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Economic Efficiency of Health Measures

Economic analyses of investments in health and safety at work

Occupational health and safety is under the pressure of legitimacy due to its costs. However, model calculations show that investments in health and safety are worthwhile in the long term. This applies to both national and company measures.

National economic perspective

The estimation of loss of production (wage costs) and gross added value (loss of labour productivity) due to incapacity for work indicates a potential for prevention and possible utility potential from a macroeconomic point of view. These estimates of the national economic losses caused by incapacity for work are, on the one hand, data on the sick leave of about 30 million members of the GKV (Statutory Health Insurance) from 2014. On the other hand, the economists are adding data to the national accounts of the Federal Statistical Office (Destatis).

With an average incapacity for work of 14.4 days per employee, 2014 saw a total of 543.4 million days of incapacity for work. Out of this volume of disability, the Federal Institute for Occupational Safety and Health estimates the total national economic loss of production in the economy as a whole of € 57 billion, or the loss of gross added value of € 90 billion.

Business perspective

Company concepts to improve safety and health at work must be designed to prevent health impairment and to ensure the well-being of employees as a basis for commitment and competitiveness. This raises the question of which measures are sensible for which company - in terms of the effectiveness of the measures, but also in relation to their cost-benefit ratio.

Measures for the health and safety of workers are carried out in companies in order to comply with legal requirements, for financial reasons and for moral reasons, in this order. The desire to contribute to the (financial) corporate objectives with investments in health and safety is therefore of great importance for companies. In this context, two central questions are raised:

  • Can the relationship between investment in health and safety and economic success be identified, for example in terms of improved productivity or product and service quality?
  • What are the practical concepts that allow an assessment of the occupational health and safety activities and a meaningful, long-term control in an organisation?

The causality of health promotion and economic success

The first question also concerns the proof that health has a causal effect on economic success. In view of the complexity of companies, the question is difficult to answer. Studies that adduce absentism or the reduction of treatment costs as a success variable, have reliable results for the effectiveness and partly also for the cost-effectiveness of certain measures in occupational health promotion.

This can be seen only to a limited extent for the productivity, quality or even published financial figures of companies. In evaluations of the productivity effects of OSH measures or more complex investments in human resources, there is a uniform tendency that investments in safety and personnel are positively linked to the success of the company. This leads to the second question raised about methods for the continuous and systematic management of health programmes.

There are a number of concepts for different target groups or lobbies.

  • From the perspective of entrepreneurs or senior management, this is primarily about the strategic management of staff and health programmes. This is also linked to the question of the contribution of these programmes to the achievement of the overriding corporate objectives, which need not necessarily be financial.
  • On the other hand, functional managers are more likely to be involved in the processes of the provision of services. The primary interest of the lowest management level is the behavioural control, the well-being and the motivation of the individual employees and the achievement of the operational objectives in the respective organisational unit.

The literature offers a variety of methods for the evaluation of individual measures of the complex measures bundles and for the evaluation of the human capital of companies. With great interest, companies have adopted a promising concept that is based on the principle of Balanced Scorecard (BSC) according to Kaplan and Norton.

Further Information

Presenteeism

Work despite illness - productivity losses and health costs

Find out more : Presenteeism …

Economic Costs due to Incapacity for Work

Estimations of the costs of production losses: Salary costs and loss of labour productivity

Find out more : Economic Costs due to Incapacity for Work …