Thursday, 31 March 2011 15:19

Work-Related Accident Costs

Rate this item
(3 votes)

Workers who are the victims of work-related accidents suffer from material consequences, which include expenses and loss of earnings, and from intangible consequences, including pain and suffering, both of which may be of short or long duration. These consequences include:

  • doctor’s fees, cost of ambulance or other transport, hospital charges or fees for home nursing, payments made to persons who gave assistance, cost of artificial limbs and so on
  • the immediate loss of earnings during absence from work (unless insured or compensated)
  • loss of future earnings if the injury is permanently disabling, long term or precludes the victim’s normal advancement in his or her career or occupation
  • permanent afflictions resulting from the accident, such as mutilation, lameness, loss of vision, ugly scars or disfigurement, mental changes and so on, which may reduce life expectancy and give rise to physical or psychological suffering, or to further expenses arising from the victim’s need to find a new occupation or interests
  • subsequent economic difficulties with the family budget if other members of the family have to either go to work to replace lost income or give up their employment in order to look after the victim. There may also be additional loss of income if the victim was engaged in private work outside normal working hours and is no longer able to perform it.
  • anxiety for the rest of the family and detriment to their future, especially in the case of children.


Workers who become victims of accidents frequently receive compensation or allowances both in cash and in kind. Although these do not affect the intangible consequences of the accident (except in exceptional circumstances), they constitute a more or less important part of the material consequences, inasmuch as they affect the income which will take the place of the salary. There is no doubt that part of the overall costs of an accident must, except in very favourable circumstances, be borne directly by the victims.

Considering the national economy as a whole, it must be admitted that the interdependence of all its members is such that the consequences of an accident affecting one individual will have an adverse effect on the general standard of living, and may include the following:

  • an increase in the price of manufactured products, since the direct and indirect expenses and losses resulting from an accident may result in an increase in the cost of making the product
  • a decrease in the gross national product as a result of the adverse effects of accidents on people, equipment, facilities and materials; these effects will vary according to the availability in each country of workers, capital and material resources
  • additional expenses incurred to cover the cost of compensating accident victims and pay increased insurance premiums, and the amount necessary to provide safety measures required to prevent similar occurrences.


One of the functions of society is that it must protect the health and income of its members. It meets these obligations through the creation of social security institutions, health programmes (some governments provide free or low-cost medical care to their constituents), injury compensation insurance and safety systems (including legislation, inspection, assistance, research and so on), the administrative costs of which are a charge on society.

The level of compensation benefits and the amount of resources devoted to accident prevention by governments are limited for two reasons: because they depend (1) on the value placed on human life and suffering, which varies from one country to another and from one era to another; and (2) on the funds available and the priorities allocated for other services provided for the protection of the public.

As a result of all this, a considerable amount of capital is no longer available for productive investment. Nevertheless, the money devoted to preventive action does provide considerable economic benefits, to the extent that there is a reduction in the total number of accidents and their cost. Much of the effort devoted to the prevention of accidents, such as the incorporation of higher safety standards into machinery and equipment and the general education of the population before working age, are equally useful both inside and outside the workplace. This is of increasing importance because the number and cost of accidents occurring at home, on the road and in other non-work-related activities of modern life continues to grow. The total cost of accidents may be said to be the sum of the cost of prevention and the cost of the resultant changes. It would not seem unreasonable to recognize that the cost to society of the changes which could result from the implementation of a preventive measure may exceed the actual cost of the measure many times over. The necessary financial resources are drawn from the economically active section of the population, such as workers, employers and other taxpayers through systems which work either on the basis of contributions to the institutions that provide the benefits, or through taxes collected by the state and other public authorities, or by both systems. At the level of the undertaking the cost of accidents includes expenses and losses, which are made up of the following:

