The Link Between Productivity and Health and Safety at Work
The Link Between Productivity and Health and Safety at Work
Hesapro partners
April 2013
FOREWORD
This background research study which is also available on www.hesapro.org, has been produced as an
output of an EU funded LdV partnership project ‘Health and Safety at Work in relation with Productivity’
–HESAPRO- in collaboration with the project partners under coordination of Ministry of Science,
Industry and Technology of Turkey Directorate General for Productivity. Project Partners can be
enumerated as PREVENT - Institute for Occuptional Safety and Health, Belgium; ANACT - French
National Agency for the Improvement of Working Conditions, France; SLCP - Slovak Productivity
Centre, Slovakia; TTS - Work Efficiency Institute, Finland and Çankaya University, Turkey.
The aim of this research is to study the link between productivity and health and safety. Not
disregarding the fact that, first of all, protection of human life is a matter of human rights issue,
selected data are given related to occupational accidents and diseases on both macro and enterprise
levels. The research stresses the importance of implementing health and safety interventions at
workplace. These interventions have impact not only on enterprise level but also on individual and
social levels. The report points out that interventions support company goals and performance and thus
health and safety interventions at workplace can be considered as a key to business excellence. Not
only the literature survey but also the case studies representing partner countries of HESAPRO Project
provided at the end of this report support the idea that health and safety management programmes
have positive impacts on productivity.
The other important concepts studied in this report are well being, workplace development and work
organisation. A new model is introduced by this report integrating productivity and well-being into one
concept: workplace development. The model shows that work organisation has a significant impact on
the relationship between health and safety at work and productivity. The model is based on integrating
work organisation and health and safety programmes. Occupational safety and health programmes
together with the other organizational projects contribute to the workplace development. The case
studies summarized in Chapter 5 also illustrate the benefits of OSH programmes, participatory
approaches involving employees in organizational projects and workplace development approaches
involving organizational measures and programmes. Case studies from partner countries support the
idea that OSH measures and programmes impact company performance.
The report ends with a recommendation that companies should be encouraged to integrate OSH
programmes/measures to work organisation and health and safety issues should be considered to be
crucial for workplace development as a way to performance and productivity.
We wish this report contributes to the studies in this area and to the perception of employers’ about the
importance of implementing health and safety management programmes. In addition we desire both
researchers and also training providers working on the related concepts benefit from this study.
1. Introduction ..................................................................................................................4
2. Definitions.....................................................................................................................5
2.1. Health and safety at work ...............................................................................................5
2.2. Productivity ....................................................................................................................5
2.3. Global performance .......................................................................................................6
3. Economic impact of occupational accidents and diseases ...................................... 7
3.1. Data on work-related risks .............................................................................................7
3.2. The impact on macro level .............................................................................................8
3.3. The impact on enterprise level .......................................................................................9
4. A key to business excellence: Workplace development ......................................... 11
4.1. OSH and company goals and performance.................................................................. 11
4.2. Participatory approach .................................................................................................15
4.3. Workplace development approach ...............................................................................17
5. Good practice cases ..................................................................................................19
6. Conclusion..................................................................................................................26
Glossary ...............................................................................................................................27
References ...........................................................................................................................31
According to the International Labour Organization (ILO) and the World Health Organization (WHO),
health and safety at work is aimed at:
the promotion and maintenance of the highest degree of physical, mental and social well-being of
workers in all occupations;
the prevention among workers of leaving work due to health problems caused by their working
conditions;
the protection of workers in their employment from risks resulting from factors adverse to health;
the placing and maintenance of the worker in an occupational environment adapted to his or her
physiological and psychological capabilities;
and, to summarise, the adaptation of work to the person and of each person to their job.
Health and safety is given a wide definition in the European Union context, going beyond the avoidance
of accidents and prevention of disease to include all aspects of the worker’s well-being. The
competence of the EU to intervene in the field of health and safety at work is defined by the provision in
Article 153 of the European Treaty, which authorises the Council to adopt, by means of directives,
minimum requirements as regards ‘improvement in particular of the working environment to protect
workers’ health and safety’ (a provision originating in the Single European Act 1986). The significance
of this broad scope of ‘health and safety’ is immense, as it underpins the potential of EU health and
safety policy to prescribe minimum standards to protect all aspects of the worker’s well-being.
