateranalytical rigour will have to bebrought to bear on this area infuture

Spain➥ in seeking consensus with social

partners, estimates usuallyinfluence the solutions adopted

➥ in the field of OSH it is notexpected that economic criteriawill become determining factors

➥ there is concern to improve thequality of regulations, inter aliaby assessing the economicimpact

Finland➥ the significance and quality of

analyses depend on thedecision-makers needs in everycase

➥ at best, analysis has an impactduring the drafting process.Proposals are often discussedwith social partners in whicheconomic factors are included;separate CBA is not necessarilyimportant

➥ importance of CBA will probablyincrease

Italy➥ estimation of costs and benefits

of OSH is becoming moreimportant; the need for CBA wasrecently pointed out by theItalian Parliament

➥ the Ministries of Labour andHealth aim to identifyhomogeneous criteria torationalise the exploitation ofpublic resources

Sweden➥ the costs affect the decision to

some extent➥ in the future, cost and benefits

are likely to become moresignificant

France➥ although not formalised,

economic impact analysis playsan important role. However,priorities are also given tohuman and social aspects

➥ consultation in which socialpartners give their reactions onhuman, social and financialimpact is mandatory

➥ an economic impact assessmentis likely to be developed

Luxembourg➥ cost-benefit analysis has little

effect on decision-makingduring policy development

United Kingdom➥ the cost-benefit analysis is one

of the pieces of information thatis considered in reaching adecision on proposed legislation

➥ no change is expected

Question

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To what extent do results of cost-benefit analyses affect the final decision to introducelegislation or other initiatives? Are they likely to be more significant in the future?To what extent do results of cost-benefit analyses affect the final decision to introducelegislation or other initiatives? Are they likely to be more significant in the future?

4.

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AIMS OF COST-BENEFITANALYSIS

As can be concluded from Chapter 2 and Chapter3, economic considerations are of growingimportance in taking measures to improveoccupational safety and health. Theseconsiderations usually focus on the introduction oramendment of legislation. This chapter deals withthe different types of cost-benefit analysis. Thefollowing types can be identified:

— estimates before OSH measures areintroduced;

— estimates after OSH measures have beenintroduced;

— indicators for the economic efficiency ofoccupational safety and health systems.

4.1 Estimation of cost and benefitsbefore measures are introduced

In order to have information available about theeffects of measures (such as new or amendedregulations) it is common in many Member Statesto prepare an evaluation before introducing thelegislation (ex ante).

In some Member States (United Kingdom,Denmark) such an ex-ante impact assessment isoften routine, and sometimes even mandatory.Economic considerations can play a part. Invarious countries, the involvement of the socialpartners is part of the procedure. Costs andbenefits can be part of the consultation.

Differences exist between Member States in theextent to which certain kinds of new legislation areevaluated. For instance in Denmark theimplementation of EU directives is not covered byassessments, whilst it is in other Member States.Generally, campaigns etc. are assessed to a muchlesser extent.

The scope of the assessments varies from countryto country and may also vary with the nature of themeasures and the severity of the problem inquestion.

Assessments of the economic impact of new OSHregulations or initiatives can be carried out atnational level, sector level and enterprise level. Inmost Member States the focus is on the costs andbenefits at national level. Costs to authoritiesand/or to the national economy are estimated inthese cases. A breakdown by economic sector orindustry is made in some Member States (Finland,United Kingdom). The consequences for individualcompanies are only estimated in special cases insome countries. However, in some Member States

the effects on SMEs are explicitly part of an ex-anteevaluation process (Germany, Finland, the UnitedKingdom).

Austria➥ estimates of financial

consequences for the Federalbudget and budgets of regionalauthorities are compulsory

➥ costs for private sector resultingfrom OSH provisions are notestimated

➥ no changes are anticipated

Germany➥ necessity and effectiveness are

evaluated using a cataloguewhich includes costs andbenefits for SMEs in particular

➥ the cost effects of regulationshave to be documented as theyaffect both administrations andcompanies

➥ there is no routine practice inestimating the costs and benefitsof OSH measures

➥ methods are being developed

Netherlands➥ new regulations and changes in

regulations are evaluated inaccordance with mandatoryprocedures; however, extensiveassessments are only carried outif high costs are expected

➥ ex-ante assessments for OSHregulation have been carried outtwice, at national and sectorlevel

Belgium➥ no prior estimate of costs and

benefits is made of measuresimplemented by the technical ormedical inspectorate

➥ when costs have to be estimated,the focus is on employers andthe sector in question

Greece➥ financial consequences for state

budget must be alwaysestimated when new legislationis introduced

➥ other cost-benefit aspects areusually estimated during thedebates in SYAE

➥ costs of non-legislativemeasures (campaigns,publications, training, etc.) arenot usually estimated

Portugal➥ estimates are not made on a

routine basis; they depend onthe objectives

➥ normally foreseeable benefits areincluded

➥ estimates of costs to theadministration are made

Denmark➥ the assessment of socio-

economic costs has beenmandatory since 1981

➥ guidelines and campaigns arenot routinely assessed; noassessments are carried out inrespect of EU directives

➥ assessments are carried out incooperation with social partners

Ireland➥ no ex-ante evaluations

performed➥ it is expected that CBA will

become a more common tool asmethodologies develop in thisarea in future

Spain➥ for regulations with the force of

law, economic impact has to beassessed using of a checklist

➥ OSH measures follow aprocedure in which costs arediscussed

Finland➥ new regulations must be

evaluated as part of draftingprocess. Economic effects ofcampaigns are not assessed ona routine basis

➥ estimates relate to the nationaleconomy and public finance, butsector and/or companyassessments should often betaken into account

➥ aim is to put more emphasis onCBA

Italy➥ no ex-ante evaluations

performed

Sweden➥ assessments have been carried

out routinely for a long time (asrequired by law)

➥ cost calculations are made atnational level

France➥ assessment of the impact of new

regulations is now mandatory atnational level as far as possible,regulations with minor effectsare not included

➥ assessments are difficult to carryout

➥ in order to know the needs oftarget groups, campaigns areevaluated ex-ante; economicconsiderations form part of this

Luxembourg➥ no ex-ante evaluations

performed

United Kingdom➥ cost-benefit analysis is a routine

part of the development oflegislation

➥ estimates apply to society as awhole but always showseparately the costs to industry;they can also be broken down,e.g. by sector

Question

19

Do national occupational safety and health administrations estimate the costs and/or benefitsof measures before introducing them? Is this done on a routine basis? Is this expected tochange in the future?

Do national occupational safety and health administrations estimate the costs and/or benefitsof measures before introducing them? Is this done on a routine basis? Is this expected tochange in the future?

20

4.2 Estimation of cost and benefitsafter implementation

Member States were asked about economicevaluations after the implementation of measures.The goal of ex-post assessment can be to test - onthe basis of the outcome of the assessment - theeffectiveness of the measure. Usually theseassessments are done in respect of legislation.Only in a few countries are other types of measureevaluated in this way (campaigns, Denmark). Theresults of CBA after implementation can be used toadjust the measures in question.

In some Member States (France, Belgium, theNetherlands) the effectiveness of OSH regulationsis monitored using data from Labour Inspectorates,but the indicators concentrate on safety and healtheffects rather than the economic implications.

In some other Member States evaluations are madeonly under special circumstances or by way of anexperiment (Spain, Finland, Germany). In theUnited Kingdom ex-post analyses are carried out inrespect of all significant regulations.

As in the case of ex-ante evaluations, here too thebenefits are hard to estimate. One of the problemsin ex-post evaluation is that positive economicresults often become visible only after a period oftime. More generally, it can be mentioned that it is

difficult to make this kind of evaluation because ofa lack of data. This hinders the verification of theoutcome of a measure against the initial estimates.

All in all it can be concluded that an explicitcomparison between goals and results of ameasure is only made on a routine basis in onecountry (the United Kingdom).

Regarding the future, it seems that most countrieshave no plans to perform ex-post evaluations on aroutine basis.

Austria➥ no estimates are made after

measures are introduced; nochange is expected

Germany➥ evaluation after implementation

only in individual cases,estimates of financialimplications are generally notprovided

Netherlands➥ data collection on investment

costs for OSH measures hasbeen carried out twice on anexperimental basis

Belgium➥ the Labour Inspectorate records

what is done to implementmeasures; in the case ofchecking safety conditions thecost of personnel is monitored

➥ method applies at national,sector and company level

Greece➥ no estimates on a routine base➥ reactions of the SYAE members

after the implementation of ameasure can be considered asan indirect evaluation of it

Portugal➥ normally a comparative balance

is produced between objectivesand actual results

➥ in evaluations account is takenof statistics (national, sector andcompany level), number ofworkers and involvement ofsocial partners

➥ social partners are involved inevaluations

Denmark➥ ex-post evaluations are not

made on a routine basis, but inthe 1980s some benefitevaluations were conducted

➥ campaigns are evaluated, butfocus is mostly on level ofcompliance or exposure

Ireland➥ no ex-post evaluations are

performed➥ it is expected that CBA will

become a more common tool asmethodologies develop in thisarea in future

Spain➥ no routine ex-post evaluations

exist, some experimentalassessments have beenperformed

➥ it is hoped that a methodologyfor assessment at national andsector level will becomeavailable

Finland➥ ex-post evaluations are not

usually carried out➥ there are no routines and no

plans to perform ex-postevaluations

➥ done once, may increase in thefuture

Italy➥ no ex-post evaluations are

performed

Sweden➥ ex-post evaluations are not

performed on a regular basis

France➥ due to difficulties in

measurement and non-economicgoals of OSH measures, only afew ex-post assessments aremade

➥ although no model is available,the labour inspectorate providesquantitative and qualitativeinformation. Statistics onoccupational accidents provideinformation on macro-economiceffects

Luxembourg➥ until now, no ex-post

evaluations have been performed➥ in 1998, analysis of 4 examples

is planned

United Kingdom➥ all significant regulations are

evaluated to see if they meettheir objectives and to check forunforeseen problems

➥ evaluations also look at actualcosts and benefits against thosepredicted, though broadcomparisons only can be made

Question

21

Do national occupational safety and health administrations estimate the costs and/or benefitsof measures after introducing them. Is this done on a routine basis? Is this expected tochange in the future?

Do national occupational safety and health administrations estimate the costs and/or benefitsof measures after introducing them. Is this done on a routine basis? Is this expected tochange in the future?

22

4.3 Measuring the economicefficiency of nationaloccupational safety and healthsystems.

So far it has been the different types of evaluationof legislation and other measures which have beenthe subject of attention. In addition to theseapproaches it is also possible to measure theperformance of the existing occupational safetyand health systems in the Member States. This canfor instance be done using economic efficiencyindicators. Member States were asked to giveinformation on the existing instruments.

Some Member States indicate that quantitative andqualitative data collected by labour inspectoratesor contained in statistics on accidents andoccupational diseases can provide someinformation on macro-economic consequences(Luxembourg, Finland, Greece, Denmark).

An indicator used in the Netherlands is the ratiobetween costs for prevention and the correctivecosts (e.g. costs of occupational accidents andwork-related illness).

A specific set of efficiency indicators and amethodology to measure these indicators is beingdeveloped in Germany. This methodology is

broad-based and relates, for example, the numberof health problems to production output.

In general it can be concluded that this type ofevaluation has so far not received much attention inthe Member States of the European Union and thatin most Member States no instruments forassessing the efficiency of the occupational safetyand health system are available.

