PEROSH - seminar 25 November 2010, Brussels OSH and Corporate Competitiveness in a Global Context Guy Ahonen Research Professor FIOH
PEROSH - seminar
25 November 2010, Brussels
OSH and Corporate Competitiveness in a Global Context Guy Ahonen Research Professor FIOH
Presentation heading / Työterveyslaitos / MM / 26-11-2010 2
The Cost-Effectiveness of Work Health Promotion
• Abundant evidence of economic feasibility of WHP - Pelletier review study (1995-2001 ) - Aldana review study (2001) - Chapman meta-analysis (2005) - Baicker review study (2010)
• Major benefits: - productivity increase - pension cost reductions - sick leave reductions - health care cost reductions
• Benefit/Cost-ratios 3-10
Presentation heading / Työterveyslaitos / MM / 26-11-2010 3
Lindström, Schrey, Ahonen, Kaleva (2000 ).
Correlation between WAP and productivity and profitability in 218 SMEs in Finland 1996 - 1998
WAP Productivity Profitability Customer service R = 0,18 ** Multitasking r = 0,19 ** R = 0,21 ** Leadership r = 0,19 ** R = 0,18 ** Cooperation R = 0,24 **
Presentation heading / Työterveyslaitos / MM / 26-11-2010 4
The Druvan case
• Municipality of Dragsjärd Finland
• Multi-dimensional promotion of work- wellbeing 2002-5
• 20-fold increase of OSH = 46 % ROI
• http://www.tyoturva.fi/ files/1166/ wellbeingproductivity.pdf
Presentation heading / Työterveyslaitos / MM / 26-11-2010 5
Estimated costs of early retirement in the OECD, % of potential GDP
Herbertsson et.al 2001
OECD average: 6,3 %
Presentation heading / Työterveyslaitos / MM / 26-11-2010 6
The cost of sick-leaves in selected OECD countries
Country % of GDP Austria 2,2
Belgium 3,1
Bulgaria 0,4
Chech 3 %
Deutschland 3 %
Estonia 5,5
Spain 1,21
Ireland 1 %
Latvia 2,8
Netherlands 2,96
Poland 0,29
European foundation for the improvement of living and working conditions: Absence from work, 2007
Mean: 3,8 % of GDP
Presentation heading / Työterveyslaitos / MM / 26-11-2010 7
The Contribution of Health to the Economy in EU: U.K. Direct and indirect costs
Suhrcke et.al. 2005
Direct costs well measured
Indirect costs greater, less well measured
Presentation heading / Työterveyslaitos / MM / 26-11-2010 8
The Contribution of Health to the Economy in EU: Mental illness
Suhrcke et.al. 2005
About 2 % of health expenditure
Presentation heading / Työterveyslaitos / MM / 26-11-2010 9
The Contribution of Health to the Economy in EU: The value of life-expectancy
Suhrcke et.al. 2005
Estimated ROI of health expenditure: 47%-252 %
Presentation heading / Työterveyslaitos / MM / 26-11-2010 10
Health & Economy Research findings
Suhrcke et.al. 2005
Arora,A (2001)
Barro,R. (1996)
Beraldo,S, Montolio,D Turati,G (2005)
Bhargava,A, Jaminson,D, Lau,L, Murray,C (2001)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 11
Health & Economy Research findings
Suhrcke et.al. 2005
Bloom,D, Canning,D Sevilla,J (2001, 2004)
Bloom,D, Canning, Jamison,D.T. (2004)
Brinkley,G (2001)
Fogel, R (1994)
Jamison,D.T; Lau,L; Wang,J (2004)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 12
Health & Economy Research findings
Suhrcke et.al. 2005
Knowls,S; Owen,P (1995)
Rivera,B; Currais,L (1999)
Rivera,B; Currais,L (1999)
Suhrcke,M; Urban,D (2005)
Wei,D (2004)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 13
Health & Economy Research findings
Suhrcke et.al. 2005
Andren,D; Palmer,E (2001)
Averett,S; Korenmann,S (1996)
Bartel,A; Taubman,P (1979)
Bartel,A; Taubman,P (1986)
Bloom,D; Canning,D Sevilla,J (2002)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 14
Health & Economy Research findings
Suhrcke et.al. 2005
Chiricos,T; Nestel,G (1985)
Contoyannis,P; Rise,N (2001)
Currie,J; Madrian,B (1999)
Fukui,T; Iwamoto,Y (2003)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 15
Health & Economy Research findings
Suhrcke et.al. 2005
Gambin,L (2004)
Gustman,A; Steinmeier,T (1986)
Hansen,J (2000)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 16
Health & Economy Research findings
Suhrcke et.al. 2005
Heinek,G (2004)
Judge,T; Cable,D (2003, 2004)
Luft,H.S. (1975)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 17
Health & Economy Research findings
Suhrcke et.al. 2005
Pelkowski,J.M; Berger,M.C. (2004)
Persico,N; Postlewaite,A; Silverman,D (2003)
