Economic Cost of Poor Occupation Health
The economic impact of poor occupational safety and health regulations is high, and better regulation is necessary to increase the success of the global economy. According to an article published in 2005 about occupational health (Lim, M., 2005, 1), “Work-related injuries and illnesses kill an estimated 1.2 million people around the world every year. This figure roughly equals the global annual number of deaths from malaria.” However, despite the importance of increasing occupational health and safety regulation only about “5–10% of the workers in developing countries and 20–50% of the workers in industrialized countries” (Lim, M., 2005, 1) are protected under any sort of occupational regulation. The other workers work at their own risk, and if they are injured they are unable to receive financial assistance.
Workers in developing countries are easily exploited since the labor force in developing countries is competitive and inexpensive, and the informal work force may contribute up to 60% of GDP in those countries (World Health Org., 1997). The GDP does not consider the externalities associated with poor occupational health and safety standards, such as environmental degradation and poor health in the population.
It is estimated by the World Health Organization that 80% of the labor force in developing countries is involved in primary production such as agriculture or mining. The work environments are likely to be exposed to pesticides from agriculture or toxins from mining, and the exposure can lead to many health problems (World Health Org., 1997).
Poor health standards cost the world 4% in GDP each year, which includes estimates in European countries as well (Rosenstock, L. et al., 2006). The decrease in GDP is due to the extra costs associated with on the job injuries and diseases that are caused by exposure to toxins in the workplace. Fortunately, the United States has been increasing funding in order to decrease economic loses. In 2002 the United States Government increased spending on occupational health research to an annual amount of $33 million, while in the 1990’s the United States spent only as little as $5.5 million (Rosenstock, L. et al., 2006).
Economic Cost of the OSH Act in the United States
The Occupational Health and Safety Act in the United States is expensive for industry because it increases the cost of production, which makes products less competitive on the international market. The monetary costs are high for industry, and according to a Policy Forum in 1997, “The direct costs of federal environmental, health, and safety regulation appear to be on the order of $200 billion annually.” (Policy Forum, 1997). However, the cost of exploiting workers can be high as well. The lost time due to injuries and disease also costs industry because production efficiency decreases with each lost employee. It is estimated that lost time and productivity due to poor standards cost the United States about $61.2 billion each year. In addition, a study in 2004 found that “The majority (76.6%) of the lost productive time was explained by reduced performance while at work and not work absence”(Stewart, W.F. et al., 2003, 1).