Small business OHS seems to be stalled

OHS research into why the small business sector does not “get” safety has been occurring in Australia for over ten years with some of the most useful being undertaken by Dr Claire Mayhew.  But the challenge, or problem, persists.

On 4 October 2010, WorkSafe Victoria released some information about an OHS blitz by inspectors on small businesses in Mildura, a rural town in the extreme northwest of Victoria.  In some ways, the tone of the media statement is a little defeatist or, at least, exasperated.

“Although we wrote to the businesses and told them we would be visiting, we still had to pull them up on a high number of health and safety issues,” Manufacturing and Logistics Director Ross Pilkington said.  “In many cases, the safety solutions were straightforward.”

98 small businesses were visited and 160 OHS breaches were identified resulting in improvement notices for the following issues:

  • Incorrect storage of dangerous goods
  • Damaged or faulty electrical tools and wiring
  • Forklift maintenance
  • Guarding on machinery, including lathes
  • Poor housekeeping
  • Manual handling (lifting, pushing and pulling)
  • Lack of perimeter guarding on mezzanine floors
  • Failing to display safe working load on shelving.

All of these are very familiar to OHS regulators and safety professionals. In fact many of these hazards have solutions listed on the WorkSafe website.

So why are small businesses not complying with OHS obligations?  Big question and not one that one blog article can answer.

OHS regulators are well versed in the research literature on the issue and the advertising strategies employed have exploited some of the motivators of workers, employers and the community.

Should WorkSafe have a higher community profile in rural areas?  It already sponsors country football and other rural activities and it is not as if WorkSafe hasn’t blitzed the city before.  In May 2007, WorkSafe reported:

“WorkSafe inspectors issued 97 improvement and 12 prohibition notices in a week-long workplace safety campaign in Mildura.”

That release also provided some regional costings on non-compliance:

“Apart from the impact of workplace deaths and injuries on individuals and local families, the cost of treatment, rehabilitation and compensation costs of 1277 reported work-related in Mildura over the past five financial years exceeds $22.4 million.  These costs are covered by employers’ WorkCover premiums.”

That’s a lot of money but the quote may answer the question of why small business does not embrace OHS:

“These costs are covered by employers’ WorkCover premiums.”

Insurance premiums do not get close to reflecting the actual cost of workplace injuries and deaths.  Businesses are not accountable for the cost of their own indifference or ignorance or laziness.  And, as a result of not being accountable, they are able to feel that the worker’s medical costs and return-to-work program is and SEP (Someone Else’s Problem).

The costs are outsourced to insurance companies so that businesses only have to pay the premium costs which, admittedly, can remain a heavy burden on a small business but are well below the true social and personal cost of injuries and rehabilitation.  It is worth asking how workplace safety would be managed in small business if workers’ compensation was not available?  We know from the experience of other countries that the cost of workplace injuries are absorbed by the community and perhaps social services but what of the management of safety, the prevention of injury?

It is worth revisiting some of the older research reports into small business safety like the work of Dr Felicity Lamm and Professor David Walters.  In 2003 they looked at the broader policy context and, amongst many other fascinating findings, wrote:

“…the key factors affecting OHS in the small business sector can be grouped under the following headings:

  •  
    • Low management and training skills;
    • Lack of resources;
    • Burden of compliance;
    • Relationship with regulatory agencies and the use of consultants;
    • Dependent relationship with large businesses; and
    • Employment and OHS practices.”

In 1997, Lamm stated a finding that, I believe, remains true to this day:

The paper also demonstrates that small business employers are becoming increasingly reliant on their accountant to provide a range of compliance advisory services, including OH&S.” [link added to abstract only]

Others suggest that in some industries OHS change may be best achieved through targeting spouses and other family members of particular significance in business decision-making.  Curiously, WorkSafe Victoria tried this in the farming sector in the early 1990s, if memory serves.

A WorkSafe small business initiative that I believes deserves analysis is its small business consulting service.  This strategy has operated for many years providing free consultancy services by private OHS providers for, usually, 3 hours.  In this period a consultant needs to identify, in practice, major OHS deficiencies, identify control measures and, most important, provide employers with the tools to manage their own OHS needs.  It is a tall order and is likely to lead to continuing services from the private providers in order to assist small business to comply with the law.

