Cost to Northern Ireland of Workplace Injuries and Ill-health

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1 Cost to Northern Ireland of Workplace Injuries and Ill-health Economic Research March 2013 Prepared by DETI Analytical Services for the Health and Safety Executive Northern Ireland (HSENI)

2 Introduction A number of previous estimates of the cost of work-related injuries and ill health for Great Britain have been carried out by the Health and Safety Executive (HSE) since 2001/02. The most recent of these was produced by Risk Solutions alongside HSE statisticians and economists, and provided the costs in 2010/11. 1 These studies do not include an estimate of NI costs. 1.2 The Health and Safety Executive for Northern Ireland (HSENI) has asked that DETI Analytical Services Unit provide a similar estimate for NI for the same time period. This research builds upon previous attempts to estimate the cost to the NI economy of workplace injury and ill health and seeks to address previously identified weaknesses in the available data. 1 Page 2

3 Methodology 2 Summary of GB Approach 2.1 In order to estimate the total cost of workplace injury and ill health, the GB report sought to establish the total cost associated with workplace fatalities, reportable injury (major or over three calendar days), non-reportable injury (three or fewer calendar days) as well as the incidence of work-related ill health. 2.2 This aggregate cost was based on the total cost to individuals, employers and the government. It also included non financial human costs which were defined as the amount that individuals would be willing to pay to avoid the associated pain grief and suffering and loss of wellbeing to themselves, their friends and families The estimated costs to society (individuals, employers and government) for each case of work-related injury and ill health are shown in Table 1. As would be expected, this demonstrates the significant cost to society of a fatality. Table 1: Cost to Society per Case (Average Appraisal Values) 2010 Prices Total Costs Workplace fatal accidents 1,565,000 Reportable injuries 17,900 Minor injuries 330 Ill health 16,400 Source: HSE Costs to Britain of Workplace Injuries and Work-related Ill Health 2 For full report, methodology and costing see Page 3

4 2.4 The GB Labour Force Survey (LFS) was used to estimate the number of cases of non-fatal injury and work-related ill health, with estimates of fatal injuries sourced from statutory reports under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR). Summary of NI Approach 2.5 Having reviewed the results of the GB report, ASU considered that it would be appropriate to base the HSENI report on the GB cost data. This is due to the fact that both NI and GB experience many of the same cost profiles (e.g. in relation to state benefits and health care provision). 2.6 When it came to considering the issue of regional wage variations, ASU followed the approach adopted in GB, which did not allow for regional wage variations. This was based on the view that regional wage variations are affected by the industry composition of employment within a region, which does not necessarily reflect the industry composition of workplace fatalities within a region. For more information see appendix 4 of the GB report. 2.7 ASU reviewed the HSENI Statistics Booklet (April 2011 March 2012) as well as the Northern Ireland LFS results to attempt to estimate the incidence of workplace injury and ill health within Northern Ireland. 2.8 The HSENI data provided information on the number fatal injuries, major injuries as well as reported over 3-day injuries. The data that was unavailable from this source included minor injuries (less than 3-day) as well as the incidence of work-related ill health. The available data from HSENI is summarised in Table 2, which shows a fall in fatal, major & over 3-day injuries over the period considered. Table 2: HSENI Data on Workplace Reported Injuries 2006/ / / / /11 Fatal Injuries Reportable Injuries 2,768 2,784 2,493 2,299 2,438 Major Injuries Over 3-Day 2,266 2,218 1,983 1,852 1,994 Source: HSENI Statistics 2.9 The NI LFS data was then examined to establish whether it could be used as reliable source to determine both the incidence of minor injury and workrelated ill health. The LFS includes a set of questions in the January to March quarter each year as to whether respondents have had an injury or suffered from ill health due to work in the last 12 months Whilst NI data was available in relation to these questions, it was considered unreliable due to the extremely small sample size achieved by these questions. Additional checks were completed on the data in order to assess whether these concerns were valid. The data was compared to the equivalent Page 4

