Economic incentives pay dividends for workplace safety and health

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Newly published research by the European Agency for Safety and Health at Work (EU-OSHA) suggests that economic incentive schemes encouraging companies to invest in risk prevention are a cost-effective option for governments looking to cut the numbers of work-related accidents and illnesses. The EU-OSHA report on economic incentives was launched at a conference of the International Occupational Hygiene Association (IOHA) ‘Health, Work and Social Responsibility’ in Rome on 29 September 2010.

Many EU Member States already offer various kinds of financial reward for businesses that invest in keeping their employees safe. These rewards range from lower insurance premiums, state subsidies and grants, through to tax breaks, and preferential terms for bank loans for the best-performing businesses.

Three out of 14 case studies highlighted in the project provided sufficient data to conduct a cost–benefit analysis. All three resulted in a positive payout ratio, ranging from 1.01 – 4.81 Euros return for every Euro invested. Quantitative criteria covered accident rates, sick leave, and general improvement in working conditions.

For example, an incentive scheme introduced in the German butchery sector in 2002 led to a 28% fall in reportable accidents over the following six years compared to a 16% fall in the sector as a whole. In total numbers this means there were about 1000 fewer accidents per year in incentivised companies.

According to EU-OSHA Director Jukka Takala, “our economic incentives project has already encouraged different EU Member States to learn from each other, and exchange good practice in designing incentive schemes. All in all, the report shows that economic incentives can be effective in all Member States, regardless of wide differences in terms of their social security and accident insurance systems.”

As a result of the project, the Italian workers’ compensation authority INAIL has developed a new incentive scheme which takes into account the experiences and good practice of other countries and therefore is based on the best available international knowledge. With a budget of over 60 million Euros the INAIL scheme is particularly targeting small and medium-sized enterprises and, according to expert estimations, could lead to a benefit of 180 million Euros at society level.

The new EU-OSHA report reflects a growing interest in economic incentives, as a means of motivating organisations to invest in occupational health and safety. There is increasing recognition that enforcement of regulations is not enough on its own, if the EU is to reach the target of a 25% reduction in workplace accidents, set out in its Community Strategy on Health and Safety.

The EU-OSHA report includes a review of existing research on economic incentives, an overview of government policy in the different EU Member States regarding reward schemes, and a collection of case studies giving details of how incentives have been used, in different European countries and across a wide range of sectors. The report evaluates the effectiveness of different incentive schemes, and identifies a number of success factors.

The report and a factsheet in 22 languages are available from the new web portal giving information on economic incentives: http://osha.europa.eu/en/topics/economic-incentives

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