Austria➥ no instruments are available

Germany➥ some instruments to measure

macro-economic and micro-economic efficiency have beendeveloped

➥ the methods are broad-based, asindicators indicate e.g. thenumber of health problemsinduced per unit of production

Netherlands➥ the ratio preventive costs/

correction costs can be seen asan efficiency indicator at nationallevel. One attempt to estimatethis ratio has been made.However, there is insufficientdata for a reliable indication ofthis ratio

➥ for the future, improving thereliability of calculations isimportant

Belgium➥ no instruments are available

Greece➥ no instruments are available➥ indicative data are derived from

the reports of the labourinspectorates

Portugal➥ no instruments are available

Denmark➥ no instruments are available

Ireland➥ no instruments are available

Spain➥ if efficiency is defined as the

cost-benefit ratio, no estimateshave yet been made

Finland➥ no instruments are available, but

efficiency of measures can bededuced from statistics onaccidents and health and fromquestionnaires

➥ calculations on the internalefficiency of the administrationsare being developed

Italy➥ no instruments are available

Sweden➥ attempts are being made to

calculate the efficiency of theadministration

➥ the OSH administration isrequired annually to report botheffects and productivity to thegovernment

France➥ no specific instruments are

available but efficiency ofmeasures can be deduced fromstatistics on accidents andhealth

Luxembourg➥ no instruments are available➥ indicative data is derived from

the statistics on accidents and illhealth

United Kingdom➥ estimates of costs of accidents

and ill health can be taken as anindirect indicator

Question

23

Do instruments exist to measure the economic efficiency of national occupational safety andhealth systems? To what extent are they related to economic output?Do instruments exist to measure the economic efficiency of national occupational safety andhealth systems? To what extent are they related to economic output?

Part 2. THE ECONOMIC IMPACT OF OCCUPATIONALSAFETY AND HEALTH POLICY

25

26

5.METHODS AND CONTENT

There are methods which can help to establish thesystematic analysis of costs and benefits, both ex-ante and ex-post. Specific/formalised methods forassessing the economic impact of new measuresexist in a minority of the Member States. Themethod adopted depends on the nature of theproblem and its potential economic impact.Though specific/formalised methods are notavailable in most of the Member States, many ofthem state that the current practices of policydevelopment often do include a structuredapproach, for instance using a checklist, acatalogue or consultation procedures.

Member States were asked to indicate whichspecific elements are part of any method thatassesses the costs and benefits of prevention withregard to occupational safety and health. Morespecifically, the question focused on the inclusionof social and other aspects such as improvedproduct quality and increased competitiveness.

In assessments of the economic impact ofmeasures the concepts of costs and benefits haveto be distinguished. Usually a clear distinction ismade between the costs of implementing OSHmeasures (prevention costs) and the benefits afterimplementation. Benefits can consist of manyelements. The approach used in assessing the costof measures varies from country to country andmay also vary with the nature of the measure. For

example, the following aspects are usuallyincluded in prevention costs:

— investments in technology and productionequipment (by employers);

— costs of external services;

— costs of additional work time;

— extra charges per worker (e.g. for extra medicalsurveillance).

Estimating the benefits proves particularly difficult.Some Member States estimate the benefits of theavoided costs of illness (Spain, Luxembourg, theNetherlands). In practice, benefits mostly includereductions in the costs of sick leave. Reductions inhealth care costs and rehabilitation costs are alsoestimated in some countries. In the UnitedKingdom monetary values of grief and suffering areincluded (indirectly).

On the whole there is little experience inquantifying effects on productivity and productquality. As a result, the effects of new regulationson companies’ competitiveness are not included ineconomic impact assessments. In a few countries(Sweden, France, the Netherlands) case studies orretrospective studies are done, but it seems that theresults are difficult to translate into a generalmethodology. In the United Kingdom it isconcluded that the direct costs to companies canbe taken as an indicator for the short-term effectson competitiveness.

All methodologies calculate the direct reduction ofcosts to society or to companies. Indirect or“secondary” effects on employment, nationalwelfare and national competitiveness are mostlynot included.

In estimating the benefits of preventive measures,many problems are indicated by Member States:

— it is indicated by several countries that thescope of an economic impact assessment isoften limited by the availability of reliable data;

— it is difficult to isolate relevant factors;

— the benefits of prevention may only becomeapparent after a long time;

— the value of human life is difficult to express interms of money, though it is indicated that itshould be part of considerations;

— putting a financial value on health damage isdifficult and not always desirable.

Those countries that have long experience ofeconomic impact assessments indicate that themethodology is not likely to change in the nearfuture unless new data becomes available.Research may not lead to changes in currentprocedures. In a few Member States, the currentapproach is too recent to be changed in the nearfuture (Belgium, the Netherlands). Of the MemberStates that do not have a specific methodology,some indicate that there are plans to develop one.

Austria➥ no formalised methodology

exists at the moment

Germany➥ no specific methodology exists

Netherlands➥ aspects depend on nature of

regulation in question; standardassessment focuses on primaryeffects

➥ of ill health and medical costsare usually not included

➥ costs of absenteeism anddisability are included

➥ increased productivity is used incase studies only

Belgium➥ no formalised methodology

exists➥ focus is on direct costs to

employers and sector; costestimate from number of workersinvolved and cost per employee

➥ benefits are not taken intoaccount

Greece➥ macro-economic approach

(social costs, general economicindicators)

➥ the intention is to establish asystematic method based onnational and EU experience

Portugal➥ though no specific methodology

exists, a number of aspects areincluded in the assessment ofbenefits from a measure, such asimproved life expectancy, qualityof life, reduced sickness, lesspublic spending and also lowercosts to business and improvedproductivity and quality

Denmark➥ analyses are performed➥ costs: equipment, disposable

equipment or external services,costs of substitute products,maintenance and energy,additional work time

➥ benefits: reduction of costs forhealth care and rehabilitation,sick leave, early retirement anddeath

➥ only first order effects

Ireland➥ no specific methodology exists

Spain➥ no standard method exists➥ when new regulations are

discussed with social partners,social costs are taken intoaccount in qualitative terms

➥ the quantitative benefits,considered to be the reduction inthe costs incurred as a result ofoccupational accidents, are alsotaken into account

Finland➥ method used depends on the

issue involved. Principles aredescribed in a guide

➥ usually all aspects areconsidered, but which costs andbenefits are included (in terms ofmoney) is decided on a case bycase basis

➥ value of human life not alwaysexpressed in terms of money

Italy➥ no specific methodology exists

Sweden➥ social costs are taken into

account➥ where data is available,

increased productivity orcompetitiveness are alsoincluded

➥ attempts have been made tovalue human life in terms ofmoney

France➥ no specific methods exist➥ absence of specific methodology

is explained by the difficulty ofisolating relevant factors, whichis accentuated by the complexityof the French system

➥ transposition of systems fromother countries seems to bedifficult

Luxembourg➥ no formalised methodology

exists➥ the benefits are the avoided

costs of illness➥ aim is to ensure that costs are

turned into benefits

United Kingdom➥ a wide view is taken, the scope

is limited by the availability ofdata

➥ medical costs included,compensation paymentsexcluded as money value forgrief / suffering is included

➥ direct costs to business can betaken as a indicator of short-term impact on industry’s cost-base and competitiveness

➥ secondary effects (e.g.employment) are not counted

Question

27

Do national OSH administrations use specific methodologies to assess the costs and benefitsof measures? Are social costs, competitiveness, the environment or product quality included inthe concept of benefits?

Do national OSH administrations use specific methodologies to assess the costs and benefitsof measures? Are social costs, competitiveness, the environment or product quality included inthe concept of benefits?

28

6.COSTS OF WORK-RELATEDILLNESS AND OCCUPATIONALACCIDENTS

6.1 Existence of estimates

A major issue regarding the economic impact ofoccupational safety and health is the estimation ofthe total costs of work-related illness andoccupational accidents. There have been attemptsto estimate these costs in many Member States.

In order to estimate the costs of work-relatedillnesses, two approaches are used. The firstestimates the total financial costs of socialinsurance for occupational accidents and diseases.The second involves an assessment of socio-economic costs, in which the monetary effects onsociety are estimated.

In most Member States, the national or privatehealth insurance organisations publish statisticson the number of occupational accidents andhealth risks on an annual basis. Further, costs ofclaims are summarised in the total annual amountpaid out in claims.

In addition, statistics are published in mostMember States on the number of working days lostand of disability pensions awarded as a result of

these occupational accidents and health risks. Thecosts of health care facilities are often available.These statistics are frequently also broken down bydiagnosis categories and categories of the workingpopulation or parts of it (industrial sectors).

However the picture given by these statistics isoften not complete. Most Member States reportunderestimation of costs. In some this is due to thefact that employers or employees do not reportaccidents or illnesses to the authorities. OtherMember States report that not all industrial sectorsare covered by the published figures. Finally someMember States report that only a limited range ofOSH risks are included in the insurance figures.This lack of information makes comparisonsbetween the statistics of these Member Statesdifficult.

Furthermore, it should be noted that national orsectoral statistics do not indicate the total cost ofwork-related illnesses to society.

To fill in the gap between the costs reported by theofficial statistics and the socio-economic costs tosociety, studies were conducted in some MemberStates (Italy, the Netherlands, the United Kingdom,Luxembourg, and Finland) in which an attempt wasmade to estimate the complete picture. Theseestimates included company costs, costs to thevictim and their social environment, preventionexpenses, and other indirect costs such as medical

services, social security and insurance systems. Inthe United Kingdom even an amount to reflect thepain, grief and suffering involved is included in thecalculations. The final conclusion of these studiesis that the costs of OSH risks to society are likely tobe far higher than is estimated from nationalstatistics alone.

Austria➥ accident insurance institutions

can identify costs of medicaltreatment due to accidents,rehabilitation measures, pensionpayments and days ofabsenteeism

➥ academic research has beencarried out into the impact ofindustrial accidents on theeconomy as a whole

Germany➥ BAUA produces regular

estimates of the costs resultingfrom individual work-relatedhealth risks, based on thenumber of lost working days.These costs can be specified andcalculated according to types ofdiseases. Exact calculations aredocumented by theBerufsgenossenschaften

Netherlands➥ estimates are carried out on the

basis of 5 factors: sick leave andinvalidity, health care costs,preventive actions by thirdparties and by companies, andother costs

➥ costs of prevention do notexceed 20% of the total costs

➥ costs of sick leave and invaliditycan be broken down bydiagnosis category

Belgium➥ the costs of illness due to OSH

hazards can only be estimated➥ direct costs are generally

expressed in terms of the socialimpact of the harm suffered

➥ expenditure is broken down byNACE sector, type ofoccupational disease,occupation and type of chemical,physical and biological agent

Greece➥ such estimates are usually made

by the social insuranceorganisations

➥ social costs of accidents anddiseases are included every yearin the annual national socialbudget

Portugal➥ direct costs arising from work

accidents and social securitycosts of compensation foroccupational illness arecalculated

➥ figures are an underestimate,because of underreporting bothof work accidents and ofoccupational illness

➥ it is also important to considerthe estimates of costs due toabsenteeism

Denmark➥ the DWES published cost-of-

illness estimates for the costs ofwork-related diseases and workaccidents in 1994

➥ the estimates include bothsocio-economic costs andpublic expenditure (financialcosts) of work-related disease

Ireland➥ the Insurance Federation

publishes annual statisticsshowing the number and costsof employers’ liability claims

➥ the costs of claims aresummarised in the total amountpaid out plus the movement intechnical reserves during thatperiod

➥ numbers and costs are notbroken down by accident orhealth risk

Spain➥ direct costs of occupational

accidents and illnesses havebeen estimated by analysingsocial security accounts,including costs of disability,health care/drugs and survivors’pensions

➥ indirect costs are assessed byestimating data, such asnumbers of working days lost asa result of occupationalaccidents and illnesses

Finland➥ in 1994 the Department for OSH

made a calculation of the costsin 1992 to the national economyof work-related diseases andoccupational accidents

➥ there are a number of researchstudies, practical calculationsand case studies on theeconomic impact of OSH atenterprise level

Italy➥ INAIL estimates the total costs of

accidents and occupationaldiseases, including insurancecharges, companies’ indirectcharges, prevention expenses,proportion of damage falling onvictim and economic costsborne by the public purse

➥ direct and indirect costs ofmultifactor pathologies (life andworking conditions) is thesubject of attention

Sweden➥ some calculations of the costs of

specific work-related risks havebeen made at national, sectoraland enterprise level

France➥ estimates have been made

through the CNAM➥ a recent public report gives

figures of around ECU 0.2billion (FRF 1.2 billion)

➥ the real magnitude of the costsof unclaimed accidents andunidentified work-relateddiseases, which are covered bythe public social security systemare unknown

Luxembourg➥ estimates are made by the

Accident Insurance Association(AAA)

➥ the damage caused to victims,companies and the nationaleconomy, is estimated at fourtimes the costs borne by theAAA

United Kingdom➥ HSE publishes estimates of the

total costs to employers,economy and society, of workaccidents and work-related illhealth

➥ this study quantifies costs to allaffected parties, includingemployers, medical services,social security and insurancesystems and victims

➥ an amount to reflect the pain,grief and suffering is included

Question

29

To what extent have there been estimates of the costs of work-related illness?To what extent have there been estimates of the costs of work-related illness?