  • expenses incurred while setting up the system of work and the related equipment and machinery with a view to ensuring safety in the production process. Estimation of these expenses is difficult because it is not possible to draw a line between the safety of the process itself and that of the workers. Major sums are involved which are entirely expended before production commences and are included in general or special costs to be amortized over a period of years.
  • expenses incurred during production, which in turn include: (1) fixed charges related to accident prevention, notably for medical, safety and educational services and for arrangements for the workers’ participation in the safety programme; (2) fixed charges for accident insurance, plus variable charges in schemes where premiums are based on the number of accidents; (3) varying charges for activities related to accident prevention (these depend largely on accident frequency and severity, and include the cost of training and information activities, safety campaigns, safety programmes and research, and workers’ participation in these activities); (4) costs arising from personal injuries (These include the cost of medical care, transport, grants to accident victims and their families, administrative and legal consequences of accidents, salaries paid to injured persons during their absence from work and to other workers during interruptions to work after an accident and during subsequent inquiries and investigations, and so on.); (5) costs arising from material damage and loss which need not be accompanied by personal injury. In fact, the most typical and expensive material damage in certain branches of industry arises in circumstances other than those which result in personal injury; attention should be concentrated upon the few points in common between the techniques of material damage control and those required for the prevention of personal injury.
  • losses arising out of a fall in production or from the costs of introducing special counter-measures, both of which may be very expensive.


In addition to affecting the place where the accident occurred, successive losses may occur at other points in the plant or in associated plants; apart from economic losses which result from work stoppages due to accidents or injuries, account must be taken of the losses resulting when the workers stop work or come out on strike during industrial disputes concerning serious, collective or repeated accidents.

The total value of these costs and losses are by no means the same for every undertaking. The most obvious differences depend on the particular hazards associated with each branch of industry or type of occupation and on the extent to which appropriate safety precautions are applied. Rather than trying to place a value on the initial costs incurred while incorporating accident prevention measures into the system at the earliest stages, many authors have tried to work out the consequential costs. Among these may be cited: Heinrich, who proposed that costs be divided into “direct costs” (particularly insurance) and “indirect costs” (expenses incurred by the manufacturer); Simonds, who proposed dividing the costs into insured costs and non-insured costs; Wallach, who proposed a division under the different headings used for analysing production costs, viz. labour, machinery, maintenance and time expenses; and Compes, who defined the costs as either general costs or individual costs. In all of these examples (with the exception of Wallach), two groups of costs are described which, although differently defined, have many points in common.

In view of the difficulty of estimating overall costs, attempts have been made to arrive at a suitable value for this figure by expressing the indirect cost (uninsured or individual costs) as a multiple of the direct cost (insured or general costs). Heinrich was the first to attempt to obtain a value for this figure and proposed that the indirect costs amounted to four times the direct costs—that is, that the total cost amounts to five times the direct cost. This estimation is valid for the group of undertakings studied by Heinrich, but is not valid for other groups and is even less valid when applied to individual factories. In a number of industries in various industrialized countries this value has been found to be of the order of 1 to 7 (4 ± 75%) but individual studies have shown that this figure can be considerably higher (up to 20 times) and may even vary over a period of time for the same undertaking.

There is no doubt that money spent incorporating accident prevention measures into the system during the initial stages of a manufacturing project will be offset by the reduction of losses and expenses that would otherwise have been incurred. This saving is not, however, subject to any particular law or fixed proportion, and will vary from case to case. It may be found that a small expenditure results in very substantial savings, whereas in another case a much greater expenditure results in very little apparent gain. In making calculations of this kind, allowance should always be made for the time factor, which works in two ways: current expenses may be reduced by amortizing the initial cost over several years, and the probability of an accident occurring, however rare it may be, will increase with the passage of time.

In any given industry, where permitted by societal factors, there may be no financial incentive to reduce accidents in view of the fact that their cost is added to the production cost and is thus passed on to the consumer. This is a different matter, however, when considered from the point of view of an individual undertaking. There may be a great incentive for an undertaking to take steps to avoid the serious economic effects of accidents involving key personnel or essential equipment. This is particularly so in the case of small plants which do not have a reserve of qualified staff, or those engaged in certain specialized activities, as well as in large, complex facilities, such as in the process industry, where the costs of replacement could surpass the capacity to raise capital. There may also be cases where a larger undertaking can be more competitive and thus increase its profits by taking steps to reduce accidents. Furthermore, no undertaking can afford to overlook the financial advantages that stem from maintaining good relations with workers and their trade unions.

As a final point, when passing from the abstract concept of an undertaking to the concrete reality of those who occupy senior positions in the business (i.e., the employer or the senior management), there is a personal incentive which is not only financial and which stems from the desire or the need to further their own career and to avoid the penalties, legal and otherwise, which may befall them in the case of certain types of accident. The cost of occupational accidents, therefore, has repercussions on both the national economy and that of each individual member of the population: there is thus an overall and an individual incentive for everybody to play a part in reducing this cost.



