Safety rationalisation doesn’t end with an improving economy!

Guest contributor, Gerard May, writes

The economic circumstances an organisation finds itself in can greatly affect their approach to workplace health and safety.  Tough economic times are still ahead for some industries and organisations, while others who rationalised for survival through the global financial crisis will begin to prosper.  This article will delve into what may be happening to Occupational Health and Safety (OH&S) in organisations heading into both tough and improving economic times.  The economy will play a role.

Rationalisation in the manufacturing industry appears likely as the Australian Industry Group’s Performance of Manufacturing Index showed nine out of the 12 sub-sectors in the industry went backwards in December 2010[1].  Pricewaterhousecooper‘s (PwC) Australian-based global head of industrial manufacturing, Graeme Billings, recently stated,

“In the face of…declines in activity and the continuing slump in new orders, it is imperative that businesses continue to search for efficiencies, improvements and innovative approaches to their markets, products and business models[2].”

OH&S will surely be in the sights of rationalisation in the sector.

Economic workplace rationalisation can negatively affect OH&S in many ways.  Such as, diminished focus on OH&S as companies focus on core business to survive, increased number of those managing workplace safety who are non-specialised, and decreased spending on maintenance and capital expenditure, to name just a few.  However, there are risks for those who neglect safety during these times.

According to Special Counsel for HWL Ebsworth Lawyers, Michael Connolly, employers could be at risk of OH&S litigation while downsizing[3].  Connolly says it’s important there is a system in place for managing the process to ensure that adequate consultation methods exist between management and workers[4].  There are financial risks too, as workplace lawyer Andrew Douglas points out,

“safety is pivotal because it is the unifying message communicated by management to workers which says that management is committed to the worker.  That unifying message has obvious commercial benefits to a business which cannot be denied and becomes more important in bad times.[5]

While there are ramifications for organisations during the downsizing process, so are there for organisations who rationalised to survive through the tough times, and are now heading into better times.

Workplaces can become more dangerous coming out of a recession.  According to a 2005 UK Government report titled, ‘Trends and Context to Rates of Workplace Injury,’ across all sectors of the economy analysis revealed a 1% increase in GDP above trend is associated with a 1.4% increase in the rate of major accidents[6].  This equates to an increase in the rate of major accidents during a boom of approximately 11-12% compared to the rates observed within a recession[7].  The report cites two reasons for this ‘pro-cyclical pattern’ in accidents.  Firstly, accident rates will increase with the hiring of new staff, since new workers are more at risk of injury.  Secondly, accident rates will increase at times of increased worker effort, such as when overtime increases in response to higher demands.  Those who were working in the safety field during and after the last major recession may provide further reasons for the increased workplace risk.

Safety consultant Ross Underwood’s 1994 findings from direct observations of corporations coming out of the early nineties recession is sobering.  He found many corporations which “downsized” or “outsized” to get through the tough times had sustained safety practice losses[8].  Examples of some of these include the following; a critical loss of experience and expertise, a pre-occupation with developing economic strategies with less time spent overviewing, supervising, and managing people, a reduction of apparent ‘optional duties’ personnel (such as plant cleaners), and where management continually pushed messages about the need to continue to operate with resource constraints, employees believed their legitimate requests for resources and attention were not going to be met[9].

The above issues can be associated with some of workplace safety’s worst disasters. Underwood posed some questions to organisational management to help them put OH&S under the quality control microscope, such as, are you insured against the most likely accident scenarios?  Have you instituted training and implemented other countermeasures to compensate for loss of technical expertise?  Have you fully audited the changed practices associated with de-manning and rationalisation?[10]

The message from the research and those with experience at the coal face is clear.  Organisations which rationalised through tough times often rationalise OH&S practices.  However, when the economy picks up, OH&S practices do not necessarily follow, which can result in fatal circumstances.

Workplace leadership and safety personnel maybe unaware they could be facing a period of heightened safety risk.  They should ensure an adequate audit of safety practices and procedures occurs following a period of rationalisation.

Gerard May has a BA (Victoria), Grad Certificate in Occupational Hazard Management (Ballarat), and is currently studying a Masters in Labour Law (Melbourne).  He was the Project Officer responsible for Worksafe Victoria’s OH&S response to the GFC and is about to begin working for LHMU.


[1] Thomson, J, Stafford, P, (2011), ‘2011: The Sector by Sector Outlook’, smartcompany.com.au, January 13, 2011

[2] Ibid

[3] Connolly, M, (2009), Employers Must Manage Health and Safety Risk of Downsizing, ohsalert.com.au

[4] Ibid

[5] Douglas, M, (2009), Making OH&S Core Business, Feb 4, 2009, viewed at- http://www.douglaslpt.com.au/?s=MAKING+OH%26S+CORE+BUSINESS

[6] Health and Safety Executive (UK) (2005), ‘Trends and Context to Rates of Workplace Injury,’ Prepared by Warwick Institute for Employment Research for the Health and Safety Executive 2005,  p XI, viewed at- http://www.hse.gov.uk/research/rrpdf/rr386.pdf

[7] Ibid

[8] Underwood, R, (1994), ‘Has Your Corporate OHS Culture Survived the Recession?’, Journal of Occupational Health and Safety-Australia New Zealand, 10(1):51-54

[9] Ibid

[10] Ibid

reservoir, victoria, australia
Categories business, economics, law, lawyers, OHS, research, risk, safety, UncategorizedTags , , ,

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