Schultz,P (2002)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 18
Social cost of early retirement in Finland 2008
The official retirement age 63-68 = 65
Number of new pension takers 77.109
Average age of new pension takers 58.1
Average los of productive work years per pension taker
65-58,1 = 6,9 v
Total annual loss of productive yers 532.052
Average value (cost) of one work year 45.405 €
Total annual cost of early retirement (cf. State budget 49 Bill. €, GNP 180 Bill. €)
24 Bill. €
/ 19
WA Index and early retirement Municipal workers 1981, % of cohort
Source: Ilmarinen, et.al.(1997), Scand J W E H
%
WA-index
Presentation heading / Työterveyslaitos / MM / 26-11-2010 20
Investment in Strategic Well-being in Finland 2009
Total sum 1,9 billion euros in a year
Aura,O, Ahonen,G, Ilmarinen,J: "Strategic Wellness Management in Finland - the first national survey of the management of employee well-being,",Journal of Occupational and Environmental Medicine 2010 (forthc.)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 21
The "Balance of Horror" in the Finnish Labour Market
Training OHS
WA promotion Recreation and culture
Corporate fitness Communication
Early retirement Sick-leaves Accidents
****
(Presenteeism)
30 Bill € / year 2 Bill € / year
Presentation heading / Työterveyslaitos / MM / 26-11-2010 22
Corporate Social Responsibility (CSR)
• - the economics dimension • - the environmental dimension • - the social dimension - the personnel - human rights - the local community - product responsibility
www.gri.com
22
Presentation heading / Työterveyslaitos / MM / 26-11-2010 23
Tripple-bottom-line-performance
• The Financial performance + environmental performance
+ social performance ____________________
= Total performance ===============
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Presentation heading / Työterveyslaitos / MM / 26-11-2010 24
GRI Community on what reporting should disclose
24 The Transparent Economcy 2010
Presentation heading / Työterveyslaitos / MM / 26-11-2010 25
The European Commission on CSR
• Definition: A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.
• In March 2010 the European Commission made a commitment to “renew the EU strategy to promote Corporate Social Responsibility as a key element in ensuring long term employee and consumer trust”.
http://ec.europa.eu/enterprise/policies/ sustainable-business/corporate-social-responsibility/index_en.htm
Presentation heading / Työterveyslaitos / MM / 26-11-2010 26
CSR and competitiveness at micro-economic level
• Cost-structure (mixed evidence, cost savings in HR, risk management, access to finance)
Europen Competitiveness Report 2008
Presentation heading / Työterveyslaitos / MM / 26-11-2010 27
CSR and competitiveness at micro-economic level: HR-effects
Europen Competitiveness Report 2008
(Montgomery and Ramus 2003)
MBAs from Europe and USA:
Research summary:
Presentation heading / Työterveyslaitos / MM / 26-11-2010 28
CSR and competitiveness at micro-economic level: HR-effects (2)
Europen Competitiveness Report 2008
Presentation heading / Työterveyslaitos / MM / 26-11-2010 29
CSR and competitiveness at micro-economic level: Financial performance
Europen Competitiveness Report 2008
Presentation heading / Työterveyslaitos / MM / 26-11-2010 30
Reasons to increased external transparency
• The role reputation in the market is increasing • Leads to reduced risk-premiums on investments • Leads to higher stock prices • Increased consumer awareness • Demand for qualified labour • Aging population
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Presentation heading / Työterveyslaitos / MM / 26-11-2010 31
Conclusions
• Inadequate health and safety causes enormous costs in industrialised countries
• All costs eventually harm corporate competitiveness • The positive economic effects of OSH measures well
documented • Knowledge-intensity of work amplify the economic role of
OSH • OSH is important because:
- it promotes Human Capital (knowlegde) - it promotes Structural Capital (organisations, risk mgmt) - it promotes Relational Capital (trust, responsibility)
Presentation heading / Työterveyslaitos / MM / 26-11-2010 32
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