Investments in work health - what are the returns

The benefits of occupational safety and health (OSH) are related to cost reduction, improved productivity and to the generation of new assets. According to Chapman´s (2005) meta-analysis, the results of well-managed occupational health promotion programmes can be seen in 27% less sickness absenteeism, 26% less health care costs and 32% less insurance costs. The benefit to cost ratio among these cases was found to be 5.81.    Poor health and safety create costs for organisations. The most common costs are related to sickness absenteeism, health care, individual productivity losses or presenteeism, personnel turn-over, insurance and pension costs and indirect cost effects, such as hiring replacement, paying for overtime, subcontractor work etc. The cost reducing effects of OSH are well documented (Johanson et al., 2007; Pelletier, 2005; Aldana, 2001; Chapman, 2005; Baicker, 2010). Well planned and systematically carried out occupational safety and health measures deliver economic returns which are 3-10 times greater than the monetary investment.  Finnish intervention studies have revealed that there can be positive profitability effects even without immediate measurable productivity effects, which indicates that the economic benefit-mechanisms of OSH are more subtle than often assumed (Lindström et al., 2000).    Early retirement reduces significantly the productive potential of the highly developed countries, i.e. the OECD average is 6.3% of GDP (Herbertsson et al., 2001). Recent calculations from Finland show that the annual loss due to early retirement is even greater, as much as 13% of GDP and some estimates have been even higher (Herbertsson et al., 2001). The productive loss caused by sickness absenteeism is smaller (about 4%) but much more apparent (European foundation, 2007). In addition, the hidden costs of occupational accidents are many times greater than their direct costs (Johanson, 2007).      All forms of OSH activity affects the quantity, quality and effectiveness of Human Capital (Ahonen 2008).