(http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/healthandsafety.htm).
2.2. Productivity
The Memorandum of EANPC defines productivity in a broad sense. Productivity contributes to value
creation or added value by making continuously better use of resources to contribute to growth,
innovation and employment; it is not seen just as a statistical ratio.
Productivity is an expression of how efficiently and effectively goods and services (i.e. goods and
services which are demanded by users) are being produced. Thus, its key characteristics are that it is
expressed in physical or economic units - in quantities or values (money) - based on measurements
which are made at different levels: on the level of the economy overall, that of a sector or branch of the
economy, that of the enterprise and its individual plants/units and that of individuals (EANPC, 2005).
Moreover, productivity is not only measured by quantity and quality, but also by the benefit the
customer obtains. This is especially true for the service industry.
The concept of productivity is also increasingly linked with quality – of output, input and the process
itself. An element of key importance is the quality of workforce, its management and its working
conditions and it has been generally recognized that improving quality of working life and rising
productivity do tend to go hand in hand.
Generally speaking, productivity could be considered as a comprehensive measure of how
organizations satisfy the following criteria (Prokopenko, 1987):
Objectives: The degree to which they are achieved.
Efficiency: How effectively the resources are used. (Doing things right)
Effectiveness: What is achieved compared with what is possible. (Doing the right things)
Comparability: How productivity performance is recorded over time.
As a finding of a study (Lamm, Massey, Perry, 2006) there is increasing and compelling evidence that
providing a healthy and safe working environment has the potential to increase labour productivity and
in turn increase business profits. Lamm et al (2006) also refer to the argument of some commentators
that productivity gains are often at the expense of workers’ health and safety. Businesses typically strive
to become more productive and in doing so are driving their workers to work longer, harder and with
higher utilization often in extremely hazardous conditions, and only implement health and safety
measures to keep compensation costs down (Massey and Perry, 2006; Mayhew and Quinlan, 1999;
Dorman 2000; Quinlan, 2001). As noted by Lamm et al (2006), James (2006) observes that while
exposure to risks associated with machinery and manual labour are being reduced, other risks related
to the increase in labour productivity are on the rise. Lamm et al (2006) also suggest efforts to increase
productivity through occupational safety and health can have contradictory results and point out the
gaps in literature that while there is evidence that occupational injuries and illnesses impact on
productivity losses, it is not clear whether or not reducing injuries and illnesses will automatically
influence productivity gains.
Findings of another study (De Greef and Van den Broek, 2004a) demonstrate that health and safety
measures have a positive impact not only on safety and health performance, but also on company
productivity. However, identifying and quantifying these effects is not always straightforward. In
addition, although experience shows that in many cases proof of profitability can be given, it might be
rather difficult in a certain number of cases to develop solid evidence. The authors also state although
the literature survey was fairly limited, research findings support the existence of an important link
between a good working environment and the performance of a company. Thus, the quality of a
working environment has a strong influence on productivity and profitability. The study also suggests
that poor OSH performance can lead to a competitive disadvantage impairing the firm’s status among
stakeholders. This is a motivating factor to company management to invest in OSH. The findings of the
literature survey (De Greef and Van den Broek, 2004a) were also supported by the collection of case
studies. By making the link between health and safety and the performance of the company, the case
studies demonstrate that OSH should no longer be seen as purely a cost, but also as an instrument to
improve the overall performance of a company, meaning that OSH should be an integral parameter in
general management. Therefore, investment in OSH becomes profitable. Investment of 1 euro in well-
being at work produces 3 - 7 euros return (Yrjänheikki, 2011).
Almost 25 % of workers in Europe (EU27) say that their health or safety is at risk because of their work.
This is shown by the results of the fifth European Working Conditions Survey (EWCS 2010). These data
from the European survey of working conditions on perceived exposure to work-related risks are
confirmed by the statistics on health related outcomes such as accidents at work and work-related
diseases. According to a Eurostat study (2010), 3.2 % of the workforce in the EU-27 reported an
accident at work in the past 12 months (Labour Force Survey (LFS) data from 2007). This means that
approximately 6.9 million workers were confronted with an accident at work.
The European Statistics on Accidents at Work (ESAW) show a more positive evolution for the
occurrence of non-fatal accidents with more than three days of sick leave. These figures declined from
4 % in 1999 to 2.9 % in 2007 (EU-15). Also fatal accidents decreased from 5,275 in 1999 to 3,580
fatalities in 2007. More detailed data on fatal accidents is provided with the graphic below.
Figure 2: Number of fatal accidents at work, European Countries 2009. (incidence rates per 100,000
persons employed)
Source: Eurostat 2009 Yearbook, Health and Safety Statistics and Turkish Social Security Inst., 2009 Statistical
Yearbook.
Accidents at work bring about a vast number of sick leave days. 73.4 % of the accidents at work result
in a sick leave of at least one day and 22 % in at least one month. In total, it was estimated that
accidents at work caused 83 million calendar days of sick leave in 2007 (Eurostat, 2010, LFS data).
According to the data registered in ESAW every year more than 100,000 accidents at work lead to
permanent incapacity to work.
For work-related health problems, the figures are even more staggering. No less than 8.6 % of the
workers in the EU-27 reported a work-related health problem in the past 12 months (LFS data from
2007). This corresponds to approximately 23 million persons. Musculoskeletal problems were most
often reported as the main work-related health problem (60 %), followed by stress, depression or
anxiety (1 4%).
Accidents at work and work-related ill-health place an important burden on global economy and hinder
economic growth. The negative impact of outcomes of work-related problems is shown in the graph
below (Figure 3). The graph demonstrates the strong correlation between national competitiveness and
the national incidence rates of occupational accidents. The graph is based on data from the World
Economic Forum and the Lausanne International Institute for Management Development (IMD),
coupled with data from the ILO (ILO, 2006). Countries with the best records on accidents at work are
the most competitive leading to the conclusion that poor working conditions put a heavy burden on the
economy and hinder economic growth.
Figure 3 - Correlation between competitiveness and the incidence of accidents at work
The major impact of work-related problems is clearly demonstrated by figures on economic losses. The
ILO has estimated that the total costs of such accidents and ill-health amount to approximately 4 per
cent of the world’s GDP (ILO, 2006). The fact that the cost of accidents at work and work-related ill-
According to an ILO training module with the title Introduction to Health and Safety at Work (ILO, 2013),
work-related accidents or diseases are very costly and can have many serious direct and indirect
effects and outcomes on both the lives of workers, their families and also on the financial status of the
enterprises. The costs to employers of occupational accidents or illnesses can be enormous. For
employers, some of the costs can be enumerated as:
payment for work not performed;
medical and compensation payments;
repair or replacement of damaged machinery and equipment;
reduction or a temporary halt in production;
increased training expenses and administration, insurance & pension costs;
possible reduction in the quality of work;
negative effect on morale in other workers.
In addition to these costs, one should also consider costs related to the following:
the injured/ill worker has to be replaced;
a new worker has to be trained and given time to adjust;
it takes time before the new worker is producing at the rate of the original worker;
time must be devoted to obligatory investigations, to the writing of reports and filling out of forms;
accidents often arouse the concern of fellow workers and influence labour relations in a negative
way;
poor health and safety conditions in the workplace can also result in poor public relations.
The consequences of occupational safety and health hazards, such as accidents and ill health, do not
only encompass the company but also individual workers/victims as well as their families and social
networks. Society as a whole has to deal with these negative outcomes of the production process (see
Table 1).
This means that the motives for developing an effective occupational safety and health policy stem from
social as well as from economic objectives. If one considers health and safety to be a basic right for
every worker, the economic goals have to be embedded in the social policy at company and society
level. Table demonstrates the complexity of the costs of occupational accidents and diseases for the
individual employee, for the company and for society as a whole.
Figure 4 offers an insight into the relationship between occupational safety and health (OSH) prevention
measures and programmes, the process and the outcomes. Occupational safety and health
programmes generate effects and outcomes that influence company performance positively and which
contribute to the company goals. In order to have an effective influence on company performance, the
occupational safety and health programme must be aligned with the company goals.