Read 7915 times Last modified on Saturday, 30 July 2022 01:25

" DISCLAIMER: The ILO does not take responsibility for content presented on this web portal that is presented in any language other than English, which is the language used for the initial production and peer-review of original content. Certain statistics have not been updated since the production of the 4th edition of the Encyclopaedia (1998)."


Accident Prevention References

Adams, JGU. 1985. Risk and Freedom; The Record of Read Safety Regulation. London: Transport Publishing Projects.

American National Standards Institute (ANSI). 1962. Method of Recording and Measuring Work Injury Experience. ANSI Z-16.2. New York: ANSI.

—. 1978. American National Standard Manual on Uniform Traffic Control Devices for Streets and Highways. ANSI D6.1. New York: ANSI.

—. 1988. Hazardous Industrial Chemicals—Precautionary Labeling. ANSI Z129.1. New York: ANSI.

—. 1993. Safety Color Code. ANSI Z535.1. New York: ANSI.

—. 1993. Environmental and Facility Safety Signs. ANSI Z535.2. New York: ANSI.

—. 1993. Criteria for Safety Symbols. ANSI Z535.3. New York: ANSI.

—. 1993. Product Safety Signs and Labels. ANSI Z535.4. New York: ANSI.

—. 1993. Accident Prevention Tags. ANSI Z535.5. New York: ANSI.

Andersson, R. 1991. The role of accidentology in occupational accident research. Arbete och halsa. 1991. Solna, Sweden. Thesis.

Andersson, R and E Lagerlöf. 1983. Accident data in the new Swedish information system on occupational injuries. Ergonomics 26.

Arnold, HJ. 1989. Sanctions and rewards: Organizational perspectives. In Sanctions and Rewards in the Legal System:
A Multidisciplinary Approach. Toronto: University of Toronto Press.

Baker, SP, B O’Neil, MJ Ginsburg, and G Li. 1992. Injury Fact Book. New York: Oxford University Press.

Benner, L. 1975. Accident investigations—multilinear sequencing methods. J Saf Res 7.

Centers for Disease Control and Prevention (CDC). 1988. Guidelines for evaluating surveillance systems. Morb Mortal Weekly Rep 37(S-5):1–18.

Davies, JC and DP Manning. 1994a. MAIM: the concept and construction of intelligent software. Saf Sci 17:207–218.

—. 1994b. Data collected by MAIM intelligent software: The first fifty accidents. Saf Sci 17:219-226.

Department of Trade and Industry. 1987. Leisure Accident Surveillance System (LASS): Home and Leisure Accident Research 1986 Data. 11th Annual Report of the Home Accident Surveillance System. London: Department of Trade and Industry.

Ferry, TS. 1988. Modern Accident Investigation and Analysis. New York: Wiley.

Feyer, A-M and AM Williamson. 1991. An accident classification system for use in preventive strategies. Scand J Work Environ Health 17:302–311.

FMC. 1985. Product Safety Sign and Label System. Santa Clara, California: FMC Corporation.

Gielen, AC. 1992. Health education and injury control: Integrating approaches. Health Educ Q 19(2):203–218.

Goldenhar, LM and PA Schulte. 1994. Intervention research in occupational health and safety. J Occup Med 36(7):763–775.

Green, LW and MW Kreuter. 1991. Health Promotion Planning: An Educational and Environmental Approach. Mountainview, CA: Mayfield Publishing Company.

Guastello, SJ. 1991. The Comparative Effectiveness of Occupational Accident Reduction Programs. Paper presented at the International Symposium Alcohol Related Accidents and Injuries. Yverdon-les-Bains, Switzerland, Dec. 2-5.

Haddon, WJ. 1972. A logical framework for categorizing highway safety phenomena and activity. J Trauma 12:193–207.

—. 1973. Energy damage and the 10 countermeasure strategies. J Trauma 13:321–331.

—. 1980. The basic strategies for reducing damage from hazards of all kinds. Hazard Prevention September/October:8–12.

Hale, AR and AI Glendon. 1987. Individual Behaviour in the Face of Danger. Amsterdam: Elsevier.

Hale, AR and M Hale. 1972. Review of the Industrial Accident Research Literature. Research paper No. l, Committee on Safety & Health. London: HMSO.

Hale, AR, B Heming, J Carthey and B Kirwan. 1994. Extension of the Model of Behaviour in the Control of Danger. Vol. 3: Extended Model Description. Sheffield: Health and Safety Executive project HF/GNSR/28.