30

6.2 Results of estimates

Member States were also asked for the results ofcost estimates for work-related health risks.

Most Member States were able to give someindication of the costs of specific work-relatedhealth risks. They calculated these costs in theirown currency or in ECU. Here the results arepresented in ECU (1995 exchange rates).

One group of countries was able to give estimatesthemselves of the cost of work-related illness as apercentage of Gross National Product (GNP).Reported percentages range for most countriesfrom 2.6 to 3.8 % (with a wide variety of costfactors included). The figure for the UnitedKingdom is estimated between 1 and 2 percent ifcosts for pain and suffering are left out.

Another group of Member States presented data onspecific cost categories. Estimations weretherefore, for purposes of this project, based ontotal reported cost data as a proportion of GNP.Percentages ranged from 0.4 to 4.0.

It must be emphasised that for both groups it isdifficult to make strict comparisons betweenMember States at present. The informationprovided did not always provide sufficient insightinto the way the calculations were carried out, what

data were used and which cost factors wereincluded or excluded.

The methods of estimation vary too greatly topermit strict comparison between Member States.Nonetheless, it is believed that the range ofindications of the costs of work-related risks givesan approximation of the real costs involved.

Austria➥ an employee organisation

estimates economy losses of atleast ECU 2.2 billion (a year)and company losses of aboutECU 0.4 billion at least due tooccupational accidents

➥ indirect estimation 1.4% of GNP

Germany➥ the sum total of all days lost on

account of unfitness for workreflects the production loss fromthe production factor labour andamounted to ECU 45 billion in1995

Netherlands➥ total costs of work-related health

risks are about ECU 7.5 billion(2.6% of GNP)

➥ costs of sick leave andinvalidity: 4.9 billion, health care0.6 billion; costs of preventiveactions: 1.6 billion, other costs0.5 billion (ECU)

➥ estimates of cost to employers,workers and society are notmade

Belgium➥ direct costs of occupational

accidents amount to ECU 750billion. Including indirect coststhe figure is ECU 3 billion

➥ direct costs of occupationaldiseases are ECU 375 million,sick leave adds ECU 250 million(total: ECU 625 million)


Greece➥ the annual results fluctuate➥ no direct link to occupational

safety and health because ofother interfering factors

Portugal➥ the direct costs arising from

work accidents amounted toECU 0.3 billion; the socialsecurity costs of compensationfor occupational illness were ofthe order of ECU 30 million


Denmark➥ the total figure for the social

costs of work-related diseasesand work accidents is ECU 3billion per year (1992 level),which is 2.7% of GNP

Ireland➥ costs of claims in 1996: ECU

184 million due to accidents orhealth risks


Spain➥ most recent estimates of the

total costs of occupationalaccidents and illnesses suggesta little bit less than 3% of GNP

➥ these costs have shown adownward trend since 1992

Finland➥ the economic calculation from

the year 1994 reveals about ECU3.1 billion, which accounts foralmost 3.8% of Finnish GNP;costs can be broken down bydiagnosis categories

➥ new calculations made by theMinistry indicate that the costshave decreased while GNP hasincreased

Italy➥ total cost of accidents and

occupational illnesses to publicpurse in 1996 amounted to ECU28 billion, broken down as ECU4.6 billion due to occupationaldiseases and the remainder toaccidents


Sweden➥ the total annual costs of reported

injuries is ECU 7.2 billion(approximately 3-4% of GNP)

➥ another calculation has beenmade showing annual costs ofabout ECU 0.6 billion forallergic diseases of the upperrespiratory passages


France➥ results are only available for

insurance costs➥ statistics available only covered

private sector employees➥ insurance costs of work

accidents and work-relateddiseases are about ECU 7 billion(FRF 44 billion)


Luxembourg➥ costs of work-related illness and

work accidents amounted toECU 86 million

➥ damage is globally estimated atECU 172-344 million (1.3% -2.5% of GNP)

United Kingdom➥ in 1990 the costs were:

– to employers: ECU 6.3-12.6billion;

– to victims/family: ECU 6.3billion;

– to economy: ECU 8.4-16.8billion (1-2% nationaloutput);

– additional sum for pain, griefand suffering: ECU 15.4 -22.4 billion

➥ indirect estimation 1.1% ofGNP2

Question

31

What were the results of these estimates?1What were the results of these estimates?1

1 Exchange rate and GNP of year mentioned by Member State. If no year was provided 1995 was taken as base year (data source: Eurostat, Facts through figures, 1997).2 Low estimate: pain, grief and sufferig excluded.

7.

32

INSTRUMENTS WITH WHICHENTERPRISES CAN ESTIMATECOSTS AND BENEFITS

7.1 Instruments for use byenterprises

In Chapter 6 estimates were presented regardingthe costs of work-related health risks as apercentage of GNP. For individual enterprises sucha concept is too difficult to work with. For them it ismore important to know if specific investment inOSH measures will reduce their costs or give thema competitive advantage, for example as a result ofless sick leave or fewer accidents at work. For thispurpose there is a need for instruments that canhelp enterprises to address these questions.

From the table it can be concluded that in mostMember States instruments exist or are beingdeveloped that help enterprises evaluate the costsand benefits of measures. These instruments areoften developed with the support of nationaladministrations or insurance funds.

In most Member States the private or publicinsurance companies return company figures tothe enterprises. On the basis of these figuresenterprises can calculate their OSH risks. Such anapproach is especially useful for large companies

because of its global nature. Estimates of the coststo small and medium-sized enterprises can beunreliable, as large incidents or injuries to a fewemployees may have a large impact in relativeterms.

On the basis of statistics returned by insurancecompanies, enterprises can estimate the benefits ofinvestments in preventive actions. However, thismethod is not part of the national policy of mostMember States, though governments, insurancecompanies and employers’ and employees’organisations consider it to be a positivedevelopment.

Here too there is a problem in relation to small andmedium-sized enterprises. These enterprisesmostly lack the financial and personnel resourcesto apply these methods appropriately. Easilyaccessible and applicable methods are beingdeveloped for these sectors in some MemberStates (Austria, Finland). Large firms often have theresources to develop these methods themselves orhave the funds to hire private consultancies to do itfor them.

Austria➥ in 1996 a booklet with a diskette

was published by theWirtschaftsförderungsinstitut, toenable individual entrepreneursto draw up a CBA for OSHmeasures

➥ AUVA offers companies aprogramme for calculating thecosts of accidents and hasdeveloped models for cost-benefit analysis for specificissues

Germany➥ instruments for CBA of an

enterprise’s OSH measures havebeen developed and tested (e.g.extended economic efficiencycalculations, micro-economicmonitoring, efficiencymonitoring procedures for thetotal OSH system).

Netherlands➥ a model for the calculation of

costs and prevention of sickleave has been developed

➥ a micro simulation model forestimating OSH risks with andwithout preventiveimprovements has beendeveloped. Measures such asimproved productivity areincluded

Belgium➥ one instrument used to calculate

a measure’s impact is based ongeneral and analyticalaccounting and examination ofcompanies’ annual accounts

Greece➥ enterprises have their own

approaches for calculating theimpact

Portugal➥ large firms with over 100

workers are required by law toproduce a yearly social balancewhich is sent to the Ministry ofLabour

➥ the social balance sheet has toinclude reports on accidents,occupational illness,absenteeism, the costs ofspending on safety equipment,direct social costs and indirectsocial costs

Denmark➥ models have been published

which focus on easy to quantifycomponents, i.e. sick leave,personnel turnover costs, costsof preventive activities andsafety-related education orinstruction programmes

Ireland➥ companies can calculate the

impact of occupational safetyand health measures byexamining their claims and costsyear on year

➥ problems with this method arisewhen one large personal injuryin a company distorts the figuresof that company

Spain➥ Spanish firms, specially the

large ones, use differentmethods, usually involving acomparison of costs ofpreventive measures with costsincurred as a result ofoccupational accidents

➥ costs of preventive measures areeasily identified in theenterprises’ accounts andinclude investments as well asexpenditure on safety personnel,external consultancy services,training, etc.

Finland➥ enterprises are offered different

kinds of instruments ➥ instruments developed by the

Ministry include calculatingcosts of sick leave, accidents,staff turnover and disabilitypensions in connection withOSH

➥ there are also models to dealwith productivity effects

Italy➥ no national models exist➥ continuous and sophisticated

monitoring of costs isconsidered fundamental

Sweden➥ a number of instruments have

been developed for this purposeby, for instance, StockholmUniversity and the JointIndustrial Safety Council

France➥ no general method exists in

France, though recentlyevaluation instruments havebeen developed, particularly forsmall and medium-sizedenterprises

➥ the social insurance systemenables large enterprises tocalculate the impact of OSHindirectly

Luxembourg➥ no national models exist➥ enterprise models will be

assessed in 1998

United Kingdom➥ a leaflet for small firms, and a

more detailed booklet, set outideas for calculating the costs ofaccidents and ill health

➥ material has also been publishedby the Trades Union Council onthe costs of musculo-skeletaldisorders

Question

33

To what extent do instruments exist which enterprises can use to calculate the impact ofoccupational safety and health measures themselves?To what extent do instruments exist which enterprises can use to calculate the impact ofoccupational safety and health measures themselves?

34

7.2 Use of instruments

No quantitative data is available in the MemberStates about the extent to which these instrumentsare used to calculate the impact of risks and OSHmeasures. However, several Member States reportthe impression that the use of these instruments isgrowing. This impression is mostly based on thesimple fact that in these countries instruments forCost-Benefits Analysis have been developed inrecent years

One problem which was identified is the lack ofresources in small and medium-sized enterprises.However, it is also recognised that in large firms,mostly in high hazard industries, methods are usedin a more structured basis.

Austria➥ the booklet published by the

“Wirtschaftsförderungsinstitut”has been well received in largecompanies and has also beenused

➥ small and medium-sizedenterprises tend to make lessuse of this instrument owing totheir limited resources in termsof personnel and time

Germany➥ to promote their use and

application there are plans topresent them at the German OSHExhibition and through softwaredistribution

➥ such instruments are only usedand tested by big enterprisesand in the framework of researchprojects or subsidisedprogrammes

Netherlands➥ the model for the calculation of

costs and the prevention of sickleave is used by professionals,for example the occupationalsafety and health services.

