OHS inspections save businesses money
Posted on June 14, 2012
A recent article in Science about OHS inspections has gained considerable attention after Michael Blanding wrote about the findings in a Harvard Business School blog. According to the executive summary:
“In a natural field experiment, researchers [ Associate Professor Michael W. Toffel and colleague David I. Levine] found that companies subject to random OSHA inspections showed a 9.4 percent decrease in injury rates compared with uninspected firms.
The researchers found no evidence of any cost to inspected companies complying with regulations. Rather, the decrease in injuries led to a 26 percent reduction in costs from medical expenses and lost wages translating to an average of $350,000 per company.
The findings strongly indicate that OSHA regulations actually save businesses money.”
That research should give enormous heart to OHS regulators around the world and reduce criticism from business groups. The findings have been defined as “definitive” but this is like saying that research into Scandinavian workplaces and society can be relevant to other countries. Research in OHS and workers compensation in the United States is relevant to the United States with mostly curiosity value to other nations. Safety research in Commonwealth jurisdictions is more broadly relative due to legal commonalities.
The reduction in medical expenses is high in the Toffel/Levine article but the US usually has health insurance as part of the conditions of employment so this reduction may not travel well outside the US. The data on reduced injury rates is perhaps more applicable and although the reduction is a healthy 9.4%, this is unlikely to gain headlines in comparison to the 26% figure.
As with any research report validity is questioned or reinforced by detailed analysis. Following a footnote (22) calculation of “total value to society of an inspection”, the authors say that
“This estimate is very rough and ignores the underreporting of injuries, safety benefits lasting more than 4 years, the reduction in pain and suffering, and (working in the opposite direction) the discounting of future benefits.”
The authors also say that their
“…research method also ignores the threat of inspections on as-yet-uninspected workplaces.”
Analysing this threat would be a fascinating challenge with, perhaps, fascinating results.
The researchers acknowledge that their research was limited to a subset of high-hazard industries, in California, with randomised inspections and a single regulator.
The most significant lesson from Toffel and Levine is that such analysis of worksite inspections by regulatory bodies can be undertaken. As with most research reports, the researchers have urged those in the same and other jurisdictions to replicate their study.
The researchers, Toffel and Levine, had to use a variety of data sources. Many countries do not have an accurate picture of incidents, illnesses and injuries and a major reason for this is that much OHS legislation remains self-regulatory and, therefore involves self-reporting. Any system of transparency that relies on honesty without verification will be unreliable. Various Australian initiatives are in place to provide this OHS statistical accuracy such as a soon-to-be-revised NOSI site with Safe Work Australia, the application of common industry codes as WorkSafe WA undertook in 2011 and the National Coroners Information System. Austalian safety professionas can add this hope to the bucketload of other hopes associated with OHS harmonisation.