Hare, VC. 1967. System Analysis: A Diagnostic Approach. New York: Harcourt Brace World.

Harms-Ringdahl, L. 1993. Safety Analysis. Principles and Practice in Occupational Safety. Vol. 289. Amsterdam: Elsevier.

Heinrich, HW. 1931. Industrial Accident Prevention. New York: McGraw-Hill.

—. 1959. Industrial Accident Prevention: A Scientific Approach. New York: McGraw-Hill Book Company.

Hugentobler, MK, BA Israel, and SJ Schurman. 1992. An action research approach to workplace health: Intergrating methods. Health Educ Q 19(1):55–76.

International Organization for Standardization (ISO). 1967. Symbols, Dimensions, and Layout for Safety Signs. ISO R557. Geneva: ISO.

—. 1984. Safety Signs and Colors. ISO 3864. Geneva: ISO.

—. 1991. Industrial Automation Systems—Safety of Integrated Manufacturing Systems—Basic Requirements (CD 11161). TC 184/WG 4. Geneva: ISO.

—. 1994. Quality Management and Quality Assurance Vocabulary. ISO/DIS 8402. Paris: Association française de normalisation.

Janssen, W. 1994. Seat-belt wearing and driving behavior: An instrumented-vehicle study. Accident analysis and prevention. Accident Anal. Prev. 26: 249-261.

Jenkins, EL, SM Kisner, D Fosbroke, LA Layne, MA Stout, DN Castillo, PM Cutlip, and R Cianfrocco. 1993. Fatal Injuries to Workers in the United States, 1980–1989: A Decade of Surveillance. Cincinnati, OH: NIOSH.

Johnston, JJ, GTH Cattledge, and JW Collins. 1994. The efficacy of training for occupational injury control. Occup Med: State Art Rev 9(2):147–158.

Kallberg, VP. 1992. The Effects of Reflector Posts on Driving Behaviour and Accidents on Two-lane Rural Roads in Finland. Report 59/1992. Helsinki: The Finnish National Road Administration Technical Development Center.

Kjellén, U. 1984. The deviation concept in occupational accident control. Part I: Definition and classification; Part II: Data collection and assesment of significance. Accident Anal Prev 16:289–323.

Kjellén, U and J Hovden. 1993. Reducing risks by deviation control—a retrospection into a research strategy. Saf Sci 16:417–438.

Kjellén, U and TJ Larsson. 1981. Investigating accidents and reducing risks—a dynamic approach. J Occup Acc 3:129–140.

Last, JM. 1988. A Dictionary of Epidemiology. New York: Oxford University Press.

Lehto, MR. 1992. Designing warning signs and warning labels: Part I—Guidelines for the practitioner. Int J Ind Erg 10:105–113.

Lehto, MR and D Clark. 1990. Warning signs and labels in the workplace. In Workspace, Equipment and Tool Design, edited by A Mital and W Karwowski. Amsterdam: Elsevier.

Lehto, MR and JM Miller. 1986. Warnings: Volume I: Fundamentals, Design, and Evaluation Methodologies. Ann Arbor, MI: Fuller Technical Publications.
Leplat, J. 1978. Accident analyses and work analyses. J Occup Acc 1:331–340.

MacKenzie, EJ, DM Steinwachs, and BS Shankar. 1989. Classifying severity of trauma based on hospital discharge diagnoses: Validation of an ICD-9CM to AIS-85 conversion table. Med Care 27:412–422.

Manning, DP. 1971. Industrial accident-type classifications—A study of the theory and practice of accident prevention based on a computer analysis of industrial injury records. M.D. Thesis, University of Liverpool.

McAfee, RB and AR Winn. 1989. The use of incentives/feedback to enhance work place safety: A critique of the literature. J Saf Res 20:7-19.

Mohr, DL and D Clemmer. 1989. Evaluation of an occupational injury intervention in the petroleum industry. Accident Anal Prev 21(3):263–271.

National Committee for Injury Prevention and Control. 1989. Injury Prevention: Meeting the Challenge. New York: Oxford University Press.

National Electronic Manufacturers Association (NEMA). 1982. Safety Labels for Padmounted Switch Gear and Transformers Sited in Public Areas. NEMA 260. Rosslyn, VA: NEMA.

Occupational Health and Safety Administration (OSHA). 1985. Specification for Accident Prevention Signs and Tags. CFR 1910.145. Washington DC: OSHA.