Publicly-available on the performance of this program is scarce with WorkSafe usually only releasing data on the number of businesses participating, as it has in the 2010 Annual Report (page 12) with over 2,500 businesses visited.  Page 23 of the 2009 Annual Report provides similar figures:

“Over 2400 businesses sought assistance from the program, up by 8% compared to the previous year and 33% compared to 2006/07.”
In 2005, the Annual Report indicated the number of business helped was 2,000.
It would be very interesting to see the results of an audit of the small business support project to determine whether much more than just numbers of participants.  Has there been some remarkable successes in the program that have changed the relationship between the small business and WorkSafe and how OHS has been implemented?  How are the OHS service providers selected, audited and, perhaps, de-registered if under-performing?
There is a small business category in the many annual OHS awards but much more important is any lessons from the support programs that others can implement.

There certainly are no obvious solutions to improving safety in this economic sector but safety seems to have stalled.  There needs to be a innovative approach to small business safety and I accept that these are being sought by regulators but it is also valid to question the value of long-standing business support programs, particularly if the results have plateau-ed.

Kevin Jones

reservoir, victoria, australia

14 thoughts on “Small business OHS seems to be stalled”

  1. I agree with you Tony full heartedly. Another problem we face, is the inconsistency of the inspectorate findings. I have seen improvement notices handed to contractors and principals on the same site for the same thing on two different occasions.
    True safety at a worksite comes from good culture, and sadly here I think the main culprit for lip service in this area from my experience is the unions. I agree with Ross that a checklist does not cover all issues, however it may be a good start, it doesn’t help with culture, but may speed up the rate of change so people can concentrate on risk as compliance is managed via the checklist.

  2. Ross, I think you further highlight the issues of competency or rigor of the inspectorate, 1.92 improvement notices per business inspected. If anyone believes that truly reflects the reality of safety issues in workplaces then they are living in a very isolated environment.

    You mention a huge number of offences, I suggest the numbers as quoted are minuscule in reality and if those same businesses were inspected by an independent expert fully versed in compliance requirements the number of offences would on average per business be in the order of a minimum of 5 offences requiring an improvement order or fine. I am happy to be challenged on my assertions because I know this to be true through long experience.

    To advise an employer that an inspection is imminent is ridiculous because it does nothing to show the truth of the situation and in fact, only proves by the numbers of offences found that business is treating safety with disdain and the issuing of improvement notices is like patting the business owner on the head and offering them an ice cream. They were warned and the result for non compliance should have been substantial on the spot fines.

    I am sure we have all seen the warnings of speed cameras in our media and if we just happen to get caught we get fined with no recourse and so it should be with OHS infringements. Hard line I know, but it is about time we got rid of this \”wussy\” approach to safety and got on with the job of preventing the misery that is workplace injury.

    The injury claims numbers tell the story and that is for reported injuries only. The management of the entire system nationally is a disgrace.

  3. Apropos of Tony\’s comments: the trouble with a checklist-based approach to safety is you only answer the questions that get asked. On the flip side, the same can be true of the \”general duties\” / \”reasonably practicable\” approach, which is to say, if no questions get asked, none may get answered.

    Anyway, WorkSafe also conducted a blitz in Moorabbin area recently which made the front page of the Moorabbin Glen Eira Leader:
    http://moorabbin-leader.whereilive.com.au/news/story/job-safety-ignored-at-moorabbin-businesses/

    Job safety ignored at Moorabbin businesses
    \”…
    A five-day blitz found 145 workplaces did not comply with health and safety regulation, despite businesses being warned about the inspection.

    WorkSafe inspectors issued 279 improvement notices during the crackdown, for offences ranging from the storage of hazardous goods to overloaded racking.

    The huge number of offences comes after 1000 compensation claims were lodged in the region in the last year as a result of workplace injury or illness.

    \”

  4. Lets get back to the original post where our fearless inspectorate visited 98 businesses for a total of 160 OHS breaches averaging 1.63 breaches per business in the wonderful Mildura municipality, which has a total of 6,159 business operating. These breaches and visits were undertaken over a 1 week period and on the face of it, is a very good exercise on the part of the authority charged with administering the legislation.