Belgium➥ the instrument used to calculate

a measure’s impact is based ongeneral and analyticalaccounting and examination ofcompanies’ annual accounts

Greece➥ in several cases enterprises have

asked for contributions fromuniversities or scientificinstitutions

Portugal➥ large firms with over 100

workers (about two thousand,employing about 800,000workers) are required by law toproduce a yearly social balancewhich is sent to the Ministry ofLabour

Denmark➥ use of “OSH accounting”

systems has increased duringthe last 5 years, especially inmunicipalities and localgovernment institutions

➥ in the private sector, some of themajor Danish companies haveincluded OSH indicators in theirannual “environmentalaccounts”

Ireland➥ many larger companies evaluate

OSH measures as part of theircost control procedures

Spain➥ the real concern of enterprises is

to know the trends in costs overtime, which means that the sameassessment method needsalways to be used; reductions incosts due to the introduction ofpreventive measures can only beassessed if the calculationmethod stays the same

Finland➥ there is no precise information

about the numbers of users ofthe different models

➥ some large enterprises havethemselves developed models

➥ interest of OSH economics hasrisen, and the use and number ofinstruments has increased

➥ the aim of models is to improvethe total productivity, not onlyminimising costs to enterprises

Italy➥ large companies use their own

methods or look at theexperiences of other countries

Sweden➥ to some extent➥ attempts are being made to

establish incentives forcalculating the impact of OSHmeasures

France➥ as a result of a modification of

the insurance rules of CNAM, anindirect evaluation instrumenthas been developed to assessthe impact of measures taken inthe field of OSH; however, onlylarge enterprises benefit fromthis model

Luxembourg➥ large companies use their own

methods

United Kingdom➥ firms in some high hazard

industries use sophisticatedtechniques to judge whetherparticular safety measures areworth implementing

➥ these have acquired substantialexpertise in financial appraisaland quantified risk assessment

➥ HSE’s experience is that the useof safety appraisals in the highhazard industries is increasing

Question

35

To what extent are instruments used by enterprises to calculate the impact of occupationalsafety and health measures?To what extent are instruments used by enterprises to calculate the impact of occupationalsafety and health measures?

37

Part 3. USE OF FINANCIAL INCENTIVES

8.

38

SUBSIDIES

So far attention has been devoted to considerationsregarding the costs and benefits of OSH measuresand assessment of the economic impact of OSH.Another issue is the direct application of financialincentives themselves in order to promoteprevention measures. Three main categories offinancial incentive can be distinguished:

— subsidies;

— penalties or fines as part of enforcement;

— incentives in social insurance schemes.

8.1 Prevalence of subsidies

Subsidies for individual enterprises can be used toreduce the costs of investments in preventive OSHmeasures, thereby promoting the development,sale or purchase of these measures. The creationand application of subsidies can be organised:

— directly by national authorities;

— by national OSH institutions etc.;

— via funds set up by public authorities orinsurance organisations.

In the Netherlands and Portugal specific taxmeasures are taken to encourage OSHinvestments. The aims of these incentives are forinstance to promote improvements in the workingenvironment, the development of technicalsolutions and better levels of protection and, moreindirectly, the modernisation of firms, the use ofsafe and clean technologies and the use of low risktechnologies and work equipment.

In most Member States there are a wide range ofactivities subsidised by national institutes andother intermediary organisations (France,Germany). These include measures such asproviding information, providing technicalassistance, organising training activities andactivities to promote compliance with theregulations.

In a number of Member States funds exist that aimto support a broad range of prevention activities. Insome cases there are programmes to facilitate theremoval of specific negative working conditions(Denmark). In some countries (Spain) positiveincentives are planned specifically in thepromotion of OSH development in small andmedium-sized enterprises.

It can be concluded that incentives are usuallyprovided by reducing the costs of technical supportor the establishment of subsidy programmes.Relatively little use has been made so far of tax-

based measures. However, all in all, positiveincentives to encourage the development, sale orpurchase of safe and healthy products, productionmethods, work organisation, machines, etc. existin a majority of Member States.

Austria➥ the statutory accident insurance

bodies are unable to grantsubsidies or sponsorship of thiskind

Germany➥ in several “Länder” special

programmes regarding safetyand health at work finance pilotprojects in small and medium-sized enterprises

➥ by using low-risk technologiesand work equipment and/orhumane work organisation theseprojects improve both OSH andthe economic efficiency of theenterprises

Netherlands➥ agricultural enterprises were

able to receive temporaryfinancial support for OSHinvestments in 1996 and 1997

➥ a recently introduced taxregulation (FARBO) encouragesenterprises to invest in certainaspects of OSH

Belgium➥ promotion of safety and health is

not subsidised➥ a fund for the humanisation of

work existed at the beginning ofthe eighties. It financed projectsin enterprises going further thanstrict application of theregulations, but the project wasnot pursued further

Greece➥ there is a policy to support

investments for the improvementof safety and health conditionsthrough national and communityresources

Portugal➥ tax concessions for firms

making the investments listed.Support for modernisation offirms from the CommunitySupport Framework for Portugal(up to 1999)

➥ these programmes includespecific measures: support forthe development of safety atwork, use of safe and cleantechnologies or the promotion ofoccupational training

Denmark➥ the “Fund for monotonous

repetitive work” supportsdevelopment projects aimed atremoving or reducingmonotonous repetitive workwhich is hazardous to health

➥ various appropriations for thefinancial years 1996-2000 existcovering: lifting of persons,rehabilitation and jobenrichment and organisationdevelopment

Ireland➥ there are no such subsidies

available➥ there are a range of state

programmes aimed at improvingquality management and workmethods in enterprises whichimpact on OSH

Spain➥ Spanish Act on Prevention of

Risks at Work says that afoundation to promote theimprovement of OSH will be setup

➥ this Act makes it possible togrant financial incentives toSMEs to promote improvementsin OSH

➥ some autonomous communitiesalso have grants for specificprogrammes and intend tocontinue with this in the future

Finland➥ different kinds of subsidies are

available. Most significantfinancier is TSR, separateresearch funds for stateemployment and agriculture.Also Ministry of Trade andIndustry grants subsidies

➥ enterprises are supportedthrough programmes forworking life and productivity

➥ the TDC finances thedevelopment of productionmethods

Italy➥ some measures exist at regional

level

Sweden➥ in Sweden substantial resources

are devoted to the workingenvironment and working lifeissues

➥ both the former WorkingEnvironment Fund and theformer Working Life Fund hadconsiderable resources (theWorking Life Fund SEK 11billion and 25,000 projects)

France➥ two types of technical assistance

are offered by CRAMs and byANACT: (part of the LabourMinistry)

➥ CRAMs also provide financialassistance in form of refunds,loans and grants

➥ subsidies within the FACT existfor innovative operations

➥ support via CRAMs and ANACThas increased slightly in the lastfew years

Luxembourg➥ training activities are organised

by the AAA

United Kingdom➥ there are no such subsidy

programmes in the UK

Question

39

To what extent do investment subsidies exist to promote the development, sale or purchase ofsafe and healthy products, production methods, work organisation, machines, etc.?To what extent do investment subsidies exist to promote the development, sale or purchase ofsafe and healthy products, production methods, work organisation, machines, etc.?

40

8.2 Effects of subsidies and futuredevelopments

Subsidies for promoting investment in measures toimprove occupational safety and health exist in amajority of Member States. In some, such financialarrangements are a relative new instrument; othershave a long-standing tradition of subsidising OSHprevention measures.

The results from this survey show that the effects ofmeasures undertaken as a result of subsidies areoccasionally evaluated in only a few MemberStates (Germany, the Netherlands and Denmark).For some countries subsidised projects arerelatively new and have not yet been evaluated. Inthe countries where these projects have existed fora longer period, they were found to have a positiveeffect, for instance improving working conditionsand the working situation and leading to thedevelopment of new products made using low-risktechnologies and work equipment.

Regarding the future of subsidy arrangements,there seems to be a number of different trends inEurope. In some Member States subsidy funds areunder pressure, while in others (Finland, theNetherlands, Spain) new measures are beingintroduced.

Austria

Germany➥ OSH improved➥ improved production methods

and development of newproducts secured jobs

➥ decision to continueprogrammes is responsibility offederal “Länder”

➥ it is to be expected that thefinancial support will be reduced

Netherlands➥ the measures taken are relatively

new; no effects are known yet.➥ in the past technological

subsidies promoted thedevelopment of new OSHfriendly machines

➥ tax regulation and subsidies fortechnological improvements areexpected to be continued

Belgium

Greece➥ significant response from

enterprises with positive resultsfor OSH

➥ subsidy projects will continue

Portugal

Denmark➥ the arrangements are quite

recent and have not beenevaluated yet

➥ the appropriations are given fora limited time, and were notdesigned as permanentmeasures

Ireland➥ no specific programme of

subsidies in place➥ general modernisation of

working methods and plant etchas improved OSH withinenterprises

Spain➥ the foundation to promote the

improvement of safety andhealth at work has not yetbeen set up and therefore it isimpossible to assess theimpact of the measures

➥ some autonomouscommunities intend tocontinue the financialsupport in the future

Finland➥ most subsidies had a significant

impact on the workingcommunity involved

➥ the aim of some subsidies isalso to disseminate theexperience gained from projects

➥ the amount of subsidies paid toenterprises has been increasedrecently

➥ emphasis is often on projectsthat have an impact on workerswelfare

Italy➥ not yet assessable➥ probably it will be increased by

the Ministry of Industry

Sweden➥ results have been positive

France➥ it is made easier for enterprises

to take measures to improveworking conditions by technicaland organisationalmodernisation

Luxembourg➥ no financial support exists➥ no assessment of the effects

United Kingdom➥ not applicable

Question

41

What has been the effect of these measures? Is this financial support likely to continue orchange in the near future?What has been the effect of these measures? Is this financial support likely to continue orchange in the near future?

42

9.FINANCIAL SANCTIONS ASPART OF ENFORCEMENT

In Chapter 8 subsidies were described as afinancial tool that could promote OSH preventionmeasures. Another type of financial incentive topersuade enterprises to undertake OSH measuresis by means of financial penalties (here defined asa financial sanction imposed by a court) andadministrative fines (here defined as a financialsanction imposed directly by inspectorates) inenforcement practices.

9.1 Financial penalties oradministrative fines

There are two ways to apply financial sanctions.Enforcement authorities can bring violations of lawto court. However, they have a “conservative”attitude toward using this approach, as it involvesuncertainty about the chances of success and thetime scale involved. Further, it seems that ratherdifferent levels of fines exist in the case ofviolations of the law. Some Member States adhereto the principle that the violation involved must notbe profitable, and savings made by the employerprior to the violation are taken into account whensentence is passed.

Another approach involves administrationsthemselves imposing financial sanctions(administrative fines). This can lead to a moreintensive use of such instruments. If violations arerectified or measures taken, lower fines (if any) maybe imposed. However, fines can be higher in thecase of repeated infringements. Differences existbetween the Member States in the way theseadministrative fines are imposed.

From the replies of the Member States assummarised in the table it is clear that they havewell-developed systems for the imposition offinancial penalties and administrative fines onindividual enterprises. Nonetheless, it should bestressed that this does not imply that enforcementfocuses only on imposing penalties or fines.Financial sanctions seem to be applied in amoderate way. Compliance with the legislation inenterprises is the main objective of enforcement.Only in a minority of situations are penalties orfines used, and usually only after the efforts oflabour inspectorates to encourage compliance inother ways have failed.

