Why investing in workplace safety and health is worth the while

IN TODAY’S fiercely competitive business environment, companies are constantly seeking ways to trim costs and boost profits.

Unfortunately, workplace safety and health (WSH) is too often perceived as a compliance cost and drain on resources – an unnecessary burden that detracts from the bottom line.

As a researcher and expert in public health, I’ve spent decades studying the impact of WSH on both human lives and business outcomes.

What I found is both alarming and promising: While neglecting WSH can lead to devastating human and financial costs, investing in it can yield substantial returns.

The true cost of workplace accidents

Companies tend to focus on the immediate expenses of safety protocols, training and equipment, and thus fail to see the bigger picture. Employers bear both direct and indirect costs when there are work-related injuries and illnesses.

Direct costs include wage-replacement benefits and healthcare services paid for or reimbursed by insurance, as well as any expenditures contributed by employers related to wage supplements or the continuation of non-wage benefits.

Indirect costs to employers include the repair or replacement of damaged property, material or equipment; administrative costs associated with injury-event investigations and the hiring and supervision of replacement staff; productivity costs that arise due to work interruptions; and costs linked to legal services or complying with labour inspection enforcement orders.

WSH as a powerful investment and differentiator

Enlightened employers, however, are recognising that WSH is not just about ticking boxes, but also about safeguarding their most valuable asset: their people.

As companies spend money on preventive measures that comply with legal and/or social requirements, these expenses also represent investments – due to the economic benefits that companies stand to reap.

Companies should thus take greater interest in how spending for preventive measures delivers a monetary return, and the extent of this return on prevention.

A published study that I led in Ontario, Canada, revealed that in the three major economic sectors – manufacturing, transportation and construction – the average return on employers’ investment in occupational health and safety (OHS) was positive and substantial.

Based on the average expenditure per employee per year on OHS investments and financial benefit to employers, it was estimated that the average financial return was 24 per cent among 289 manufacturing employers, 114 per cent among 56 transportation employers and 34 per cent among 88 construction employers. There was variation around the average, but most employers experienced a positive return.

Strong OHS performance can achieve both tangible and intangible financial benefits. By prioritising worker safety and well-being, these companies are unlocking a treasure trove of advantages such as improved production quality, enhanced employee morale and retention, strengthened corporate reputation and a strengthened environmental, social and governance profile that contributes directly to the bottom line.

Even with convincing data and research, however, the question remains: How can businesses overcome the challenge of viewing WSH as just a compliance cost and start recognising it as a strategic investment?

The key lies in shifting from a reactive to a proactive approach.

Meaningful change needs to start at the top

The change needs to start with the organisation’s leadership. They must first champion WSH as a core company value, not just a regulatory requirement.

This means integrating safety considerations into all aspects of business planning and decision-making. It also means providing the necessary resources and empowering employees at all levels to prioritise safety.

Second, businesses need to adopt a data-driven approach to WSH. By tracking leading indicators of safety performance – such as near-misses, safety training completion rates, risk assessments and hazard identification – companies can address potential issues before they result in incidents.

This proactive stance not only prevents harm, but also demonstrates a tangible return on investment.

Third, companies should view WSH as an opportunity for innovation. Many safety improvements also lead to process improvements, enhancing productivity and quality.

Redesigning a manufacturing process to reduce ergonomic risks, for example, might also streamline production flow, thus reducing waste and increasing output.

WSH as a means for sustainable business

Understandably, some companies, particularly the small and medium-sized enterprises (SMEs), are hesitant to embrace safety as they are unsure of how to start and are concerned about cost.

Canada has aimed to make WSH accessible and affordable. I understand that Singapore’s Ministry of Manpower and WSH Council are doing the same to lend a helping hand to SMEs.

These include capability-building initiatives, such as the free StartSafe programme to help companies identify workplace risks, and readily available resources for SMEs to improve their safety processes, such as the Start Guide for SMEs.

Singapore’s WSH performance is among the best globally, having achieved a 0.99 fatality rate in 2023. The challenge now for the Republic is to maintain its WSH vigilance to ensure that its workplaces remain safe and healthy for all.

This can happen if more businesses realise that WSH is not a cost to be minimised, but an essential investment that pays dividends in human, financial and reputational terms.

The writer is a professor at the Dalla Lana School of Public Health, University of Toronto