In this respect, it forms part of the business strategy and also the continuous improvement circle that
drives a company towards excellence. Outcomes are noticeable on organisational level since
occupational safety and health measures lead to change by creating better working conditions,
improving the social climate and the organisational process. The results are positive organisational
outcomes such as less cost, improved company image, less staff turnover and higher productivity. On
an individual level, an occupational safety and health programme leads to greater health awareness
(healthier lifestyle) and an improved motivation and commitment. These changes result in several
outcomes such as more job satisfaction. Moreover the framework shows that important additional
effects and outcomes can be obtained since there is a clear link between the various outcomes and
between the organisational and individual level.
Figure 4- Outcomes of OSH measures and programmes in relation with company performance and
company goals
Source:
PriceWaterhouseCoopers, 2008
The idea that we develop in this section is based on the fact that the design of a H & S program alone is
not enough. The participation of employees in the organizational design is as important as the design
itself which will have lasting effects on the overall performance. OSH programmes can only contribute in
a sustainable manner to the company goals and performance if the programmes are well-designed and
based on a participatory approach.
The Memorandum of EANPC defines productivity in a broad sense. Productivity contributes to value
creation or added value by making continuously better use of resources to contribute to growth,
innovation and employment; it is not seen just as a statistical ratio. Productivity is an expression of how
efficiently and effective goods and services (i.e. goods and services which are demanded by users) are
being produced. Thus, its key characteristics are that it is expressed in physical or economic units - in
quantities or values (money) - based on measurements which are made at different levels: on the level
of the economy overall, that of a sector or branch of the economy, that of the enterprise and its
individual plants/units and that of individuals (EANPC, 2005).
Efficiency or performance is usually viewed in terms of "productivity". Yet this notion is to be handled
with care. Performance cannot be solely based on labour productivity, often understood as the
execution speed or as the ability to ensure a high production volume at the lowest price. The total factor
productivity must be taken into account. In some situations, increasing the cost of labour can result in
increased capital efficiency. For example, the reliability of a machine park can bring a higher level of
performance than purely the speed of execution. One could also consider aspects such as the quality of
service, or the ability of a firm to diversify its supply, etc. These are all characteristics of a high level of
business performance in today's economic environment.
Another comment concerns the relationship between the individual and the collective interest. This
relationship is paradoxical. Performance is inherently collective-based: it depends on the functioning of
cohesive work teams. But at the same time, performance is based on the subjective involvement of
individuals in the workplace. Beyond the managerial modes, a very deep movement of individualization
of job involvement is in question. This involvement is a powerful driver of business performance.
A paradox is that most of the real drivers of performance are not measured. Indeed, in today’s economy
performance is no more measured as producing a maximum of goods in a minimum of time. Before,
when this was the case, management indicators were relatively simple to implement, which is no longer
appropriate. In today’s economy, two factors determine the performance. Firstly, the effectiveness
depends on the ability of a group to deal with the event, to react to what was not foreseen in theory.
Secondly, the efficiency is not related to resources but to quality and communicative relationship.
Nevertheless, it is particularly difficult to measure the contribution of these two concepts in relation to
performance. Although it is tempting and safe to stick to strictly quantitative and easily measurable
indicators (as working time, for example) the risk is to measure the performance and effectiveness on
an incorrect basis.
It is necessary to develop the debate in the company about the real drivers of performance. If the
effectiveness of a company is increasingly depending on communication, the most appropriate means
to achieve the objectives as well as the objectives themselves need to be discussed.
Empirical evidence is found of the economic advantages of adopting an adequate safety management
system (Fernández-Muñiz et al., 2009). The results of the study show that a highly developed
management system increases the safety performance, as well as the competitiveness and the
economic-financial performance. The safety performance was related to outcomes such as injuries,
material damage, absenteeism. Competitiveness performance links with elements such as the quality of
products and services, customer satisfaction, reputation and image. Also, the more advanced the OSH
management system, the more satisfied these organisations are with their economic and financial
indicators.
The most promising results can be obtained if business performance integrates with OSH interventions.
