The Economics Of Ergonomics

Feb 27, 2015 4 Min Read
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Investment in the health, safety and wellbeing of employees has increasingly been acknowledged as integral parts in building employee engagement, as well as the economic sustainability and organisational development of enterprises.

In economic terms, the ILO (International Labour Office) estimates that more than 4% of the world’s annual GDP is lost due to occupational accidents and diseases, with 313 million suffering non-fatal accidents, and more than 160 million people suffering from occupational and work-related diseases annually.

In addition, one must consider the indirect costs of each incident, impact on families and consequential societal costs.
Barefoot Economics, The Economics of Health, Safety and Well-being, a publication by the Department for Occupational Safety and Health of the Finnish Ministry of Social Affairs and Health with ILO Safework programme aims to provide information on costs and benefits of the development of work environments and by doing so, encourage behaviour which will develop the safety and health level of the organisations.

Figure 1: Direct and indirect costs of occupational accidents (adapted from Barefoot Economics, The Economics of Health, Safety and Well-being by the Department for Occupational Safety and Health of the Finnish Ministry of Social Affairs and Health with ILO Safework programme).

Over the years, studies have shown that ergonomic interventions at the workplace result in positive financial returns for organisations in some sectors.

In a review of recent studies, the Institute of Work and Mental Health of Canada found that participatory ergonomics programmes in which workers, supervisors and other workplace parties jointly identify and address work-related risks can be beneficial (to both employees and the organisation).

In a clothing manufacturer with 295 workers, there was a net benefit to the company of almost C$295,000 (approximately RM858,000); and for a car parts manufacturer with 195 employees, a savings of C$244,000 (approximately RM710,000).

Several studies demonstrate a positive relationship between company workplace practices and business success.

These studies highlight workplace policies that demonstrate respect for employees’ basic requirements:

  • good external working conditions.
  • job security.
  • good relations between management and workers.
  • fair pay and employee motivation.


These requirements may have different business implications. For instance, some companies struggle to comply with government and legal requirements to maintain the right working environment, such as the installation of sophisticated safety systems, like sensor devices and smart security equipment. The problem may stem from budget allocation issues or a lack of technical awareness and expertise.

Job security is also another issue. Some companies may not have the financial capability to sustain consistent staff due to rapidly changing demands, so hiring part-time or seasonal workers is their best resort.

And, while employers also understand the importance of fair compensation, some companies may not be able to provide full benefits or increase pay due to a high amount of debt or high production costs. In these situations, employees may feel that the management is unfair, which leads to a lack of motivation.

Productivity and operational efficiency

To improve productivity and operational efficiency, organisations should work towards creating an open and innovative working climate that nurtures employee engagement.

In addition to delivering on its employee value proposition, if an organisation can empower its employees and encourage them to create and share knowledge on improving efficiency, it can increase safety and productivity, and ultimately business performance.

Companies can also deploy cutting-edge technologies, such as EHS software, to improve safety in the workplace. These innovative solutions allow organisations to gather relevant data that managers and quality control specialists can easily access on mobile devices to monitor any hazards. They can then make intelligent decisions and amend policies to safeguard the health and safety of the employees.

When employees feel their employers’ genuine concern for them, it may help boost their morale. They may feel happier and more motivated, which increases efficiency and productivity in the workplace.

Figure 2: Safe workplace and its benefits for the work organisation (adapted from Barefoot Economics)

In conclusion

As with our personal health, we have an obligation to ourselves and to our co-workers to take charge of our (collective) health destinies.
Speaking up and calling out unsafe and unhealthy practices, and then suggesting countermeasures demonstrate an employee’s commitment and value to the organisation.

And vice versa, of course, leaders have to also commit to taking action to ensure a good working environment for all.
Related article: Ergonomic Checkpoints

Karen is really energised when speaking to business leaders who see the light (that bright natural daylight!) and take steps to invest in their people holistically. Drop us a line or two in the comment box below or email us at editor@leaderonomics.com. For more Consulting Corner articles, click here.

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This article is published by the editors of Leaderonomics.com with the consent of the guest author. 

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Karen has rather bizarrely maintained a childlike side to herself – always keen to see, learn and do new things. Yet she has remained grounded on finding the best way to help people – especially those who have the skills and heart to do incredible things.
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