    Unfortunately, it now also highlights where the real problems are. I take issue with the very low number of breaches per employer averaged at 1.63 per employer when anyone one with experience of safety in small business would also question that figure as being very conservative, but nevertheless, I will, for the sake of this post, use that figure. If we multiply the total number of businesses by that average breach figure of 1.63 breaches per employer then we have a potential for 10,039 breaches in the Mildura municipality for that week alone. I will be bold enough to suggest it would be at least twice that figure conservatively ,which makes the rest of Australia look pretty ordinary.

    Sure, we will hear all the arguments that lightning doesn\’t strike in that many places at once, however, identified breaches clearly show situations that should not even be on the radar and that is what we have been banging on about for ages. This disaster will not be resolved by another policy or a tweak here and there, it has to be in your face on the floor inspection and enforcement of \”Rules\” that are clearly understood by employers, Micro to Large and just as importantly to employees. So it is in my opinion, a very close to back to the drawing board by legislators situation, to put new legislation in place given the masses of research and information now available to get it right.

    If everyone clearly understands the rules of engagement then we are over 60% of the way there.

  5. My experience tells me that small business operators rely on their own skills and call in specialist advice only for those issues that are (a) absolutely essential, (b) totally beyond their own skills base. So an accountant, sometimes a lawyer, occasionally a trainer may be seen as essential.

    Safety?
    • It\’s all just common sense!
    • It\’s ridiculous, you can\’t wrap people in cotton wool at work!
    • It\’s all too difficult.
    • It\’s just another additional expense that the small business person can\’t afford
    • It\’s all just government red tape!
    • It\’s all a revenue raiser for the state government – like speeding fines!
    • We care about our employees and always tell them to be careful.
    • We\’ve been doing things this way for X years/generations and we haven\’t killed anyone yet!
    • Sure we\’ve had injuries, but you can get run over crossing the road!
    • And it\’s just common sense!

    Strangely, the same people will speak with glowing pride of the unique features and quality of their products, the new products they\’ve developed, the equipment they\’ve installed, the skill of their tradespeople, how they support local charities/sports clubs etc.

    There is a disconnect in the way ordinary people who run or work in small businesses view workplace safety. Skills and knowledge are an issue but the attitudinal issues run deeper. Perceptions are:
    • Not my business, safety is not how we make a living.
    • Too complicated. Safety is very technical and highly regulated. You have to be a chemist/engineer/medical specialist/lawyer to figure it out!
    • Fearful. The regulator is punitive – they fine you and prosecute you, ruin your business and your family\’s fortunes. No, we wouldn\’t go to them for help.
    • Hopeless. It doesn\’t matter what we do, an accident can still happen.

    Most people assume that they will be fined or prosecuted when visited by a safety inspector, because they\’ve heard of such things happening. They are sometimes pleasantly surprised that they\’ve been assisted, not persecuted.

    These are usually good people who have a much closer relationship with their employees than most larger businesses. They genuinely care about them. The employer is often rewarded by their worker with loyalty and extra effort. That sometimes leads to employers and 1st line supervisors cutting corners on safety when production is urgent.

    After the incident (hopefully a near miss), there is much regret and wishes for a rewind on their actions on safety. But they are really no better equipped than they were before, just a little more experienced.

    Small business does not have to submit to any scrutiny on safety on a regular basis. You can set up a business and run it for decades without having any contact with the safety regulator. No-one provides any safety information or training to business as a matter of course. Compare this with the hoops you have to jump through to obtain business registration, get permission for business activities in various premises, employ people under awards etc., register for GST and keep the ATO happy! In NSW this requires extensive interaction with the Department of Fair Trading, DIR, and the ATO.

    But your only interaction with the safety regulator is to take out an insurance policy for Worker\’s Comp, along with a swag of other insurances. This will be done through an insurance broker, or with an insurance company that is a third party \’scheme agent\’.

    We need to make safety services and information very accessible and a requirement that forces interaction with the regulator.

  6. Marion, I agree with your sentiments entirely, just getting through the business day can be difficult enough. A simple easy to read and apply \”Rule Book\” would go a long way towards fixing the compliance problem.

    You know your business better than anyone else and there is no getting away from the fact, if you employ then you are responsible, so there are some basics to making sure you have done as much as is \”reasonably practicable\” to ensure you comply.