Austria➥ penalties exist for administrative

infringements on the part ofemployers and employees

➥ they exist also for personsoperating safety centres orindustrial medical centres

➥ penalties are higher in case ofrepeated infringements (amountsare specified)

Germany➥ in the framework of enforcement

of public OSH authorities’orders, administrative fines andprison sentences may beimposed

➥ in certain cases it is alsopossible to seize unlawful profits

Netherlands➥ violation of legislation can be

subject to sanctions. Financialpenalties are imposed forserious violations

➥ mostly agreement is reached onimprovement, warnings aregiven or orders issued. Only in aminority of cases are financialpenalties imposed (2.000involving a total amount of ECU1.4 to 2.3 million)

Belgium➥ administrative fines can result

from action by the labourinspectorate

➥ penal sanctions fall within thejurisdiction of the courts, whichfix the sum of any fines

➥ where the public prosecutor’soffice refrains from initiatingprosecution, an administrativefine may be levied

Greece➥ administrative and penal

sanctions are provided for bylaw; administrative sanctions(fines and stoppages ofoperations) are imposed byinspectors, mostly in sectorswith high risk activities (mainlyconstruction and shipbuilding);penalties (usually imprisonment)are imposed by the courts

Portugal➥ compliance may be secured

through training or the use ofpenalties

➥ penalties may vary according tothe seriousness of the offence

➥ where there is a serious hazard,Inspectors may also ordersuspension of working

Denmark➥ in 1996 DWES recommended

that the prosecution authoritiesbring charges against 447enterprises or individuals

➥ proposed penalty depends onrisk involved and seriousness ofviolation. Basic principle is thatviolations of legislation must notbe profitable

➥ usually, the penalty proposed isabout ECU 1300

Ireland➥ financial penalties are not often

imposed (35 cases in 1996)➥ hazard inspectors may also

order suspension of particularwork which can also have asignificant financial impact

➥ injured parties can also securefinancial compensation throughthe civil courts

Spain➥ Act on Prevention of

Occupational Risks classesinfringements depending onnature of obligation

➥ fines for infringements may beapplied at 3 levels

➥ in 1997, more than 22.000 fineswere imposed involving a totalamount of ECU 43 million

Finland➥ penalties for labour offences are

based on the criminal code➥ he penal scale is from day-fine

to imprisonment for not morethan 1 year. Pecuniary penaltiescan also be used for safetyoffences

➥ the OSH administration can useconditional administrative finesin enforcement of OSH

Italy➥ instructions are given to

transgressors and reported tothe Public Prosecutor; ifviolation is eliminated, fines arediscussed administratively andmay be reduced to a certainminimum

➥ in 1996 about 15,000 fines outof a total of 38,000 relating toverified violations followed theseinstruction procedures

Sweden➥ some sections in the regulations

can lead to penalties ➥ civil courts pass judgement on

these offences which may resultin imprisonment or fines

➥ majority of Inspectorate’sinjunctions may be the subjectof subpoenas

France➥ financial penalties are imposed

by the courts; the size dependson seriousness and number ofemployees put at risk

➥ administrative sanctions, suchas suspension of work activities,particularly in the constructionsector, also have a significantfinancial impact

Luxembourg➥ fines imposed by AAA (up to

10.000 ECU)➥ 100% increase of the enterprise

premiums for a maximum of 5years

➥ administrative measures areoften imposed by labourinspectorates to encouragecompliance

United Kingdom➥ a financial penalty is the most

common penalty imposed by thecourts, although other penaltiesare available

➥ people who suffer work injuriesor work-related ill health canalso secure personal injurycompensation through thecourts

Question

43

To what extent are financial penalties and administrative fines used in the enforcement oflegislation?To what extent are financial penalties and administrative fines used in the enforcement oflegislation?

44

9.2 Effects of financial sanctionsand future developments

The application of financial sanctions is one of theinstruments available to the authorities toencourage improvements in occupational safetyand health. Despite the fact that well developedsystems for the application of financial sanctionsexist, relatively little is known about the preciseimpact of this type of measure. Most MemberStates do not know the exact effects of the financialsanctions imposed.

Some Member States (Ireland) indicate that theexisting financial sanctions are rather low to act asa serious deterrent, or that their imposition by thecourts is too uncertain and long a procedure andtherefore inefficient (the Netherlands). Othersargue that it is not the financial sanction as such,but the publicity around a court case that seems tohave the major impact (Finland, Luxembourg).

Some Member States report that the measureshave had a positive effect on the OSH situation.Furthermore, there seems to be a trend towardsincreasing the level of financial sanctions (theNetherlands, France, the United Kingdom). OtherMember States have no plans to increase financialsanctions as they have only recently changed theirregulations in this respect (Belgium, Spain, andDenmark).

Austria➥ in the past few years the number

of infringements of occupationalsafety and health regulationsidentified has tended to decrease

➥ there are no current plans tochange the existing penaltyprovisions, although demandsfor changes are being heard insome quarters

Germany➥ the consequence of the

measures is that as a ruleenterprises comply with law

➥ the measures contribute to thefact that in general in Germanenterprises occupational safetyand health provisions areextensively implemented

Netherlands➥ the introduction of an

administrative penalty isexpected in a plannedamendment to the WorkingConditions Act. With thisadditional instrument the LabourInspectorate will be able toimpose fines directly upon theemployer

Belgium➥ the effect of these measures on

employers is not known➥ the new law on the welfare of

workers at work (1996)increased the penal sanctions. Itnow covers the employer, hisagents or representatives, anyoutside company, the projectsupervisor, the client, and sub-contractors, including the self-employed

Greece➥ financial penalties have been

found to make an importantcontribution to theimplementation of legislation byemployers

➥ they will continue to be appliedwith readjustments in the levelsof fines every 4-5 years (lastreadjustment was made in 1994)

Portugal➥ existence of penalties

encourages risk prevention andthe improvement of safety andhealth conditions

➥ it is planned to revise theamounts of the penalties set inthe oldest legislation

Denmark➥ no quantitative data is available➥ penalty provisions were

expanded in 1997➥ the main purpose of the

amendment is to influence thegeneral level of financialpenalties, which it is assumedwill increase

Ireland➥ financial penalties, where

applied, are generally low anddo not act as a deterrent

➥ there appears to be a commonview that financial penaltiesshould be increased to the pointwhere they act as deterrent

Spain➥ the effect of administrative fines

has not been assessedindependently of other measures

➥ the law on the Prevention ofOccupational Risks came intoforce in 1996 and there isunlikely to be any change inmaximum fines in the near future

Finland➥ trials are usually rather efficient

mainly because of publicity➥ OSH administration’s sanctions

make its own activities moreeffective

➥ renewal of criminal code is toorecent to evaluate

➥ a change is prepared, so thatfines can be imposed directly

Italy➥ historically fines have been

effective as a generalpsychological deterrent, but thiseffect cannot be quantified

Sweden➥ no evaluation has been made so

far

France➥ these measures have a deterrent

effect➥ a number of penal sanctions

have recently been tightened➥ no plans to amend the

enforcement procedures areexpected

Luxembourg➥ the effects of penalties and fines

are limited but positive➥ bad publicity around a court

case is efficient➥ the doctrine of courts regarding

penalties may change

United Kingdom➥ no evaluations have been carried

out➥ there are no plans to increase

the maximum fines, butMinisters have expressed thewish to see an increase in theactual level of financial penaltiesimposed within the existinglimits

Question

45

What has been the effect of these measures? Are any changes likely in the extent to whichthese sanctions are applied or the level of sanctions imposed?What has been the effect of these measures? Are any changes likely in the extent to whichthese sanctions are applied or the level of sanctions imposed?

46

10.INCENTIVES IN SOCIALINSURANCE SCHEMES

So far no explicit reference has been made to thepotential role of social insurance schemes(including social security) in relation tooccupational safety and health. Attention hasfocused mainly on the role of direct measures bynational or regional authorities. Nonetheless, itshould be stressed that social insurance schemes(whether run by public administrations, socialpartners or private organisations) can play animportant role in encouraging improvements inoccupational safety and health, especially as theyhave a direct interest in bringing down the numberof occupational diseases and accidents.

In this context Member States were asked to give ashort description of the main features of the socialinsurance system in relation to OSH and to indicateto what extent financial incentives exist withinthese schemes that improve OSH. Furthermore,Member States were asked about possible futurechanges in the level of these incentives.

10.1 Main features of socialinsurance system

In the European Member States social insurancesystems deal with the financial consequences of

occupational accidents and diseases foremployees. Social insurance for occupationaldiseases or accidents is often a statutoryobligation. This does not necessarily mean that theinsurance of occupational injuries is part of anational social security system. In some MemberStates private insurance companies under publicsupervision (semi-public) are responsible forthese insurances. Some Member States haveseparate insurance systems for occupationalaccidents and occupational diseases.

In some Member States (United Kingdom)employees with occupational injuries may also beable to claim compensation through the courts ifthey can prove that the employer was negligent inmeeting their duty of care to the employee.

Austria➥ statutory obligation➥ covers only standard benefits➥ accident insurance is directed at

preventive and curative care andcompensation

Germany➥ Accident Insurance Funds are

corporations under public lawand self governed by the socialpartners

➥ accident insurance is structuredaccording to sectors of economy

➥ statutory task is to preventaccidents, occupational diseasesand work-related health hazards,and to alleviate theirconsequences

Netherlands➥ the social insurance system

makes no distinction betweensickness and disability due towork related causes or due toother causes

➥ employers have to pay the costsof sick leave during the first yearof sickness

➥ employees’ disablementinsurance covers sickness anddisability for those who havebeen sick for a period longerthan a year

➥ medical costs are covered bynational or private insuranceschemes, depending on income

Belgium➥ dual system: occupational

diseases covered by socialinsurance scheme, occupationalaccidents covered by privateinsurance schemes

➥ occupational diseases fund isaimed at curative care andcompensation

➥ compensation is paid and thecosts of treatment arereimbursed if one can prove thatexposure occurred; if not on thelist, victim must prove thatdisease stems from job

Greece➥ compulsory public social

security schemes

Portugal➥ private insurance system against

accidents coordinated by theInstituto de Portugal

➥ occupational illness comesunder the social security systemthrough the National Centre forProtection from OccupationalRisks, which is financed throughemployers’ contributions

Denmark➥ most important financial

incentive is that employers paycosts of sick leave during firsttwo weeks (private) or fullsickness period (publicemployers)

➥ the compulsory system ofemployer liability insurance forwork accidents is a privateinsurance arrangement

➥ compulsory employer liabilityinsurance for occupationaldiseases is taken care of by areinsurance body.

