EU Agency Offers Cost-Benefit Analysis of Injury Prevention

The European Agency for Safety and Health at Work is offering a new, practical tool to help businesses evaluate the true impact of workplace accidents and conduct cost-benefit analyses of preventive measures.

Every year, nearly 5 million employees in the EU suffer from work-related accidents involving more than three days absence from work, and 5,500 workers are killed. Besides the human suffering, these accidents have a strong economic impact on business, as 150 million workdays are lost and the insurance costs add up to 20 billion euros.

"This new tool will enable businesses and all those involved in prevention at company level to get a realistic overview of the total costs of occupational accidents and diseases and document the benefits of preventing them. It will help to demonstrate that good safety and health is good business‚ as prevention of work-related injuries not only reduces costs, but also contributes to improving company performance," said Hans-Horst Konkolewsky, agency director.

The agency's new tool, which can be easily applied using standard spreadsheet software such as Microsoft Excel and Lotus 123, provides a simple, five-step framework for firms to put a price on these costs, including 'hidden' costs such as lower productivity, higher insurance premiums and the impact on a firm's return on investment. This data can then be used to calculate the additional cash flow that would be generated if the firm invested in specific preventive measures - a standard 'cost-benefit' analysis.

Presented in a new online publication, an Inventory of socio-economic costs of work accidents and summarized in agency fact sheet 28, the process involves attributing costs under three main headings, each in a spreadsheet format. These include Safety and Health Management, such as the cost of protective equipment and occupational safety and health personnel, internal and external; Safety and Health-Related Costs, such as work-related absenteeism, excessive staff turnover and legal costs and fines; and, finally, Consequences of Accidents to Company Performance, such as lost output, damage to reputation and reduced ability to innovate. In each case, the fact sheet suggests ways to quantify these costs.

To calculate the financial benefits of investing in particular preventive measures, a similar process is used. The cost of the investment, including consultancy, equipment and other costs, is compared with the costs of not having these measures.

All publications are available on the agency Web site at agency.osha.eu.int.

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