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Economics of Health and Safety at Work

Business concepts to improve health and safety at work must avoid adverse effects on health and ensure the well being of employees as the basis for commitment and, as a result, success and competitiveness. This raises the question of which measures are meaningful for which companies in the sense of the effectiveness of the measures and their cost-benefit ratios. Measures for health and safety of employees are carried out in enterprises in order to meet legal requirements, for financial considerations, and moral reasons - and in that order. The desire to contribute to the company's (financial) objectives with investments in health and safety is of high priority for entrepreneurs, and indirectly those responsible for health and safety. In this context, two central questions are raised:

  1. Can the links between investment in health and safety and economic success be demonstrated, e.g., by measuring improvement in productivity or product and service quality?
  2. What (practical) concepts exist that enable an evaluation of health and safety activities and a meaningful, long-term management in an organisation?

The first question addresses the issue of evidence of causal effects of health on economic success and is a difficult one to answer at the high level of business as complex organisations. Studies citing absenteeism or reducing health care costs as "variable success" have reliable evidence for the effectiveness and partly for the cost efficiency of certain methods in the workplace health promotion. This can only partly be determined also for the productivity, quality, or even published financial ratios of companies. Reviews on productivity effects of workplace health promotion measures or complex investments in human resources (HR) indeed show a uniform trend that investment in health and safety / HR relate positively to the company's success.

This leads to the second question raised about methods of continuous and systematic control of health and safety programs. There are a number of concepts for different target or interest groups. From the perspective of the business owner or senior manager it is primarily about the strategic management of HR or health programs, or about the question of these programs contributing to achieve higher business objectives (which do not necessarily have to be only financial). Area managers, on the other hand, are more concerned about the integration of the methods into the processes of goods and services, and the primary interest of the lowest management level is in the behavioural control, the welfare and motivation of individual employees and the achievement of operational objectives in the appropriate organisational unit. The literature avails of manifold methods for the evaluation of individual measures of the complex set of measures or to assess the human capital of companies. In this respect a concept that is based on the principle of Balanced Score Card (BSC) developed by Kaplan and Norton is promising and receives great interest on the part of companies.


Profitability Assessment and Economic Evaluation of Human Performance Management Programmes - Guidelines and Tools (F 2105)

Köper, B. & Vogt, J. (2003). The economic point of view: Costs and benefits of development programmes. Journal of Human Factors and Aerospace Safety, 3(3).

Köper, B., Möller, K. & Zweetsloot, G. (2009). The Occupational Safety and Health Scorecard - a business case example for strategic management. In: Scandinavian Journal of Work, Environment and Health, 35(6), pp. 413-420