This is demonstrated by a review of eighteen cases by Koningsveld. The cases originate from TNO
projects (TNO Work and Employment, NL) aiming at improving prevention and performance. The
A survey conducted in more than 1,000 businesses, on various "working models" can update the link
between performance and corporate health (Lapointe et al., 2006). This research shows the existence
of four models of organizational involvement:
The traditional model (centralization);
The partnership model (trade union involvement in the field of work organization and change);
The participative model (involving employees without partnership with trade unions on issues of
modernization);
The organizational democracy model (participatory and partnership at a time).
The model of democracy is characterized by a very high participation rate (twice the average) in
organizational decisions, and also by a very high intensity of organizational innovation (just in time, ISO,
SMED, tool management and planning production, multi skills, teamwork and group problem solving).
As an indication, in this model unions have access to the financial statements of 60 % of cases
(compared to the traditional model was 17 %). Similarly, in 90 % of firms in this model we find a joint
quality or continuous improvement group.
In addition, the model of democracy is, according to employers, the most successful economically: with
regard to turnover, quality (superior to other models) and productivity. The traditional model shows little
wins on the criterion of "production costs".
Finally, in terms of social performance work intensification, skills, autonomy, and health (each of these
criteria are measured using several indicators), the model of democracy is also the most effective.
Indeed, if this is the model that shows the largest intensification of work over the past years, this is also
where health problems decreased mostly. The solution of the paradox is to be sought in the other two
As stated in the previous section, in order to have an effective influence on company performance, the
occupational safety and health programme must be aligned with the company goals.
The approach forms part of the business strategy and of the continuous improvement circle that drives
a company towards excellence. Outcomes are noticeable on organisational level and on an individual
level (Figure 4).
Many studies and good practices exist showing the links between health and safety at work (or well-
being at work) and productivity. However, in practice, even though there is overwhelming evidence of
the economic benefits of occupational safety and health, this does not necessarily result in an increase
of preventive or health promoting measures in workplaces. Therefore, it could be an interesting
approach to integrate productivity and well-being into one concept: workplace development.
The work organisation has a significant impact on the relationship between health and productivity. It is
indeed the work organisation that effects the corporate decisions on efficiency and health of employees.
Since the 80's, efforts have been concentrated on the redesign of organizations and production
processes through technological modernization (ERP, DMS, Intranet,etc.), organizational innovations
(Lean, ISO, just in time, etc.), the transformation of structures (reduction of hierarchy, matrix, fusion
between back and front office, etc.) and managerial innovation (reporting, management by objectives,
customer focus,etc.). Meanwhile, developments in the information and communications technology
changed our way of communicating and working: we do not communicate by e-mail as we do face to
face; we do not seek information on the Internet the same way as we do in a catalogue; a virtual
marketplace is different from face to face business; we do not work the same way with a paper file than
in an interactive situation with telephone script on screen and computerized customer file.
The change in management practices - technical and organizational - affects directly the performance
and introduces a new area of workforce mobilization with flexibility demands, more "subjective"
commitment, a renewal of skills, etc.
At the macro level, the strong increase of these processes in the industrial sector in the last twenty
years is associated with high productivity growth and a sharp decrease in jobs. However a direct
causality between these factors should be avoided. On a micro level, these processes renew the forms
of labour, becoming more heterogeneous, since it is necessary to adapt to specific customer requests
and integrate multiple objectives and constraints (cost, quality, time, etc.). The result is that work
organization has a coordination function between the market and the employee who needs to manage
the demand of the customer and his workload.
The organizational innovations having consequences on working conditions and health does not
necessarily mean that innovation is causing an intensification of work. On the contrary, research
indicates that companies that innovate the most, i.e. those who adopt, abandon, recycle these
processes at a faster rate than others or more intense, are also those that are more sustainable. The
most sustainable companies are those that decentralize the most and reduce the hierarchy more
strongly than others. Suggesting that innovation leads to autonomy and / or accountability is conducive
to organizational learning. Under certain conditions, organizational change may improve working
conditions and guarantee the continuity for the company.
Workplace development is considering the relationship between performance, health and work
organization. Workplace development is a complex concept that is not just simply a quantitative
expression (amount of production, amount of served customers, amount of time spent at work). It has
Parameters
Has the Have the
intervention Has the savings
Has the
resulted in intervention (energy, raw Has the
intervention Has the
N° Title of the Case Study changes in the resulted in material, time, accident
resulted in a accident
quantity of changes in the traffic Has the Has any frequency
higher average severity rate
product or quality of reduction, absenteeism motivation rate
skill level of the decreased?
service for the products or ecological rate increase decreased?
work force?
given amount of service? footprint etc.) decreased? observed?
time? increased?
