Calculating the International Return on Prevention for Companies

Costs and Benefits of Investments in Occupational Safety and Health

Project of the International Social Security Association (ISSA),
German Social Accident Insurance (DGUV),
Berufsgenossenschaft Energie Textil Elektro Medienerzeugnisse (BG ETEM)

I. Aim

Companies spend money on prevention work with regard to occupational safety and health in order to follow legal and/or social requirements. These expenses also represent investments, since the companies benefit economically from the effects of prevention measures. Therefore, it is of interest whether spending for prevention work delivers a monetary return, and if so, to what extent the “Return on Prevention” comes up. To answer these questions, it is necessary to account for prevention work. The difference between single-economic costs and monetary benefits processed in a prevention balance sheet shows the prevention profit or loss. The Return on Prevention, defined as benefit-cost ratio, illustrates the economic potential of investments in prevention work.
The aim of the cross-country project is to draw up prevention balance sheets (in monetary format) for companies in different countries and to calculate the country-specific return on prevention. Afterward, it is possible to consolidate the results and to estimate the global single-economic costs and benefits of investments in occupational safety and health. In addition, the particular relevance of prevention work (in non-monetary format) in companies is of importance. From the international point of view, it is of interest to identify different attitudes towards prevention work with respect to occupational safety and health.

II. Study

The project should be international as far as possible: the more countries actively supporting the project, the better. The project management team on behalf of the German Social Accident Insurance (DGUV) will prepare the questionnaire and guidelines for the interviews. To collect valid empirical data regarding prevention costs and benefits, one company per one million persons employed in the country (minimal ten, maximal 40) should be interviewed. Preferred branches are: mining, construction, electrical engineering or other industries. Positively selected companies interested in prevention work and holding experience in effects of occupational safety and health are most welcome.
The interviews should start in spring 2010 because the filled questionnaires are required until 30.09.2010. On the ISSA-World Congress on Safety and Health at Work in Turkey 2011, the results of the project are supposed to be presented. Furthermore, publications are planned. Each country taking part at the project will be able to publish the national estimates on the economic benefits of prevention.

III. Significance

Prevention work with regard to occupational safety and health follows legal and/or social requirements. Likewise, the companies benefit economically from the effects of prevention measures. The project intends to focus these single-economic effects and to gain new experiences in prevention approaches. If the empirical results demonstrate that it is worthwhile for companies to invest in occupational safety and health, future discussions about the usefulness of prevention work have to take the Return on Prevention into consideration – national and international

IV. Team

Prof. Dr. Dietmar Bräunig (University of Gießen, Germany)
Dr. Thomas Kohstall (Institute for Work and Health (IAG), Germany)
N.N. (Berufsgenossenschaft Energie Textil Elektro Medienerzeugnisse (BG ETEM), Germany)

V. Partner – Countries

VI. Results

Prevention Pays - Results of an International Study

Expenditure on prevention is beneficial for companies and represents value-added investment from a commercial point of view. This is the result of an international study by the International Social Security Association (ISSA), the German Social Accident Insurance (DGUV) and the Employers’ Association for Energy, Textiles, Electronics, Media (BG ETEM).
Based on a model of prevention accounting, the study interviewed 300 companies across 16 countries regarding their rating of the commercial advantages and disadvantages of investing in occupational safety and health. The study was conducted between 2010 and 2011. The overall rating from companies involved in the study for “Return on Prevention” was 2.2. This means: for each monetary unit that a company invests in workplace prevention they have a return of 2.2 monetary units in the form of economic success potential. This is a statistical value. The actual return depends on individual conditions.
The qualitative factors which companies rated as particularly important were improvements in corporate image and company culture as well as a reduction in downtime and disruptions. This was accompanied by an increase in employee motivation and satisfaction. Larger companies tended to rate the impact and benefits of occupational safety and health higher than smaller companies.
The study used standardised interviews. Prevention experts in the companies were questioned (where possible in a group) about their rating of the microeconomic effects of OSH activities. In accordance with the social accounting method, prevention accounting is seen as an ongoing cost-benefit-analysis. A positive selection of the companies interviewed ensured that there was sufficient experience working with and in OSH. At the same time, the microeconomic benefits for companies with less prevention experience should tend to be higher. The research was supervised by Prof. Dr. Dietmar Bräunig, Justus Liebig University Gießen and Dr. Thomas Kohstall, Institute for Work and Health of the German Social Accident Insurance.
Based on these results, occupational safety and health requires a political reassessment. Not only is OSH relevant in societal and macroeconomic terms, it also contributes to microeconomic success. Workplace prevention should be done not only to meet ethical and legal requirements but also because it represents successful business management – both domestically and internationally.

IVSS Research Report German

IVSS Research Report English

IVSS Research Report French

IVSS Research Report Spanish

IVSS Research Report Turkish

VII. More Information

• Quality in Prevention Report, subproject 5
  (PDF, 648 kB)
• Final report  "Quality in prevention"
  (PDF, 2 MB)
• paper in DGUV Forum
  (PDF, 925 kB)
• paper in Die BG
  (PDF, 27 kB)