Enterprise Commitment to Occupational Health and Safety: Can "Soft" Investments Survive Hard Times? Peter Dorman Amsterdam: Workshop on the Economic Evaluation of Occupational Safety and Health September 18, 2009

Situating the Analysis NormativePositive “Improve” decision- making in firms Promote OSH investments Identify costs and benefits perceived by firms To explain differences Toward an economic etiology

More Situating: A Typology of Costs All social costs Economic costs Internal costs HardSoft

OSH and the Business Cycle A well-known relationship A dispute over interpretation Paradoxes for the perspective of cost analysis

Business Cycle Evidence: A Few Warnings 1.Fatal and nonfatal data have different patterns. 2.Many nonfatal observations are missing. 3.Time series should be corrected for changes in the composition of employment. 4.Time series should be de-trended (and much of the trend may be spurious).

Business Cycle Evidence: Finland

Business Cycle Evidence: France

Business Cycle Evidence: Germany

Business Cycle Evidence: Greece

Business Cycle Evidence: Italy

Business Cycle Evidence: Spain

Business Cycle Evidence: Sweden

Business Cycle Evidence: The UK

Business Cycle Evidence: The US

Interpreting the Evidence The impact is real Employment changes less than output Last hired, first fired The impact is an illusion Effect of unemployment on reporting incentives Boone and van Ours (2006), Terrés de Ercilla et al. (2004) But what about the cyclicality of economic costs?

Why Not All Costs Can Be Hardened Underreporting Uncertain etiology Measurement costs routine vs non-routine reporting tangibles vs intangibles Workers can be replaced

Soft Costs at the Enterprise Level Relationship with regulators Flexibility costs Uncertainty costs Reputation costs Relationship with workforce Commitment costs Conflict costs

Costs Vary Firms in the secondary sector lower absenteeism cost less development/use of human capital adversarial workplace relations accepted Regulatory retreat more reliance on voluntary compliance less need to exceed the regulatory floor Expansion of precarious labor force

What to Expect from the Current Recession 1.It is rooted in global imbalances. 2.There can be no sustainable recovery without rebalancing. 3.This will require large changes in the pattern of investment and demand. 4.Buffers from competition will be greatly reduced.

Key Questions for the Near Future 1.Will the cyclical pattern of injuries and illnesses be repeated? 2.If it is, will it be fictitious or real? 3.Will precarious employment expand? 4.Will employers be less motivated by soft costs?