Ireland➥ there is a system of compulsory

social insurance to which bothemployers and employeescontribute

➥ employees who suffer workplaceinjuries or diseases are eligiblefor certain social securitypayments

Spain➥ compulsory scheme as part of

the social security system ➥ usually, insurance is guaranteed

by the Mutual Association forOccupational Injuries andDiseases (independentemployers’ association set up forjoint management of liabilities).Sometimes, it is guaranteed bythe body responsible for thesocial-security system

➥ insurance aimed at preventiveand curative care andcompensation

Finland➥ accident insurance system is

obligatory and statutory➥ private insurance companies

under public supervision areresponsible for accidentinsurance

➥ employees insurance;entrepreneurs and their familymembers are in general notcovered by a obligatoryinsurance scheme (exceptfarmers)

Italy➥ insurance is compulsory and

covers all accidents at work, aswell as all diseases recognisedas directly related to work

➥ managed by INAIL, operatingunder the auspices of theMinistry of Labour

Sweden➥ work injury insurance is

obligatory for all personsgainfully employed and it isfinanced through socialcontributions from employers

➥ the insurance is co-ordinatedwith the regular sickness benefit

France➥ risk for occupational injuries

(accidents and diseases) iscovered by the national securitysystem

➥ the majority of workers areinsured by the CNAM

➥ it indemnifies injured workersand fixes the rate of insurancecontributions paid by enterprises

Luxembourg➥ managed by the Accident

Assurance association (AAA)operating under the auspices ofthe government

➥ obligatory and statutory system➥ employees insurance➥ insurance covers occupational

accidents and diseases

United Kingdom➥ in addition to general

disablement benefits, specificbenefits are available for peopledisabled as result of workaccidents of suffering fromspecified occupational diseases

➥ compulsory insurance system inwhich employers are required totake out insurance to cover theirliability for injury or ill healthsuffered by their employees atwork

Question

47

Short description of the social insurance system as regards occupational accidents anddiseasesShort description of the social insurance system as regards occupational accidents anddiseases

48

10.2 Incentives in social insurance

Social insurance systems that cover the costs ofoccupational diseases and accidents, involvesubstantial financial resources that are collectedthrough contributions from employers andworkers.

Levying premiums offers the opportunity to createfinancial incentives to encourage preventive actionin companies. A small majority of the EuropeanMember States have mandatory financialincentives built into social insurance schemes.They report a variety of such incentives. Thedifferentiation of premiums for insuring againstoccupational accidents and diseases or ofcontributions to the social security system is themost common.

The differentiation in premium or contributionusually depends to some extent on the companies’behaviour or results with regard to occupationalsafety and health. The indicators that determine thepremiums vary. The premium differentiation can berelated to the risk level in different sectors orindeed to the risk level or working conditions inindividual enterprises. The latter is only the casefor larger companies. In some countries, the size ofthe premiums depends on the degree ofcompliance with the regulations, whilst in others it

is the extent to which appropriate safety and healthmeasures are implemented that is decisive.

In some Member States social insurance systemsinclude, besides the above-mentioneddifferentiation in premiums or contributions, othertools to encourage companies to improve safetyand health at work; these include:

— advances or grants for preventive action;

— partial compensation for employers for thecosts of an occupational health service;

— obligation to pay the costs of periods ofabsence on account of illness;

— reclamation of costs in case of grossnegligence by the employer.

In general the Member States do not foresee anymajor changes in the level or nature of theseincentives. However, there seems to be a trendtowards greater differentiation of premiums forinsuring against occupational accidents anddiseases. In Sweden the introduction of financialincentives is the subject of debate.

Austria➥ the social insurance institutions

may take action to recover fromthe employer social insurancebenefits paid in the case ofindustrial accidents oroccupational diseases, in casesof gross negligence or wilfulprovocation

➥ no changes are foreseen

Germany➥ contribution reflects the

difference in extent and costs ofaccident prevention in individualcompany

➥ an additional system involvingthe imposition of supplementson or the granting of discountsto the insured company rewardseffort put into OSH measures

➥ incentives are reviewed regularlyand adjusted to risk tariff

Netherlands➥ employers pay at least 70% of

the wages during first year ofsick leave but can insure againstthis. Premium is based on thelevel of sick leave

➥ after first year DisablementBenefits Act insurance coverssickness and disability. Premiumrelated to number of disabledpersons who left company in lastfive years

Belgium➥ the Occupational Disease Fund

does not include financialincentives

➥ no changes are expected in theOccupational Disease Fund’spolicy on prevention. However,varying contributions to theFund according to anenterprise’s efforts on preventionis a possibility

Greece➥ IKA imposes an occupational

risk contribution on employerswhich is related to OSHstandards in the enterprise

➥ this incentive has not beensuccessful so far

➥ new incentives are underinvestigation

Portugal➥ financial incentives to improve

occupational safety and healthdo not exist in the Portuguesesocial insurance schemes

Denmark➥ neither social insurance

schemes nor social benefitsystems contain specificfinancial incentives

➥ most important financialincentive is that employers paycosts of sick leave during firsttwo weeks (private) or fullsickness period (publicemployers)

➥ no changes are expected

Ireland➥ there are no specific incentives

in the social insurance schemes

Spain➥ insurance may be reduced by up

to 10% if effective preventivemeasures are used or raised byup to 20% for enterprises thatfail to comply

➥ the amount of benefit payablewill be increased by 30-50%when the injury or illness is theresult of failure to comply

➥ changes are foreseen from 1998

Finland➥ compensation to employers for

costs of occupational healthservice

➥ accident insurance schemesinclude incentives for largecompanies, special tariffsystems where premiums arebased on accidents

Italy➥ the premium paid by employers

to INAIL is calculated on thebasis of the total amount ofsalaries, at a variable ratedepending on specific risks

➥ INAIL introduced 3 kinds ofincentives: rate differentiation,SMEs’ premium and buildingsector premium

➥ rate differentiation depends onthe application in full ofprevention regulations

Sweden➥ no financial incentives exist in

the social insurance schemes➥ financial incentives are the

subject of debate

France➥ CRAMs provide financial

incentives for SMEs in the formof advances or grants

➥ no substantial changes areexpected

➥ larger enterprises can benefitfrom refunds on their insurancecontributions if they takemeasures to improve OSH

Luxembourg➥ no incentive exists➥ levying of premiums by risk

sectors offers a kind of financialincentive

➥ more company- oriented levyingis under discussion

United Kingdom➥ there are no financial incentives

in the UK social security system.Compensation is paid by thestate from general taxation

Question

49

To what extent do financial incentives exist in social insurance schemes to improveoccupational safety and health? Do you foresee changes in either the incidence or thelevel of these incentives?

To what extent do financial incentives exist in social insurance schemes to improveoccupational safety and health? Do you foresee changes in either the incidence or thelevel of these incentives?

50

10.3 Private insurance schemes

European Member States not only have mandatorysocial insurance schemes, but sometimes alsovoluntary private insurance schemes that includefinancial incentives to encourage companies toimprove the level of occupational safety and health.The most important incentives used in privateinsurance schemes are:

— differentiation of premiums for insuring thecosts of, for example, sick leave and medicaltreatment that are related to occupationalaccidents and diseases;

— differentiation of premiums for insuring againstclaims of employees against their employer inthe case of occupational accidents anddiseases.

The scope for financial incentives provided byprivate insurance schemes to improve safety andhealth is limited. In most cases, especially forsmaller firms, the cost of insurance is related tosector-wide experience of claims rather thanassessment of the effectiveness of the individualfirm’s safety and health performance.

There is more scope for private insurers to offerincentives to large employers who operate riskmanagement systems recognised by the insurer.For other - smaller - companies, however,

insurance premiums often take account only of therisks involved and pay almost no attention to acompany’s prevention efforts. Moreover, since thecost of insurance is linked to market forces,incentives linked to safety and health performancetend to be overshadowed by fluctuations in costscaused by market conditions.

Although there is a trend in some Member Statestowards more flexible insurance premiums, notmany changes are expected in either the level or theincidence of these financial incentives in privateinsurance schemes.

Austria➥ not known if there are financial

incentives in private insuranceschemes specifically geared tooccupational safety and healthmeasures

Germany➥ companies are obliged to join a

statutory accident insurancescheme. Private accidentinsurance schemes do not usefinancial incentives to try andimprove occupational safety andhealth in companies

Netherlands➥ insurers determine the premium

for insurance against payment ofsick leave in the company

➥ companies can also choose topay the costs of sick leavethemselves or to insure only partof the costs

➥ further changes are not expected

Belgium➥ good results concerning

occupational accidents are takeninto account by insurers.Premiums may vary by up to15%

➥ premiums for small firms do notvary much

➥ there is a trend towards takinginto account the risks involvedand a company’s preventionefforts

Greece➥ private insurance organisations

usually take into account thetreatment of OSH matters by theinsured enterprise, as well asresults relating to the insurancesubject (e.g. progress ofaccidents)

➥ no data available on futuredevelopments

Portugal➥ introduction of premiums

graduated according to the riskof work accidents within the firmin 1998

➥ premiums will be assessed byreference to the activity pursuedand the conditions of preventionat the workplace

Denmark

Ireland➥ financial incentives exist to the

extent that claims costs arelinked to premium levels.

➥ pilot scheme has beendeveloped whereby certain newSMEs which agree to undertakean approved course in OSH andsubsequently put in place anappropriate Safety Managementsystem are then offered reducedinsurance premiums

Spain➥ the risk of occupational

accidents and diseases is notcovered by private insuranceschemes

Finland➥ private insurance schemes do

not include features that affectOSH

➥ no changes in prevailingpractices are expected in thenear future

Italy➥ no financial incentives or rate

discounts➥ the premium is fixed on the

basis of the concrete risk beingcovered

➥ the adoption of safety and healthmeasures can be a factor in theapplication of a more favourablepremium

Sweden➥ no financial incentives exist➥ private insurance systems do not

include features that affect safetyand health

France➥ the risk of occupational injuries

(accidents and diseases) iscovered by the national socialsecurity system and not byprivate insurance schemes

Luxembourg➥ enterprises must by law affiliate

to the AAA➥ no private insurance schemes

exist

United Kingdom➥ scope for financial incentives

within insurance is very limited➥ especially for smaller firms, the

cost of insurance is related tohistorical or sector-wideexperience of claims

Question

51

To what extent do financial incentives exist in private insurance schemes in order to improvesafety and health? Do you foresee changes in either the incidence or the level of theseincentives?

To what extent do financial incentives exist in private insurance schemes in order to improvesafety and health? Do you foresee changes in either the incidence or the level of theseincentives?

52

11.SELECTING CONTRACTORSON BASIS OF OSH CRITERIA

A rather new and somewhat different approach is topromote occupational safety and health inenterprises by selecting contractors or suppliers ofproducts, goods and services on the basis of theirperformance regarding safety and health at work. Inthe context of this project Member States wereasked whether public organisations (at national,regional or local level) - acting in their capacity asprivate organisations - select contractors orsuppliers on the basis of OSH criteria.

The results of this survey show that many MemberStates have some experience in this regard.

Sometimes a legalistic approach is taken in whichpublic organisations requires the contractor tocomply with OSH legislation. In some MemberStates there is specific legislation to prohibit publicorganisations from awarding contracts to anyonewho has been found guilty of offences concerningsafety and health at work (Spain). Sometimes thespecifications for public contracts impose theobligation to comply with safety and healthregulations during the execution of works. In otherMember States, it is left up to the discretion (orinitiative) of the public organisations in question totake account of contractors’ safety and healthperformance.

Public organisations, in their capacity as privateorganisations, may also require OSH standardsthat go beyond the minimum set by regulations ordemand specific initiatives that support thepractical implementation of OSH at the workplace -for example training programmes or campaigns(the Netherlands).

There are several reasons why it can be consideredimportant for contractors’ safety and healthperformance to be taken into consideration inawarding contracts.

Firstly, public organisations (national and local) -acting as private organisations - can contract outsubstantial amounts of work. Contracts betweenpublic organisations and contractors can berelatively big or the kind of work/service requiredrather specific. It can create an incentive to havegood safety and health performance in certainsectors. Secondly, contracting good companiesmay function as an example of good workingpractice for others.

Austria➥ in some individual cases the

parties to a contract are obligedto comply with the relevantoccupational safety and healthregulations

Germany➥ whenever public authorities

award contracts, the contractincludes binding preconditionsthat statutory provisions,including OSH regulations, haveto be complied with

Netherlands➥ several examples exist where

authorities as privateorganisations impose conditionson contractors about safety andhealth standards for thepurchase of goods and services,for example regarding cleaningservices and dredging

Belgium➥ procurement procedures govern

the purchase of work equipmentand personal/collectiveprotection equipment in thepublic sector

➥ principal employer must rejectsub-contractors whom he knowsto have a poor safety and healthrecord

Greece➥ all authorities impose conditions

concerning OSH➥ contracts are strictly

implemented in the case of thepurchase of goods or servicesfor which certain requirementsor standards are provided for bylegislation (e.g. construction,equipment, etc.)

