The costs and risks of workplace injuries

Credit: Getty Images/Akacin Phonsawat.

This is the second article in a series of three that started by addressing the challenges of worker safety in a changing labour market. This article will consider the costs and risks of workplace injuries to stakeholders. The final article will offer some recommendations to improve workplace safety.

The costs and risks associated with workplace injuries go far beyond the pain and suffering of individuals who go to work every day to provide for themselves and their families. Several workplace stakeholders are materially affected by workplace injuries. This article will examine the costs and risks to those stakeholders associated with the trauma and tragedy of workplace injuries and fatalities. In providing objective data and evidence regarding the collective impact of workplace injury, I will demonstrate that workplace injury prevention must be a priority for Canadian businesses. The third and final article in this series will address how organizational leaders can improve workplace safety.

The costs and risks of workplace injuries are important to five stakeholder groups: workers (and their dependents), the employer, the Canadian economy, the government, and society at large.

Workers and their dependents

Workers, and their dependents, are the stakeholders that are the most directly affected by workplace injuries and fatalities. We know from the first article in this series that over 348,747 workers had lost time injuries and over 993 workers died in 2022 (this data only covers workers in workplaces governed by workers’ compensation legislation in Canada).  We also need to keep in mind that these statistics underreport the problem since they do not include workers whose workplaces are not governed by workers’ compensation legislation.

On a global scale, a recent report by the International Labour Organization (ILO) estimated 350,000 workers are killed by traumatic workplace incidents, just less than 2 million die from workplace related diseases, and about 313 million workers are injured every year.

The physical pain and suffering involved in many workplace injuries is palpable. The emotional pain and suffering of injured workers, and their dependents, is incalculable. The economic loss to injured workers of their full income, future opportunities, and personal career choices is easy to conceptualize but difficult to fully quantify. Clearly, workers and their dependents have the most to lose when health and safety is not a priority in their workplaces.

Employer

The employer is the second stakeholder with costs and risks associated with an employee being injured at work. First, there is the of workers’ compensation premiums, surcharges, and penalties. Across Canada, total premiums paid by employers to all workers’ compensation boards was more than $11.5 billion in 2023.

Annual costs of all workers’ compensation premiums paid by employers in 2023 by jurisdiction

Additional financial risks exist for employers. For example, in Ontario, there is a policy of 100 per cent claw-back of earned workers’ compensation rebates in a year where there is a workplace fatality, regardless of proof of fault. In the United States, by way of comparison, the Department of Labor estimates that employers spend almost $1 billion per week in workers’ compensation premiums.

Second, there may be replacement costs for employers if a worker is injured and no longer able to attend work to do their job. This may also involve recruitment costs, training costs, and temporarily lower productivity of a replacement worker.

Third, there may be damage to property owned or leased by the employer. Workplace incidents involving worker injuries often involve property damage requiring repair or replacement.

Fourth, there may be significant damage to a business’ reputation. In the current digital age, incidents and workplace accidents are often the subject of broad social media as well as mainstream media coverage. This puts the accident employer in the spotlight, and usually in an unfavourable light.

Finally, there is the serious legal risk of occupational health and safety (OHS) law enforcement when there is a workplace injury. OHS laws compel mandatory reporting and give regulators authority to issue stop work orders, administrative monetary penalties (AMP). Employers can also face litigation costs of defending an OHS prosecution and the risk of serious financial penalties. Increasing maximum fines on corporate employers, directors and officers, and even supervisors or injured workers has been a politically popular response to continuing numbers of workplace incidents.

Penalties for violating Canadian OHS laws

The Canadian economy

The Canadian economy is the third stakeholder that pays a high price for workplace injuries. The total economic costs of workplace injuries go far beyond the direct and indirect costs to the injured worker, their dependents, and their employer. There have been several Canadian, American, and international studies  measuring the economic costs of workplace injuries. From a Canadian perspective, the total estimated cost to the Canadian economy in 2008, the latest available data from Statistics Canada, was $19 billion. More recent estimates from non-government sources are as high as $29.4 billion. Suffice it to say the economic costs of workplace injuries in Canada is staggering.

By comparison, the American National Safety Council estimated the total economic costs from workplace injuries in the United States was $167 billion in 2022. Interestingly, this is disproportionately lower than Canadian economic costs from workplace injuries given that the United States has a population almost 10 times larger than Canada.

Government

The fourth stakeholder affected by workplace injuries is the government, including in all 14 Canadian jurisdictions. Governments incur significant direct and indirect costs arising out of workplace injuries. All governments have an established OHS regulator that sets, communicates, and enforces workplace safety standards. The infrastructure cost of each of these OHS regulators is significant and represents a direct burden on Canadian taxpayers.

Quite apart from the role OHS regulators in promoting workplace injury prevention, they are also required to investigate and take enforcement action against workplace stakeholders for alleged legal contraventions, which in turn requires the OHS regulators to employ additional staff, including investigators, technical experts, and lawyers. Enforcement actions involve the administrative and professional staff of administrative tribunals and the courts. They carry their own overhead and public costs. The cost of paying for the salaries, benefits, offices, vehicles, technology, infrastructure, experts, lawyers, tribunals, courts, administrators, and other related resources used during a workplace injury investigation is staggering. For example, the annual budget of the Ontario government’s OHS regulator, the Ministry of Labour, Immigration, Training and Skills Development, was over $1.8 billion in the last fiscal year.

Canadian society

Finally, society at large arguably pays a tremendous cost for workplace injuries. The abovementioned four stakeholders have clear and compelling interests in managing the costs and risks associated with workplace injuries. There are also many indirect costs of ambulance services, medical care and treatment, hospital stays, and ongoing medical and rehabilitation treatment for injured workers. Although Canadians are usually quite proud of their socialized medical system, workplace injuries put a strain on that system every year.

Although it is difficult to quantify all societal costs attendant with all workplace injuries and fatalities, they reflect on Canadian society when hundreds of thousands of workers are injured every year. Arguably, there is a social cost when even one worker is injured at work. Therefore, society at large, even more than taxpayers, is a stakeholder in workplace injury prevention.

There is no known study where these societal costs and risks have been surveyed or measured. While data and objective evidence is helpful to make the case that workplace injuries are costly, societal concern may also be based on moral grounds. As a caring, free, and democratic country, Canadian society has a strong interest in valuing life, safety, and health, and preventing workplace injuries.

In conclusion, evidence of the costs and risks, both measurable and intrinsic, of workplace injuries is immense. As seen in the first article in the series, many jobs in the future have a medium to high risk of workplace injury in Canada. The costs and risks presented in this second article, based on objective data and evidence, make a strong case for reducing worker injuries. The improvement of worker safety, the ‘how’ to support the ‘why’, is the subject of the next article in this series. In this third and final article, I will provide some practical and proven solutions to reduce workplace injuries and reverse projected trends for future jobs in the labour market.

Norm Keith is an employment, labour and regulatory lawyer, and a partner at KPMG Law LLP. He may be contacted at nkeith@kpmg.ca or 416-540-3435. