Safety should not be the red tape bastard of productivity

There is a logic being applied to workplace safety and public policy that does not ring true. The argument seems to be that productivity levels in Australia are low, that part of the reason for this low productivity is excessive business paperwork and that workplace safety regulators are a major contributor.   (SafetyAtWorkBlog has written around this topic previously.)

Businessman with devil or angelThe authority on productivity in Australia is, unsurprisingly, the Productivity Commission (PC).  In mid-June 2013, the commission released its Productivity Update, the first of promised annual reports.  Search in the document for “workplace safety” and there is no mention, even “safety” only pulls up a couple of public safety references.  Nothing for “workplace” either.

In fact, the report states that

“Strong growth in labour productivity in the December quarter of 2012-13 could be a sign that a broader improvement in MFP growth is now underway” (page 2)


“modelling shows that a comparatively small increase in the rate of labour productivity growth (primarily due to higher MFP growth) could lead to a comparatively large increase in the level of real GDP per person by 2050.” (page 2)

2050 is a long way off but the forecast is for an increase in productivity and the growth in the December quarter could indicate a trend. So for all the productivity gloom and doom being written about in the business newspapers, the reality may be different.  This reduces the authority of the first stage in the argument mentioned at the start of this article.

Glenn Dyer writes on the report in today’s Crikey newsletter (subscription only):

“…the real story from the Commission’s report is that we don’t yet have the real story on this issue.

Productivity is being impacted by factors as disparate (temporary and more enduring) as the strong Australian dollar, weak consumer demand, weak bank lending and the de-leveraging by prudent consumers, the burying of power lines and over investment in generating and distributing capacity, the rapid growth in health and social service employment, the mining investment boom, the impact of the drought and people using less water and electricity and employers “hoarding” labour.

It is not as cut and dried as the critics claim, nor is it as bad. Productivity is on the rise from the slowdown in the naughties and into the early years of this decade.”

(Hopefully he meant “noughties” unless his experience of the start of this century was very different from mine).

There is no mention in the report of red tape as a contributory factor.  The business media, in particular, seems to be reporting business concerns without asking what the actual concerns are in relation to workplace safety and investigating whether the concerns are justified.  In Victoria, at least, the conservative Liberal government listens more to the business community than to the trade unions or safety professionals (those who are talking to the government) and so neither is the government looking too closely at the legitimacy of these concerns.

The Productivity Commission’s Productivity Update provides some independent evidence to the discussion of productivity, red tape and workplace safety.  It seems to indicate, as Dyer summarises, that there are more significant economic and policy impacts on productivity than workplace safety.  Workplace safety may be a target of the government’s and business’ red tape challenge because it is seen as an easy target.

There is no one arguing for the economic importance of workplace safety or pointing out the productivity benefits of keeping workers safe.  For instance, on its own calculations, the Productivity Commission has estimated the annual cost of workplace bullying to be at least $A6 billion but the current discussions on the workplace bullying draft code in Parliament and elsewhere are not arguing on the basis of the economic benefit of controlling or eliminating bullying from Australian workplaces.

Workplace safety rarely, if ever, has economists arguing about its economic and productivity benefits.  The only discussion occurs around reducing costs and not on increasing revenues or profits.  Safety professionals and associations must enter the productivity debate so that they can back up the increasing due diligence attention given to OHS by CEOs and Directors with dollar arguments.  They need to ask productivity questions in the OHS context.  One day, someone with the government’s ear will listen and OHS will be seen as a good son instead of a red tape bastard.

Kevin Jones

reservoir, victoria, australia

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