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Enhanced Safety and Health at Workplace Increases Overall Business Productivity

We cannot afford to discuss sustainability without a strong emphasis on the safety and health of the workers. As workers are the primary stakeholders and most vital resources of organisations, no organisation can be sustainable without giving priority to the protection of its workers’ safety, health, and wellbeing. To achieve a truly sustainable organisation, workers must be given central importance when developing and implementing sustainability strategies. It is only when safety and health considerations are combined with human capital and meaningfully integrated into an organization’s sustainability strategies that a sustainable economy and a healthier planet can be achieved.

Guy Ryder, Director-General of the ILO warned that the economic impact of failing to invest in worker safety and health is nearly equal to the combined gross domestic product (GDP) of the 130 poorest countries in the world during the opening ceremony of the XXI World Congress on Safety and Health at Work. The ILO figures shared during the Congress also revealed that nearly 3 million workers globally die each year as a result of occupational injuries and illnesses. Around 2.4 million of the death tolls is directly linked to work-related disease. The total cost of illnesses, injuries and deaths was 3.94% of the global GDP, or $2.99 trillion.

Launching workplace health and safety (WHS) programs and ensuring compliance with related policies, laws and standards is not only good practice from the workers’ aspect though. On the contrary, studies suggest that business investments in workers’ wellbeing and improved health and safety are likely to bring a direct positive return through reduced costs as a result of reduced occupational disease, injury and death. A myriad of research insists that poor WHS has serious negative impacts on workplace productivity and profitability.

Investing in safety and health programs in the workplace can result in enhanced business performance and profitability in several different ways, including:

  • Lowering WHS compliance costs (e.g., reduced Work Cover premiums)
  • Reducing sickness on the job and reaching lower absenteeism rates
  • Reducing costs associated with workplace accidents and fatalities
  • Reducing the costs associated with return-to-work processes (e.g training and orientation)
  • Reducing labour costs associated with absenteeism and turnover
  • Preventing costs associated with workers’ compensation claims
  • Higher levels of employee productivity as a result of improved morale, motivation, commitment and engagement
  • More efficient and less disrupted work processes
  • Better risk management
  • Protecting intangible firm assets (e.g., brand image)
  • Improvements in business reputation and increase in customer loyalty[1]

Businesses are therefore, strongly advised to pay high attention to the linkages that exist between productivity enhancement and improved WHS management. To see the real figures in their businesses, organizations can calculate the economic costs resulting from the health and safety failures to understand how crucial it is to invest in WHS systems and practices.

One must also acknowledge that today, global supply chains have become extremely complex, diverse and fragmented. These chains have contributed to economic growth, job creation, poverty reduction and entrepreneurship and can contribute to a transition from the informal to the formal economy. They can be an engine of development by promoting technology transfer, adopting new production practices and moving into higher value-added activities, which would enhance skills development, productivity and competitiveness. At the same time, failures at all levels within global supply chains have contributed to decent work deficits for working conditions such as in the areas of occupational safety and health, wages, working time.[1] Poor business practices such as exploitative working conditions in lower supply chain tiers not only jeopardize workers’ health and safety but also damage the companies’ reputation and risk business failure in long term.

Due to their highly complex nature, safety and health improvement in global value chains necessitate a mix of interventions from public and private actors and strong multi-stakeholder engagement.

The ILO identifies three steps toward better health and safety in global supply chains:

  1. Assess WHS gaps and vulnerabilities in your value chain. This requires knowing all your suppliers and sub-contractors including the ones at the bottom end of your supply chain as low visibility generates higher occupational risks. Women, racial minorities and seasonal workers can also be at the centre of the high-risk points as they tend to be subject to non-standard work arrangements.
  2. Develop a strategic action plan appropriate for your company and value chain. An action plan must effectively address the risks and comprise a basis for a roadmap towards full compliance with laws, regulations, industry practices and international standards. Policymakers should bear in mind that there is no one-size-fits-all solution that every business model can benefit from. Improving safety and health in global supply chains down to the lowest tier of suppliers requires a thorough understanding of influences, root causes and underlying constraints for compliance at each production stage before designing interventions.
  3. Deliver the action plans and follow up the process to prevent, protect from and compensate for occupational risks. This step includes creating internal teams, training the workforce, and making sure that suppliers adhere to your action plans and policies through regular checks and audits. Paying attention to the corrective actions identified in the audit reports and tracking them to closure is important. When you put in place a corrective action process, make sure that you include root cause analysis together with preventative mechanism development and implementation. Your aim should be always to look out for continuous improvement for WHS.

A healthy and safe workforce is a key component to influencing the sustainable adoption of a culture of good practices down the supply chain. Regardless of the place, your business is located in the supply chain, stimulating the demand for improved working conditions from buyers and suppliers is highly beneficial for your business’s success and your workers’ wellbeing. Cascading sustainable business behaviour down the supply chains might be challenging, but overcoming these challenges with the help of sustainability experts will help you unlock great benefits for your business and your stakeholders.

At Our Hiraya, we help our clients build management systems that mitigate health and safety risks and improve working conditions at their workplaces and their respective supply chains. If you are ready to adopt a sustainable approach which extends over your supply chain, our expert consultants can assist your company in identification of the benefits and challenges associated with sustainable supply chain management for you.  Our comprehensive Supplier Enablement Program via NTINDI Enterprise is designed to engage your company with your suppliers and take them on the journey with you. We develop strategies to make sure that your suppliers’ operations are in line with your supplier code of conduct and further sustainability goals. We gradually help your suppliers mitigate risks and drive incremental improvement, increase their engagement and fully disclose necessary information for your company to use in your reporting.

REFERENCES

[1] https://www.safeworkaustralia.gov.au/system/files/documents/1702/workplace-health-safety-business-productivity-sustainability.pdf

[2]  ILC: 105th Session, 2016, Resolution concerning decent work in global supply chains following the general discussion based on Report IV, Decent work in global supply chains.

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