    From a practical perspective the following and more is a good idea for small and micro business to address:

    1. Take the time you don\’t really have to create a comprehensive induction document for your staff (you only really have to do this major exercise once) which covers what the business is about and responsibilities of the employees and employer to one and other. This should include OHS policy and behaviour. (also good for you to remind yourself of why you have undertaken business ownership)
    2. Undertake your own hazard identification check list and incorporate that as an addendum to the induction document (this should include conditions of use of any machinery and training requirements before an employee is authorised to use said machinery.

    There is a huge amount more that could be added, but as you say, resources are always a dilemma for small business. The document I suggest becomes all encompassing and the hard yards are to get the document in place in the first place, once that has been achieved, a quarterly review to cope with \”creeping\” changes should be part of managing your business.

    Keeping in front becomes a matter of habit and should take place when you review your trading results, after all, it is normally employees that are needed to do the business and attention to that area of the business becomes critical to success.

    That adage of \”Keep it simple stupid\” is certainly appropriate and by taking the approach I have suggested, you will have gone a long way to complying with your responsibilities and will get very good benefits from employee involvement in the whole process which can only add to the bottom line, after all, that is a primary reason for doing what you do and it is great thing for our local communities.

    There is a wealth of information on the Net but a lot of it is cumbersome and unrealistic for small and micro business to use, however there are elements of some of that information that you can choose to incorporate in simplified documentation to suit your business and the resource constraints you have.

    You are one of hundreds of thousands of small and micro businesses employing the greater majority of Australians that are being comprehensively let down by governments of all political persuasions and their bureaucrats in OHS matters.

  7. As a small business person myself, I think the solution is to make OHS simpler and more affordable. In some cases, formal, relevant training is both hard or impossible to find and very expensive. The gold standard is much easier to achieve if you have resources dedicated to OHS and enough people to amortize the costs. WIth one or three employees, it\’s a very different picture.

  8. Kevin, The Royal Commission thing is on the money, back them into a corner, argue the terms of reference in the media to ensure the pressure is on to have the widest possible references available, don\’t give them any breathing space via a well orchestrated media campaign to keep the focus on the comings and goings of the RC and be ready when the RC hands down its report to really ramp up the pressure in the media to stop the pollies from slip sliding away from the issue.

    Having the backing of the ACTU and similar organisations in this would be interesting. It might just expose the issue of how close such organisations are to political policy to the detriment of their constituents.

  9. Sorry Kevin, I can\’t let the “As far as is reasonably practicable” thing go without comment. While agree it is somewhat vague, it nevertheless poses a question the inspectorate must determine one way or the other and should they determine the employer has not complied, it should attract a fine and let them argue it in the appropriate forum. It should not however distract an inspector from using his/her judgment in the exercise of his/her statutory duty. The more cases in argument the more it will focus the legislators attention on the inadequacy of their legislation.

    To roll over and say it is all to hard or rely on case law as an out is not acceptable.

  10. Like you Kevin, I have seen all of the arguments and while it remains in the hands of the bureaucrats the soft option is always going to prevail, but if I can provide a good dose of heartburn to those who should be doing better, then I am part way to achieving something.

    I go back to the Royal Commission thing which, in terms of cost, is but a drop in the ocean given the money that has in effect been wasted to date. At least this route would tell it like it is providing the terms of reference are very broad.

    You never know it might even recommend how there should be formal interaction between the various professions in the pursuit of better outcomes in OHWS.

    Just about anything is better than the appalling mess that is workplace safety and workers compensation today. Maybe that is a bit harsh because there are individual efforts out there that are to be applauded and encouraged

    The dialogue continues and hopefully, one day, commonsense may prevail.

    1. Royal Commissions are as much political responses to crises as anything else. Rarely will a government instigate one if not already backed into a corner. The political appeal is that a Royal Commission is a long process, often over twelve months. This allows for politicians to defuse the outrage of the issue by saying \”let\’s wait and see what the Royal Commission reports.\”

      I think it was Yes Minister that said never commission an investigation that you don\’t already know the outcome of.