Portugal➥ all authority bodies must comply

with the specific legislationcovering public-works schemesand the acquisition of goods orservices

➥ for products, these mustguarantee a range of technicalsafety specifications inaccordance with European ornational standards

Denmark➥ OSH variables are included in

purchasing policy guides forstate and local authorities,mostly with respect to products

➥ quantitative data on theconditions imposed are notavailable

Ireland➥ some organisations request a

copy of the supplier’s safetystatement before purchasingservices/goods

Spain➥ public administrations are

prohibited from awardingcontracts to anyone who hasbeen found guilty of offencesconcerning OSH. Thespecifications for publiccontracts lay down obligation tocomply with OSH regulationsduring the execution of works

➥ products offered to publicadministrations must complywith safety specifications

Finland➥ it is not common to impose such

conditions

Italy➥ the legislation in force requires

that tender forms stipulate thatsafety regulations must berespected in accordance with theEuropean Directives

➥ a national association (ITACA)was recently founded to defineand develop transparentadministrative procedures ofhigh quality in public tenders

Sweden➥ it is not common to impose such

conditions

France➥ contractors must comply with

welfare regulations. Theseinclude occupational safety andhealth

Luxembourg➥ the AAA imposes its own

accident prevention rules oncontractors

➥ large companies impose theirOSH standards on contractors

United Kingdom➥ all businesses, including local

authorities, have certainresponsibilities for the actions oftheir contractors under safetyand health legislation. Howauthorities seek to influencecontractors is largely a matter forthe individual authority

Question

53

To what extent do public organisations - acting as private organisations - select contractors onthe basis of safety and health standards in the purchase of goods and services?To what extent do public organisations - acting as private organisations - select contractors onthe basis of safety and health standards in the purchase of goods and services?

55

Part 4. EUROPEAN LEVEL

56

12.INITIATIVES AT EUROPEANLEVEL

Member States were asked which initiatives couldbe undertaken at European level regarding theeconomic aspects of occupational safety andhealth.

According to most Member States, there is a needfor exchanges of information about estimating thecost and benefits of measures taken by nationaladministrations. This is seen as helpful, andshould in the view of some countries be morestrongly pursued. In particular, economicassessments of EU directives, information at themacro level and studies of specific measures werementioned.

With regard to methodology development atnational level, it is the view of many Member Statesthat a methodology is needed that would make itpossible to assess the impact of applying EUdirectives using common factors that would allowfor comparisons. Finland recommended furtherharmonisation of statistics between the MemberStates, such as the quantification of the incidenceof work-related sickness. These data werementioned as basic preconditions for subsequenteconomic analysis and for assessing the costs andbenefits of current or proposed EuropeanDirectives. At the moment, any estimation of

comparable European figures is both difficult andlaborious.

Development of methodology or instruments to beused at company level is suggested by a number ofcountries. Some Member States (Italy, theNetherlands) stressed the importance of simplemodels for cost-benefit analysis, also to be used bySMEs in their day-to-day practice. These practicaland simple methods should explicitly addressbenefits other than the reduction of sick leave, suchas productivity, product/service quality andcompetitiveness. Methods and instruments in thisarea would be less influenced by national legislationand could be disseminated more easily. Greecesuggested that the social partners should beinvolved, in order to add their own figures, views andexperiences, in any future activity affecting economicaspects at European level.

In addition to methodology development (for bothnational and company levels), a wide range ofdifferent suggestions were made for initiatives tobe taken at the European level, such as:

— evaluation of measures with respect toproductivity and competitiveness;

— guidelines for homogeneous indicators,improvement of comparability;

— database of measures, costs and effectiveness;

— pilot projects, research

— exchange of successful methods and examples.

The dissemination of information on financialincentives is supported by most Member States.Some Member States suggest more research anddissemination of empirical evidence of theeffectiveness of insurance-based incentivesystems.

The SHAPE project will also produce relevantinformation on methodologies. This project -financed by the European Commission - isintended to develop and test methodologies foroccupational safety and health cost-benefitanalyses.

57

TABLE. OVERVIEW OF INITIATIVES AT EUROPEAN LEVEL SUGGESTED BY MEMBER STATES

AU BE DK FI FR GE GR IR IT LUX NL PT ES SW UK

Estimates regarding EU directives anddissemination thereof JJ JJ JJ JJ JJ JJ JJ

Dissemination of estimates and dataat national level JJ JJ JJ JJ JJ JJ JJ JJ JJ

Development and experiencesof methodologies (macro level) JJ JJ JJ JJ JJ

Harmonisation of data, improvementof comparability JJ JJ JJ JJ JJ

Development and comparison of methodsinstruments for companies JJ JJ JJ JJ JJ JJ JJ

Dissemination of good examples, pilotprojects, databases JJ JJ JJ JJ JJ JJ JJ JJ JJ

Information on case studies, disseminationto SMEs JJ JJ

Estimate of benefits, effects on productivityand quality JJ JJ JJ JJ JJ JJ

Effectiveness, efficiency indicators JJ JJ

Economic incentives JJ JJ JJ JJ

Research projects JJ JJ JJ JJ

Austria➥ it is not possible for estimates of

this kind to be carried out. Atbest, they would lead to theprovision of misleadinginformation, an exchange ofinformation appearsunnecessary

Germany➥ exchanges of information on

these issues should be morestrongly pursued

Netherlands➥ the dissemination of information

on case material seemsparticularly valuable. Thisinformation can be ofeducational value. Obtainingsufficient case material isextremely expensive. Samples ofthe available internationalknowledge could be useful

Belgium

Greece➥ dissemination and exchange of

information among nationaladministrations with examplesand comments (either throughdocuments, the Internet or visitprogrammes)

➥ collection of data, views andsuggestions from the socialpartners and from the socialsecurity organisations

Portugal➥ initiatives contributing to the

exchange and dissemination ofinformation on cost-benefitanalysis are of great importance,both for administrations and forcompanies

Denmark➥ the EU Commission could

disseminate the final documentson the impact assessment of EUdirectives

Ireland➥ there appears to be very little

information available on theabove costs/benefits. Perhapsfunding for research should bemade available

Spain➥ promoting the provision of

maximum information on theexperiences of nationaladministrations as regardsestimating the cost and benefitsof public measures

Finland➥ all analyses of impacts should

be easily available

Italy➥ the dissemination of information

to SMEs, using simplelanguage, first of all through theEuropean Agency Network, butalso directly through the INAILand the Chambers of CommerceINFO Centres

Sweden➥ dissemination of estimates and

data at national level➥ more information and analysis of

the impact of economicincentives on OSH

➥ increased exchange ofexperience using differentmethods and models

France➥ exchange of information between

national administrations may behelpful (statistical surveys,methodological experiments,etc.)

Luxembourg➥ the SHAPE project of NIA TNO

commissioned by DG-V couldbe used for this purpose

United Kingdom➥ information on specific studies

designed to assess the costs andbenefits of measures may behelpful

➥ experience with methodologyand results could be morewidely shared.

➥ activity on the costs of poorsafety and health shouldconcentrate, in the short tomedium term, on thedissemination of nationalstudies

Question

58

Which initiatives could be undertaken at European level regarding exchanges of informationabout estimating the cost and benefits of measures taken by national administrations?Which initiatives could be undertaken at European level regarding exchanges of informationabout estimating the cost and benefits of measures taken by national administrations?

Austria➥ calculations of this kind at

European level could be useful➥ the meaningfulness of estimates

of this kind is limited➥ concrete consequences should

be clarified in advance beforecost-benefit analyses aredeveloped

➥ new methodologies must notresult in additional work

Germany➥ comparison and critical

evaluation of appropriateinstruments e.g. by setting up asuitable information network

➥ European efforts shouldprimarily focus on developingthe methodology for estimatingthe costs and benefits of OSHand describing their advantages

Netherlands➥ the gathering of periodic

estimates on cost andeffectiveness at enterprise-levelfor the different kinds of healthrisk and the different sectors ofindustry and sizes of enterprisesis recommended

➥ database of measures, the costsand effectiveness for certainrisks

Belgium➥ priority should be given to

evaluating how measures affectcompetition, employment levels,productivity and product quality


information among nationaladministrations with examplesand comments (documents, theInternet or visit programmes)

Portugal➥ special care should be taken in

defining the parameters forestimating benefits

Denmark➥ further developments should

focus on the quantification of theincidence of work-relatedsickness

➥ at enterprise level “benefit”components other than sickleave are needed

➥ further development of practicaland simple methods to includeproductivity and product/servicequality in company-levelcalculations is needed



Spain➥ developing a methodology that

would make it possible to assessthe impact of applying EUdirectives, using commonfactors that would allow forcomparisons

Finland➥ harmonisation of statistics is a

prerequisite for comparability.Economic calculations andcomments on these calculationsshould be easily available

➥ methods for calculating andestimating the costs and benefitsof OSH should be assessed anddeveloped through Europeancooperation

➥ successful methods should bedisseminated

Italy➥ the preparation of guidelines for

the identification ofhomogeneous indicators toestimate costs and benefits

Sweden➥ a European model should be

aimed at

France➥ use of expert groups is

recommended to develop amethodology to evaluate thecosts and benefits of safety andhealth at work within theadvisory committee on safetyand health at work inLuxembourg

➥ pilot projects in enterprises aresuggested to test methodologiesto estimate these costs andbenefits

Luxembourg➥ establish EU statistics on the

nature and location of injuries➥ evaluate standard sick leave➥ costs of OSH compared to

working hours gained (workingtime minus sick leave losses)

United Kingdom➥ at present, any estimation of

consistent pan-European figuresis likely to be both difficult andresource-intensive. Further workon experience in assessing thecosts and benefits of current orproposed European Directiveswould be especially helpful

Question

59

Which initiatives could be undertaken at the European Level regarding the calculation of poorOSH and the development and use of methodologies to estimate costs and benefits?Which initiatives could be undertaken at the European Level regarding the calculation of poorOSH and the development and use of methodologies to estimate costs and benefits?

Austria➥ the collection, processing and

dissemination of information ofthis kind could be carried out bythe Agency

Germany➥ the development of overall

economic efficiency indicatorsshould be considered; for thispurpose, safety and healthinformation should beincreasingly combined witheconomic data (e.g. periods ofunfitness for work in relation toproduction)

Netherlands

Belgium➥ positive towards any European-

level initiative in this field


information among nationaladministrations with examplesand comments (either throughdocuments, the Internet or visitprogrammes)

Portugal

Denmark➥ more empirical evidence of the

effectiveness of insurance-basedincentive schemes



Spain➥ promoting the provision of

information on the practicesemployed by enterprises tocalculate the impact ofpreventive measures on theirfinancial results

Finland➥ research on incentives used at

present; study their significancemore thoroughly and widely

➥ comparative studies of theeconomic impacts of differentkinds of measures

➥ a study of the interactionbetween working conditions andproductivity could be conductedon a cooperative basis

Italy➥ the identification of all European

financial sources directly orindirectly supporting anddeveloping occupational safetyand health (research, education,structural funds)

Sweden➥ sharing of the results of studies

on financial incentives and theirimpact on OSH

France➥ open to development European

projects such as SHAPE on thebasis of evaluations discussedwithin the Advisory Committeein Luxembourg

Luxembourg➥ the (existing) SHAPE project is

of importance➥ dissemination of information

through the Agency’s network

United Kingdom➥ any work on financial incentives

should take full account of thework carried out by the EuropeanFoundation, to avoid duplication

➥ devising simple methodologiesfor firms making day-to-daydecisions, especially for SMEs;the SHAPE research project mayprovide, in time, relevantinformation

QuestionWhich initiatives would be feasible concerning information about the use of financial incentivesor other instruments?Which initiatives would be feasible concerning information about the use of financial incentivesor other instruments?

