Work-related injuries and illnesses cost $28.6 billion annually

The following article is a news item provided for the benefit of the Workplace Health and Safety profession. Its content does not necessarily reflect the views of the Australian Institute of Health & Safety.
Sunday, 23 October, 2022 - 12:00
Industry news
National News

If there were no work-related injuries and illnesses, Australia’s economy would grow by $28.6 billion each year, 185,500 additional full-time equivalent (FTE) jobs would be created and workers across all occupations and skill levels would benefit from an average wage rise of 1.3 per cent annually.

A recent research report, conducted by Deloitte Access Economics and commissioned by Safe Work Australia, examines the cost of work-related injury and illness in Australia and estimates how much value could be created within the Australian economy by removing work-related injury and illness.

The report said the impact of an additional 185,500 FTE jobs every year would have translated to a 1.6 per cent increase in GDP every year, which is comparable to the current direct contribution of the Australian Agriculture industry or the estimated economic growth foregone during NSW’s COVID-19 lockdown in 2021.

The largest impact to GDP (45 per cent of the total) would have come from workers who experienced a work-related death or injury which caused them to be absent from the workplace.

“Critically too, the bulk of the new 185,500 jobs created are skilled roles, spread across officials and managers (52,200 FTEs), technicians (32,900 FTEs) and clerks (45,300 FTEs). This result suggests that Australia’s continued transition towards a knowledge-based economy could be accelerated by reducing work-related injuries and illnesses, given most of the new jobs created will require higher skills,” said the report, Safer, healthier, wealthier: The economic value of reducing work-related injuries and illnesses.

“Importantly, this analysis finds that Australian wages would have increased, with productivity gains driving a broad uplift in income to labour across all occupation types. This is particularly insightful given policymakers often look to industrial relations policy levers to tackle issues relating to wages and productivity growth. This analysis reveals that WHS also has a role to play in contributing to Australia’s economic prosperity.”

The report found that each year there was, on average, 623,663 work-related injuries and illnesses between 2008 and 2018. This led to significant productivity losses arising from absenteeism and presenteeism, as well as ongoing losses to labour supply from work-related deaths and injuries or illnesses causing permanent incapacity.

These long-term productivity losses continue to have an influence on the economy through to 2065. Further costs were incurred by the health system totalling $3.4 billion annually, while annual payments of $4.5 billion went towards workers’ compensation and other financial costs.

“Overall, this study overwhelmingly finds that when a worker experiences a work-related injury or illness, it is not only those directly affected that suffer – including the individual, their families and community – it is also the wider Australian workforce that loses the opportunity to access more and better jobs with higher wages,” the report said.

“This analysis estimates the value that could be created within the Australian economy in the absence of work-related injuries and illnesses in terms of both changes to GDP and to employment. These numbers may be interpreted alongside Australia’s GDP and employment, allowing for a meaningful interpretation of the scale of impact that work-related injury and illness have on the Australian economy.”

The research utilises computable general equilibrium (CGE) modelling, which is the first of its kind to adopt the World Health Organization’s guidelines for identifying the economic consequences of disease and injury.

Safe Work Australia branch manager, evidence, communications and strategic policy, Meredith Bryant said the findings clearly illustrate the economic and productivity benefits to the broader community of investing in workplace health and safety.

“Creating workplaces that are safe and free of injury and illness provides broad economic benefits for all Australians, including more jobs and better pay,” she said.

“We know that the devastating effects of injury and illness at work go beyond the effect on the individual, their workplace, occupation, industry or jurisdiction in which they occur.

“Our communities and the Australian economy more broadly feel the impacts of these injuries and illnesses including through costs associated with loss of productivity, reduced work participation and increased healthcare.”