Social Costs of Occupational Disease and Injury

27 April 2006

The Economic and Social Costs of Occupational Disease and Injury in New Zealand

New report raises the costs of workplace diseases and injuries.

A newly released report quantifies the economic and social costs of workplace-related diseases and injuries in New Zealand – and indicates they are up to four times higher than previous estimates.

Commissioned by the National Occupational Health and Safety Advisory Committee (NOHSAC), the report considers a number of previous studies and analyses all new cases of occupational disease and injury between March 2004 and March 2005.

It estimates that the full economic and social costs of occupational diseases and injury total $20.9 billion a year, comprising $4.9 billion in financial costs and $16 billion in the costs of suffering and premature death. It also estimates that only 2% of the total costs are ‘compensated’ by organisations such as ACC and the Ministry of Social Development.

“Reports like these are powerful tools for shaping the future of our efforts to reduce workplace diseases and injuries,” says NOHSAC Chair Neil Pearce. “By looking at the whole costs – rather than those covered by compensation alone – and where they are incurred, we can make informed policy and practice decisions and deliver appropriate programmes and long-term benefits to the people of New Zealand.”

The report categorises ‘financial’ costs into six groups, with the most important being human capital costs (the lost productive capacity of a worker until retirement age), which are valued at $3.05 billion a year. Next are health and rehabilitation costs at $694 million, production disturbance costs at $573 million, transfer (deadweight) costs at $238 million and administration costs at $55 million. ‘Other costs’ (such as those for carers and aids, equipment and home modifications) total $293 million.

“These huge financial costs are being borne by – and impacting upon – employers, employees and society,” says Pearce. “And of course the effects are much more than financial – there are often significant and long-term social consequences for the injured and sick people and for their families, workplaces and communities – and further down the track, the health system, the Government and the economy.

“We must address these costs, and soon. Every year between 700 and 1,000 people die from occupational disease and 100 people die from occupational injury. We also see up to 20,000 cases of new work-related diseases, and about 200,000 work-related injuries that result in claims to ACC. This is a huge and unacceptable burden for New Zealand to bear.”

The report allocates the ‘financial’ and ‘total’ costs of workplace diseases and injury according to: incident severity; injury or disease type; industry; and cause, ethnicity, age and gender.

For incident severity, it reveals that the financial cost per case is highest for people with permanent disabilities at $1.1 million, with the total cost per case (including suffering) highest for fatalities, at $3.3 million. Injury/disease type costs are also high – for example, the financial costs per cancer case are nearly $700,000, with total costs per case the highest of any category at $2.9 million. However, sprains and strains cost the most in total.

Among other notable results:
 financial and total costs per case are· higher for males than females
 financial and total costs per case are· highest for Māori and lowest for Pacific Island people
 financial and total· costs per case are highest for people aged 45-64 and lowest for people aged 15-24.
 costs per case in the transport and storage industry are more than· three times those in government administration and defence, while manufacturing takes the largest share of all industries in total costs.

“The report is an excellent snapshot of the current state of play,” says Pearce. “We intend using it to work with others to develop strategies aimed at keeping our workers and our workplaces safe, healthy and productive. I urge policy analysts, researchers and health and safety professionals to read it – not only does it provide insights into the huge costs of workplace diseases and injuries, it provides some clear directions for action.”

For more information, and a copy of The Economic and Social Costs of Occupational Disease and Injury in New Zealand, contact:

ENDS