  11. If, as is claimed, inspectors visited 98 businesses and only identified 160 breaches of OHS law then we should be looking at the quality of the inspectorate. My experience with small business over 25 years as a general management consultant (OHS included) would put the figure at near quadruple that amount of breaches per visit conservatively. 1.63 breaches per visit and one wonders at the capacity of the bureaucracy to live in the real world. Why on earth would you even consider warning them you were coming, unless you were looking to produce some magic promotion showing how well OHS education and promotion was working in Victoria, or is that a little too cynical?

    The authorities need to get it through their collective heads that small business sees OHS as a cost to be avoided, as in their eyes they see no bottom line benefit at all. Small business owners in the main are struggling to get the days necessities done to do the business and anything else is a distraction from that goal.

    So we get to the point. How do we get their attention first? and then how do we get compliance? The first can be achieved by having a simple well written easy to understand (read as year 8 level) \”RULE BOOK\” that gives clear examples of what is the minimum requirement for industry category by industry category – the rule books should not be written by bureaucrats or any other pseudo bureaucrat (unions) although their input should be welcome, but they would have no say in the final product.

    Compliance is basic, if you don\’t comply you pay and by paying I mean on the spot, no warning, fines that are substantial enough to make an employers eyes water. As an example, non possession of the suggested rule book would constitute a failure to comply and attract a $500.00 on the spot fine no appeal allowed (we don\’t care if the dog ate it).

    If small business does not fully understand its obligations because of the large pile of largely confusing and legalistic verbiage that is continuously thrown at it over decades with effectively no result, then the finger needs pointing in the direction of those responsible for administering the whole sorry mess. Nothing less than a Federal Royal Commission with very broad powers inquiring into this national disgrace and providing clear and unequivocal direction and rules has got a hope of getting OHSW anywhere.

    Let us get back to Mildura, a beautiful place in the sun and well worth a visit. It has 30,000 population in the township and 50,000 in the municipality and 6,159 businesses in the municipality. So based on the results as reported one would have to be asking questions like; What cross section of businesses were visited? Given the district has a large employment in the agricultural sector, I would have expected at least 5 or 6 breaches per visit minimum????

    Back to previous research, it would seem that there has been some very valuable work done and in the main continuously ignored in large part by those responsible for delivering safe work conditions via legislation, which purportedly, was put in place to \”force\” businesses to comply with certain basic standards. I think people need to understand, that compliance with the legislation is not optional but mandatory, so I fail to understand why, if we are so concerned about the safety and welfare of our fellow workers, we are not shouting from the heavens about the abject failure in overall terms of bureaucracy to administer the law firmly and relentlessly. The number of inspectors available for \”on the road inspections\” is obviously woefully inadequate and by my calculation if on the spot fines were a part of the equation the inspectorate would be self funding and a reducing number of fines might just be showing an increase in compliance, provided the same amount of diligence was applied continuously.

    I accept innovation is a good thing, but can we please just start with policing the law as it stands and ensuring those that don\’t comply are in fact forced to pay a penalty, improvement notices are a limp wrist-ed approach and do nothing to focus attention whereas, substantial fines certainly do concentrate the mind and compliance then becomes the cheaper option.

    It would seem a hard line approach is not everyone\’s cup of tea, however, it would also seem to be the only one that has really not been \”effectively\” tried. I thought that was what we had legislation for, because, self management of OHS obviously failed thus requiring legislation to force compliance ????

    One would hope that the political blog watchers are keenly watching these blogs as there is certainly a wealth of information and opinion that clearly shows their administration of OHS and OHS policy is woefully inadequate and the workforce is now starting to react.

    1. Tony

      Over at least 20 years OHS compliance has moved away from the prescriptive rule books and, in my opinion, the community is worse off as a result. Small business seems to fit the need for a clearer and simpler path to compliance but it is not going to happen.

      Various legislators over the years have considered a two-tiered compliance model with prescription for small, tightly-resourced companies, and a performace-based model for those with dedicated OHS resources, but that has never occurred. \”As far as is reasonably practicable\” is going to make OHS compliance for small business even more difficult, and place greater pressure on consultants and advisers.

      On the matter of \”on-the-spot\” fines, I believe WorkSafe Victoria has the legal capacity to apply these but does not. I recall past questions about this to WorkSafe at seminars and they say that research is inconclusive on the preventative benefit of this form of penalty.

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