The Effects of the Economy on Workplace Safety

March 1, 2009
As the downturn in the economy forces companies to deal with declining revenue, layoffs and tight-to-non-esistent credit problems, will workplace safety become collateral damage to the economic crisis?

Companies spend about $170 billion a year on costs associated with workplace injuries and illnesses, and almost $1 billion every week to injured employees and their medical providers, according to Warren K. Brown, president of the American Society of Safety Engineers (ASSE).

So what impact will declining revenues and tight credit have on safety? One safety specialist expressed it this way, “This sudden economic crisis will have many effects on workplace safety… mostly negative.”

It's important for employers to remember that they are not alone in the turmoil, that insurance providers also are cutting back on staff and resources, thereby shifting the increased responsibility for workplace safety from one leaky boat to another, with few life preservers available.

A myriad of problems are arising as the economy continues to tighten. Layoffs force fewer people to do more work, while always thinking in the back of their minds, “Am I next?” As a result, focus shifts from attention to detail and workplace injuries likely will increase.


Concern for job security means workers are reluctant to report safety infractions or near misses because they don't want to be perceived as “troublemakers,” and thus, one step closer to the door. From the employer's standpoint, safety training takes a budget hit, and accidents sometimes are not reported in order to keep insurance premiums down.

Another area that warrants concern is the machinery and equipment workers use daily. In good times, companies could stroll into a bank and with little effort, draw on funds needed to purchase or update aging equipment. But current conditions force the extension of the life of equipment by re-tooling parts to save money, increasing the chance of breakdowns and possible mishaps. Other companies find themselves forced to move from their current location to smaller buildings that may not be as “safety friendly.”

With all this being said, now is the one time we can't afford to move away from workplace safety. With payrolls running lean, we need people on the job and working at full capacity now more than ever.

First, companies need to know right off the bat that they will receive less support from their service providers. Accept that fact and move on. Now that you have taken on that added responsibility, the next step is to make sure you don't cut safety resources.

A discretionary view of safety puts both your employees and your company in harm's way. As Brown points out, “A company's reputation is at risk should a disaster or incident occur. Employers face a damaged reputation and brand when employees are injured, especially if the incidents are preventable.”

It equally is important to bring employees into the loop, to let them know the message from top management is clear: “We will never compromise safety!” They have to be taught to watch out for each other and believe, through your example, that there truly is a “we're all in this together” mentality within the organization.

Companies are under pressure. Insurance companies are under pressure. And certainly, safety professionals are under pressure. But all three must be united in a common bond of staying safe on the job. Because investing in safety is not only investing in a safe working environment, but also in your company's bottom line.

In a recent address to the American Gas Association's Safety Leadership, then-U.S. Secretary of Labor Elaine L. Chao probably summed up the situation best. “Safety and health programs in the workplace are not only an employer's legal responsibility, it also makes good business sense,” said Chao. “No price can be placed on the most important benefit, and that is to see that every worker returns home safely to their loved ones at the end of each work day.”

Frank Pennachio, CWCA is co-founder and director of learning at the Institute of WorkComp Professionals, Asheville, N.C, the largest network of workers' compensation professionals in the nation. He also is president of a workers' compensation insurance agency, and a licensee and trainer for Injury Management Partners. A well-known speaker, his articles appear regularly in business and trade associations. He can be contacted at frank@workcomp

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