60

61

Part 5. CONCLUSIONS

62

CONCLUSIONS

Considerations regarding the costsand benefits of OSH measures

1. The economic impact, and more specifically theestimating of the costs and benefits ofoccupational safety and health, has become animportant issue in most Member States of theEuropean Union and the attention paid to it isstill increasing.

2. In Member States different financial incentivesand instruments are used in occupational safetyand health policy. Cost-benefit analysis (CBA)is the best known tool at the moment. However,other incentives such as the use of subsidiesand financial sanctions are also important.

3. In some Member States the assessment of theeconomic impact is one of the standard piecesof information used in political decision-making. However, the way economicassessments influence decision-making variesfrom one Member State to another

4. Although CBA is seen as an important part ofthe decision-making process on new measuresin most Member States, the impression is thatethical considerations are still predominant.

The Economic Impact ofOccupational Safety and HealthPolicy

5. In many Member States Cost-benefit analysisbefore a measure is taken is often routine, andis sometimes even mandatory. Other measuressuch as campaigns etc. are assessed much lessfrequently.

6. Cost-benefit analysis is carried out afterimplementation of an OSH measure in only afew Member States.

7. The way assessments are performed varies fromone country to another and may also varyaccording to the nature of the measure. Estimatingthe benefits proves particularly difficult. Socialaspects are usually to some extent included.

8. Member States indicate that there are manyproblems involved in estimating the benefits,including a lack of reliable data, difficulties inisolating relevant factors, and the fact that benefitsoften become apparent only after some time.

9. Some Member States have estimated the cost ofwork-related illness as a percentage of GrossNational Product. Reported percentages rangefrom 2.6 to 3.8 (with a variety of cost factorsincluded). For other Member States estimateswere based on the total of the reported cost data

as a proportion of GNP. Percentages rangedthen from 0.4 to 4.0.

10. The methods of estimating the costs of work-related illness as a percentage of GNP vary toogreatly to permit strict comparison betweenMember States. Nonetheless, it is believedthat the range of indications of the costs ofwork-related risks gives an approximation ofthe real costs involved.

11. For individual enterprises it is more importantto know if specific investment in OSHmeasures will lower their costs. In mostMember States instruments exist, or are beingdeveloped, which give support to enterprisesin evaluating the costs and benefits ofmeasures. Small and medium-sizedenterprises often lack the financial andpersonnel resources to apply these methodsappropriately.

Use of financial incentives

12. Subsidies that promote the development, saleor purchase of safe and healthy products,production methods, work organisation,machines etc. exist in a majority of MemberStates. However, only in a few Member Statesare the effects of measures undertaken as aconsequence of subsidy evaluated.

63

13. Regarding the future of subsidy arrangements,there seem to be a number of different trendsin Europe. In some Member States subsidyfunds are under pressure; while in others newmeasures are being taken.

14. The Member States have well-developedsystems for the imposition of financialpenalties and administrative fines onindividual enterprises. Nonetheless, theyseem to be applied in a rather moderate way.Compliance with the legislation is the mainobjective of enforcement.

15. Some Member States indicate that the level offinancial sanctions is too low to work as adeterrent and that they have therefore takeninitiatives to increase them. Furthermore, thereseems to be an increasing interest amongadministrations in using administrative finesthemselves instead of, or in addition to,bringing offenders to court.

16. In a small majority of the European MemberStates financial incentives form part ofmandatory social insurance schemes foroccupational diseases and accidents. Theyreport a variety of incentives. Differentiation ofpremium is the most common incentive.

17. Smaller firms are especially affected by the factthat financial incentives in premium policy are

usually more related to sector-wide experienceof claims than to assessment of theeffectiveness of the individual organisation’ssafety and health arrangements.

18. A rather new and different approach topromoting occupational safety and health inenterprises involves public organisations - intheir capacity as private entities – selectingcontractors or suppliers of products, goodsand services on the basis of their performanceregarding safety and health at work.

19. Many Member States recognise the need toexchange information about estimating thecost and benefits of measures. Many MemberStates stress the importance of a methodologyto assess the impact of EU directives.

Initiatives at European level

20. A further development of instruments to beused at company level is suggested. SomeMember States stressed the importance ofsimple models for Cost-benefit analysis, thatcan be used by SMEs in their day-to-daypractice.

65

ANNEXES

I.

66

DEFINITIONS1

Absenteeism

Temporary absence from work due to both sick leaveand non-specific absence from work.

Administrative fines

Financial sanctions imposed directly by aninspectorate

Benefits

The benefits of an activity or policy can be assessedfrom the difference between the total corrective costsin the situation before and after measures plus themonetary value of other improvements that can berelated to the project or policy.

Cost-benefit analysis (CBA)

A technique for evaluation of the total costs andbenefits in monetary units at the level of society or ofa specific project. CBA compares the preventioncosts with the benefits (i.e. reduction in correctivecosts plus additional gains).

Cost-of-illness (COI)

A method of adding costs that can be associated withdiseases and illnesses.

COI analysis quantifies the magnitude of theproblem, while other methods must be used tochoose between solutions. COI analysis can involveboth financial and socio-economic costs, accordingto the agent(s) for whom the calculation is performed.In a cost-of-illness methodology “costs” are theresources used that can be associated with specifichealth outcomes.

Costs

The money value of resources used. In this project,the term preventive costs is used to mean the use ofresources for preventive action and corrective coststo describe the consequences of accidents and theincidence of sickness.

Early retirement

Any permanent withdrawal from working life before“normal” retirement age (as defined by nationalhabits and legislation). As a health indicator, earlyretirement is often defined as persons receivingdisability pensions.

Financial costs

Expenditure (in monetary terms) for one economicagent, i.e. the enterprise, the individual or the publicsector. Financial costs include transfers betweenagents, as opposed to social costs.

Financial penalties

Financial sanctions imposed by a court.

Human cost

A term used in socio-economic calculations todescribe the value of quality of life (which includesmental and physical health) as such. The term “griefand suffering” or “healthy life expectancy” may alsobe used to describe the same phenomena. Humancosts may be quantified by willingness to paymethods.

Non-medical rehabilitation

Expenditures incurred to create opportunities fordisabled persons to perform normal activities, suchas workplace or housing conversions andoccupational rehabilitation.

Occupational accident

A sudden event, caused by external circumstanceswhich took place in connection with work. The effectsof accidents may be: ill health or injury, damage to

1 This annex is partly based on the European Foundation’s report «A model for assessing the costs of stressors at national level»

67

property, plant, products or the environment,production losses or increased liabilities.

Occupational diseases

Diseases of workers that are known (or presumed) tobe caused by unfavourable working conditions.Occupational illnesses are officially recognised byauthorities or insurance schemes, whereas work-related diseases are not.

Opportunity costs (of accidents oroccupational diseases)

Lost business opportunities (orders, sales) thatwould probably not have not been lost if no accidentor occupational disease had occurred.

Output loss

A method used to establish the money value ofworking time lost due to sickness. The value of aworking hour (week, year) lost is assumed to be themarginal output (production) of the worker.

Payback Period

Simple indicator used in cost-benefit analysis tocompare cash flows (income and expenditure)related to projects, investments or policies. Noindicators include the effect of time.

Permanent disability

Persons having an incapacity to work due to healthproblems. The incapacity may be partial, so thatpermanent disability may be used both for peoplewho have taken early retirement for health reasonsand for working people with a chronic disease orinjury.

Personnel turnover

The turnover of workers in a stable employmentsituation - i.e. excluding the effects of job growth orcontraction in the company, and excluding purelyseasonal variations in employment. In most casesmeasured by the number of workers resigning as apercentage of the workforce.As a safety and healthvariable, the turnover rate should be compared with a“normal” rate or with a realistic goal for the firm.Excessive personnel turnover can only be considereda cost at company level.

Productivity

The volume of output per input unit. Labourproductivity (output per hour) is most often used ininternational comparisons, but capital productivity,e.g. measured by capital utilisation rates could alsobe measured. Productivity can be measured in unitsand in money values.

Return on Investment

Indicator used in cost-benefit analysis (mostly atcompany level) to compare cash flows (income andexpenditure) related to projects, investments orpolicies. This indicator includes the effect of time.

Socio-economic costs

In a cost-of-illness framework, socio-economiccosts are the total welfare losses that are theundesired by-products of the economic processes(externalities). Socio-economic costs may includecorrective costs in the health system, potential outputlosses in the labour market or in householdproduction and human costs. If socio-economiccosts can be avoided, they can be used to quantify thebenefit side in a cost-benefit analysis.

Willingness-to-pay (WTP)

A method of assessing goods that have no marketprice, mostly used to value environmental goods,safety and health. If fully informed of the risks andtheir consequences, most studies show that apopulation is willing to pay more to reduce a risk,compared to the direct financial losses they are likelyto suffer. WTP is assessed through interviews orquestionnaires ( “contingency valuation”).

Work-related illness

Illnesses that are at least in part caused by theconditions at work.

68

ABBREVIATIONS

AAA Association d’Assurance contre lesAccidents (Luxembourg accidentinsurance association)

ANACT Agence nationale pour l’améliorationdes conditions de travail (Frenchnational agency for the improvementof working conditions

AUVA Allgemeine Unfallsversicherungs-anstalt (Austrian industrial accidentinsurance institution)

BAUA Bundesanstalt fur Arbeitsschutz undArbeitsmedizin (German FederalInstitute for Occupational Safety andHealth)

CBA Cost-Benefit Analysis

CNAM Caisse nationale d´assurancemaladie (French national healthinsurance fund)

CRAM Caisses régionales d´assurance demaladie (French regional healthinsurance funds)

DWES Danish working environment service

ECU European Currency Unit

EUROSTAT Statistical Office of the EuropeanCommunities

FACT Fonds pour l ’amélioration desconditions de travail (French Ministryof Labour, Fund for the Improvementof Working Conditions)

GNP Gross National Product

HSE Health and Safety Executive (UK)

IKA Social Security Institution (Greece)

INAIL Istituto Nazionale per l’Assicurazionecontro gli Infortuni sul Lavoro(National Italian Institution forInsurance against Accidents at work)

ITACA Istituto per la Trasparenza,l’Aggiornamiento e la Certificazionedegli Appalti (Institute for thetransparency, updating andcertification of contracts)

NACE Nomenclature générale des activitéséconomiques dans les états membres(General industrial classification ofeconomic activities)

NIA-TNO Netherlands Institute of WorkingConditions/Organisation for AppliedScientific Research

OSH Occupational Safety and Health

SHAPE Safety & Health and Performance andEnterprises

SME Small and medium-sized enterprises

SYAE Council for safety and health at work(Greece)

TDC Technological Development Centre

TSR Tyosuoselurahasto (Finnish workingenvironment fund)

II.

European Agency for Safety and Health at WorkGran Vía, 33. 48009 Bilbao - SpainTel.: 94 - 479 43 60Fax: 94 - 479 43 83http: // www.eu-osha.ese-mail: [email protected]

AS

-11-97-689-EN

-C

9 789282 826348

ISBN 92-828-2634-1

Portada DE-12446/2

Documents

Transcript of Portada DE-12446/2