Yes but not Yes but not Yes but not Yes but not Yes but not Yes but not Yes but not Yes but not
İSGİP Project “Improvement of OSH measured measured measured measured measured measured measured measured
1
Conditions at Workplaces in Turkey
Yes but not Yes but not Yes but not Yes but not Yes but not Yes, number Yes, 19,5 % Yes, 14, %
measured measured measured measured measured of OSH compared to compared to the
suggestions the previous previous year
Safety Toolbox Talks at Turk Tractor
per person year
2 and Agricultural Machinery
increased 67,8
Corporation
% compared
to previous
year
Toward Safer Traffic in Turkey Yes but not Yes but not Yes but not Yes but not Yes but not Yes but not Yes but not Yes but not
through Continuous Education and measured measured measured measured measured measured measured measured
3
Lifelong Learning of Driving
Instructors
Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable
4 New World of Work, Belgium
Not applicable Yes but not Yes but not Yes, time Yes but not Yes, the Not applicable Not applicable
measured measured savings, office measured company has
cost drop with been voted as
5 Microsoft, Belgium
25%, savings of the ‘Greatest
92 million euros Place to Work’
in 2011 worldwide
Human Work Digital Design Using Yes but not Yes 22,2 % Yes but not No Yes but not Yes Yes but not Yes but not
To Minimize The Health Impacts Of measured (900 pcs before, measured measured (increase measured measured
6
The Introduction Of New Production, 1100 pcs after) productivity of
Slovakia work)
The Use of Modern Tools of Erg. for No No Yes but not No Yes but not Yes but not Yes but not Yes but not
ident. and elim. of Health Risks in measured measured measured measured measured
7
the Process of Mech. Eng.
Production, Slovakia
Not applicable Yes but not Yes but not Not applicable Not applicable Yes but not Not applicable Not applicable
8 Lean production at Scania, France measured measured measured
Yes but not Yes but not Yes but not Not applicable Yes but not Yes but not Not applicable Not applicable
Improving quality and reducing
9 measured measured measured measured measured
absenteeism at Inoplast, France
Yes but not Yes but not Yes but not Yes, 1 € Yes, in Yes Yes but not Yes but not
measured measured measured produced 5.2 € 2011salary (clear measured measured
return costs were 3 connection (lower costs of
% lower between occupational
compared to supervisors’ accidents)
2009 because management
Kesko Management Model for Well- of reduced of wellbeing
10
being at work, Finland sickness and
absence employees’
motivation and
productivityrev
ealed but not
exactly
reported)
Yes, simulator Yes, one-hour Yes but not Yes, according Not applicable Not applicable Yes, 18–43 % Yes but not
training can education with a measured to international according to measured
contribute to the vehicle simulator studies even 40 international
Vehicle Simulators as a Learning improvement in corresponds even % compared to studies
11
Environment, Finland novice drivers of to four-hour the traditional
higher order education in traffic education
skills like hazard with a real vehicle
perception
* Accident Frequency Rate (F) = Ʃ Number of Occupational Accident /Ʃ Working Hour * 1.000.000
(Occupational accident frequency ratio (F) gives the number of occupational accidents occurring in one million working hours).
** Accident Severity Rate (G) = Ʃ Missing Days due to Occupational Accident /Ʃ Working Hour * 1.000
(Accident Severity Rate (G) gives missing workmanship in one thousand working hour).
1 Has the intervention resulted in a higher average skill level of the work force?
1 6 1 3
Has the intervention resulted in changes in the quantity of product or service
2 for the given amount of time?
2 7 1 1
Has the intervention resulted in changes in the quality of products or
3 service?
- 10 - 1
Have the savings (energy, raw material, time, traffic reduction, ecological
4 footprint etc.) increased?
3 3 2 3
TOTAL
14/88 48/88 5/88 21/88
Number of cases: 11
Number of assessment parameters: 8
Total number of assessments: 11 x 8 = 88