—. 1985. [Chemical] Hazard Communication. CFR 1910.1200. Washington DC: OSHA.

Occupational Injury Prevention Panel. 1992. Occupational injury prevention. In Centers for Disease Control. Position Papers from the Third National Injury Control Conference: Setting the National Agenda for Injury Control in the 1990s. Atlanta, GA: CDC.

Organization for Economic Cooperation and Development (OECD). 1990. Behavioural Adaptation to Changes in the Road Transport System. Paris: OECD.

Rasmussen, J. 1982. Human errors. A taxonomy for describing human malfunction in industrial installations. J Occup Acc 4:311–333.

Rasmussen, J, K Duncan and J Leplat. 1987. New Technology and Human Error. Chichester: Wiley.

Reason, JT. 1990. Human Error. Cambridge: CUP.

Rice, DP, EJ MacKenzie and associates. 1989. Cost of Injury in the United States: A Report to Congress. San Francisco: Institute for Health and Aging, University of California; and Baltimore: Injury Prevention Center, The Johns Hopkins University.

Robertson, LS. 1992. Injury Epidemiology. New York: Oxford University Press.

Saari, J. 1992. Successful implementation of occupational health and safety programs in manufacturing for the 1990s. J Hum Factors Manufac 2:55–66.

Schelp, L. 1988. The role of organizations in community participation—prevention of accidental injuries in a rural
Swedish municipality. Soc Sci Med 26(11):1087–1093.

Shannon, HS. 1978. A statistical study of 2,500 consecutive reported accidents in an automobile factory. Ph.D. thesis, University of London.

Smith, GS and H Falk. 1987. Unintentional injuries. Am J Prev Medicine 5, sup.:143–163.

Smith, GS and PG Barss. 1991. Unintentional injuries in developing countries: The epidemiology of a neglected problem. Epidemiological Reviews :228–266.

Society of Automotive Engineers (SAE). 1979. Safety Signs. SAE J115: SAE.

Steckler, AB, L Dawson, BA Israel, and E Eng. 1993. Community health development: An overview of the works of Guy W. Stewart. Health Educ Q Sup. 1: S3-S20.

Steers, RM and LW Porter.1991. Motivation and Work Behavior (5th ed). New York: McGraw-Hill.

Surry, J. 1969. Industrial Accident Research: A Human Engineering Appraisal. Canada: University of Toronto.

Tollman, S. 1991. Community-oriented primary care: Origins, evolutions, applications. Soc Sci Med 32(6):633-642.

Troup, JDG, J Davies, and DP Manning. 1988. A model for the investigation of back injuries and manual handling problems at work. J Soc Occup Med 10:107–119.

Tuominen, R and J Saari. 1982. A model for analysis of accidents and its applications. J Occup Acc 4.

Veazie, MA, DD Landen, TR Bender and HE Amandus. 1994. Epidemiologic research on the etiology of injuries at work. Ann Rev Pub Health 15:203–21.

Waganaar, WA, PT Hudson and JT Reason. 1990. Cognitive failures and accidents. Appl Cogn Psychol 4:273–294.

Waller, JA. 1985. Injury Control: A Guide to the Causes and Prevention of Trauma. Lexington, MA: Lexington Books.

Wallerstein, N and R Baker. 1994. Labor education programs in health and safety. Occup Med State Art Rev 9(2):305-320.

Weeks, JL. 1991. Occupational health and safety regulation in the coal mining industry: Public health at the workplace. Annu Rev Publ Health 12:195–207.

Westinghouse Electric Corporation. 1981. Product Safety Label Handbook. Trafford, Pa: Westinghouse Printing Division.

Wilde, GJS. 1982. The theory of risk homeostasis: Implications for safety and health. Risk Anal 2:209-225.

—. 1991. Economics and accidents: A commentary. J Appl Behav Sci 24:81-84.

—. 1988. Risk homeostasis theory and traffic accidents: propositions, deductions and discussion of dissemsion in recent reactions. Ergonomics 31:441-468.

—. 1994. Target Risk. Toronto: PDE Publications.

Williamson, AM and A-M Feyer. 1990. Behavioural epidemiology as a tool for accident research. J Occup Acc 12:207–222.

Work Environment Fund [Arbetarskyddsfonden]. 1983. Olycksfall i arbetsmiljön—Kartläggning och analys av forskningsbehov [Accidents in the work environment—survey and analysis]. Solna: Arbetarskyddsfonden