5 GB LFS data on a per 10,000 employee basis to establish whether the rate of injury etc was similar. The lack of consistent trends provided no additional level of confidence that the NI LFS data could be used as a basis for estimating the cost of workplace injury or ill health Given the issues with using NI LFS data, it was decided to apply the 2010/11 rate of incidence per 10,000 employees established in the GB report (shown in Table 3) to the total number of employees within Northern Ireland. This makes the assumption that employees in NI are no more or less likely to suffer work-related minor injuries and ill health that elsewhere in the UK. Discussions with HSENI officials have suggested that other evidence supports this assumption. The estimated incidence of minor injuries and ill health for NI following this methodology is shown in Table 4. Table 3: GB Rate of Minor Injuries and Ill Health (2010/11) No of cases GB employees Rate per 10,000 Minor Injuries 366,667 24,103, Ill Health 499,512 24,103, Source: HSE Costs to Britain of Workplace Injuries and Work-related Ill Health Table 4: Applying GB Incidence Rate to Northern Ireland 2006/ / / / /11 Total Employees 643, , , , ,739 Minor Injuries 9,792 9,957 9,807 9,692 9,853 Ill Health 13,339 13,565 13,360 13,203 13,423 Note: Employee numbers based on a two-year average of total annual employees 2.12 It is recognised that there are weaknesses with this approach, not least that variations between years are a direct result of total employee numbers rather than changes to the incidence of ill health and injury. This means it is less useful to assess the movement of costs over time. However, ASU are content that it can be used for a broad approximation of the costs in the absence of reliable NI LFS data Using the available HSENI data (which has been compiled using a three year average as per the GB methodology) and supplementing it with the derived data for minor injuries and ill health produces the results in Table 5. Table 5: Estimated Incidence in Northern Ireland 2006/ / / / /11 Workplace fatality Reportable Injuries 2,904 2,682 2,525 2,410 2,342 Minor Injuries 9,792 9,957 9,807 9,692 9,853 Ill Health 13,339 13,565 13,360 13,203 13,423 Sources: HSENI statistics, DETI calculations Page 5

6 Results Using the GB cost data and NI incidence, it is estimated that the total NI cost of workplace injuries and ill health is 285million. This is based on an average of costs over the past three years, although there has been very little variation during this time A full breakdown of NI costs since 2006/07 is shown in Table 6, which highlights a slight decrease in costs over the period. By combining NI costs and GB costs in 2010/11, the total estimated cost of injuries and ill health for the UK was 13.71billion. Table 6: Estimated NI Cost (2010 Prices) millions 2006/ / / / /11 Workplace fatality Reportable injuries Minor injuries Ill health Total cost An overview of NI costs by type of injury is shown in Figure 1. As the largest element of the NI costs (ill health) is estimated using GB incidence rates (as opposed to NI LFS data where sample sizes prohibit), if the actual incidence of work-related ill health in NI is significantly different to GB it would have a large impact on the costs. To illustrate this, it is estimated that if the incidence of NI workplace ill health was half of the GB rate, the costs would fall from 285million to 175million. 3 HSENI has anecdotal evidence to suggest that under-reporting occurs in relation to major injuries, which means that the NI cost may be an under-estimate. However, in the absence of any data on the extent of under-reporting taking place, it is not possible to adjust the data to reflect this. Page 6

7 Figure 1: Breakdown of NI Costs (Average 2008/09 to 2010/11) Workplace Fatalities, 7% Reportable Injuries, 15% Minor Injuries, 1% Ill Health, 77% 3.4 As discussed earlier, the methodology used to estimate minor injuries and ill health are not suited to comparisons over time. However, focussing solely on the total estimated cost of workplace fatalities and reportable injuries, this has fallen by 20million from 2006/07 to 2010/11 (equivalent to a 25% decrease). Figure 2 presents the cost trend during this time. Figure 2: Costs of Fatalities and Reportable Injuries 85 Cost of Fatalities and Major Injuries ( m) / / / / / The total cost of workplace injuries and ill health for GB in 2010/11 was 13.4billion. Taking into account size, the overall impact on the economy is slightly lower in NI than GB (see Figure 3). Page 7

8 Figure 3: NI and GB Costs as % of Output (2010/11) 1.20% Costs as % of GVA (2010/11) 1.10% 1.00% 0.90% 0.80% NI GB 3.6 Given that the number (and therefore cost) of injuries and ill health is related to the number of persons working, it is useful to benchmark NI s costs against the number of employees in GB. The NI cost was equivalent to 2.09% of GB costs in 2010/11, whereas the NI share of GB employees was higher at 2.69%. This indicates that the NI costs of workplace injuries and ill health are slightly lower than would be expected based on the number of employees. Page 8

9 Conclusions ASU estimated the total cost to Northern Ireland of workplace fatality, injury and ill health to be approximately 285m, with ill health representing around three quarters (77%) of this total figure. 4.2 The approach taken for this report has enabled a broad estimate of the cost of workplace injury and ill health to be calculated for Northern Ireland. However, there are significant limitations to this approach due to the inherent difficulties that have been experienced with existing data sources. 4.3 Given the relatively small incidence of workplace injury and ill health within the population as a whole, it is unlikely that a household survey such as the LFS would ever be able to provide a cost effective basis for such estimation. To even begin to provide a basis for robust estimation of the cost of workplace injury and ill health would require at least a fourfold increase in the sample size of the NI LFS, which would not be cost effective. 4.4 Alternatively, the HSENI may wish to consider whether it should augment its existing information gathering processes in order to better capture the necessary information to help inform the cost implications of workplace injury and ill health. It is likely that such an approach would represent an additional and significant burden to business. 4.5 The resource and financial implications of any approach to improve estimation of the costs of workplace injury or ill health are likely to be significant and it is unlikely that a proportionate solution can be found to improve the reliability of this data, given the resources that would be required. Page 9

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