1. BAB 4
KOS KEMALANGAN

2. ACCIDENT COST Direct Cost Worker Compensation Indirect Cost
Safety Programme Cost
Comparison between Direct Cost & Indirect Cost

3. ACCIDENT COST Accident are more expensive than more people realize.
Visualizing the total cost of an accident is much like viewing an iceberg from above and below its surface.

6. ACCIDENT COST
The key to preventing workplace accidents and the impact of their resulting costs is to create and maintain an effective safety and loss prevention programme.

7. - A loss prevention programme protects employers against not only financial losses but the loss of good workers and worker morale.
- Investing in an accident prevention programme will benefit everyone in the organization from top to bottom.

8. The overall cost of accident in US is US800 billion annually.
These cost include lost wages, medical expenses, insurance administration, fire- related losses, property damage, and indirect cost.
Workplace accidents rank second behind motor vehicle accidents in costs.

9. To calculate the total cost of an accidents, it’s necessary to factor in two types of costs.
First, like the tip of an iceberg, are the obvious, or direct cost. Second, below of iceberg surface, the indirect cost.

10. DIRECT COST
Some of costs are obvious-example, workers compensation claims which cover medical costs and indemnity payments (gantirugi) for an injured or ill worker.
The insurance company generally pays these cost with premium dollars and some employers consider these costs “part of doing business”.

11. -but these direct costs are just the tips of an accident iceberg.
-studies show that for every dollars of direct costs there are more dollars indirect costs, the hidden, uninsured cost of an accident.
-all accidents and occupational ill health represent some form of cost to an organization.

12. Direct cost of an accident include:
1. Claim made in civil court
2. Fines imposed in criminal courts; and
3. Increased employer’s liability insurance premiums.
Direct costs are those costs that are accrued directly from an accident. They are quite easy to calculate, and include the medical costs incurred and the compensation payments made to the injured workers.
Direct costs are usually insurable by enterprises.

13. INDIRECT COST
But what about the cost to train and compensate a replacement worker, repair damaged property, investigate the accident and the implement corrective action, and to maintain insurance coverage?
Even less apparent are the costs related to schedule delays, added administrative time, lower morale, increased absenteeism, and poorer customer relations.

14. These are indirect costs-costs that aren’t so obvious until we take a closer look.
They are more difficult to calculate and tend to not be insured.
Indirect costs include:
1. Time away from the job not covered by worker’s compensation insurance.
2. Payment of other workers who are not injured, for example those who stopped work to look after or help the injured worker and those who require output from the injured in order to complete their tasks.

15. 3. the costs of damage to materials or equipment, the costs of overtime imposed by the accidents (lost production, additional supervision and additional light, etc.)
4. the costs of wages paid to the supervisor for time spent on activities related to the accidents. This includes caring for the injured, investigating the accidents, and supervising the activities.

16. -costs associated with instructing, training, and repositioning employees.
-medical cost paid by the employer that are not covered by the insurance. This may include treatment facilities, personnel, equipment and supplies.
Costs of managers and clerical personnel investigating and processing claim forms and related paperwork, telephone calls, interviews, etc.

17. WORKER COMPENSATION (W.C)
Workers’ compensation is a form of insurance that provides medical care and compensation for employees who are injured in the course of employment.
Abrogating the employee’s right to sue their employer for the tort of negligence.
As a way to allow injured employees to be compensated appropriately without having to take their employer to court.

18. Objectives of W.C. Replacement of income for injured employees.
Rehabilitation of the injured employees.
Prevention of accidents.
Cost allocation.

19. There are no welfare or unemployment compensation programs other than statutory termination benefits:
1. Employees Provident Fund (EPF)
2. Social Security Benefits (SOCSO)

20. Employees Provident Fund (EPF)
Compulsory savings scheme in Malaysia
To ensure its member security and well being in old age.
May use part of their EPF savings for their housing & education (30%) and medical needs (10%).
Mandatory for private sector employees and non-pensionable public sector employees.
Contribute 12% of employee’s wages for Malaysian worker and RM5 per foreign worker and expatriate.
May withdraw contributions to medical fund for medical treatment subject to approval by a medical board.

21. Social Security Benefits
The Social Security Organization (SOCSO) administers, implements and enforces the Employees’ Social Security Act.
SOCSO provides coverage to eligible employees through the Invalidity Pension Scheme and the Employment Injury Insurance Scheme.
Coverage is compulsory for Malaysian worker and permanent residents employed under a contract of service and earning RM2K per month or below.

22. To receive a pension, the worker must have an incurable disease or permanent disability before the age of 55.
The employee also must have contributed to the scheme at least 24 of the last 40 months
The benefits is equivalent to 80% of the worker’s average daily wage, minimum RM10 and maximum RM52 given.

23. Certified by a medical board as permanently disabled (20% or greater) due to an occupational injury are entitled to receive permanent disability benefits.
100% disability-will be paid 90% of his/her average daily wage, not less than RM10.
May continue to work while receiving this benefit.

24. SAFETY PROGRAMME COST
The implementation of a safety programme should reflect its nature as a normal, day to day concern of general management.
There is no definite/standard safety programme cost.
One of the most effective ways to ensure the safety of a system and to manage its financial risk is to incorporate health and safety requirements at the very beginning of the acquisition process, before buying or building the system.

25. SAFETY PROGRAMME COST
Only around 15% of workplaces report spending more than 10% of their budget on the management of health and safety issues.
25% didn’t know how much of their budget went to health and safety issues.

26. COMPARISON BETWEEN DIRECT COST & INDIRECT COST
Occupational accidents cause direct and indirect or hidden costs for the whole society.
A popular way to demonstrate this is the iceberg model. There are many variations of the proportion of the costs but usually the proportion of indirect costs is much bigger than direct costs.

28. Accidents are more expensive than most people realize because of the hidden costs.
Studies show that the ratio of indirect costs to direct costs varies widely, from a high of 20:1 to a low of 1:1.
OSHA: the lower the direct costs of an accident, the higher the ratio of indirect to direct costs.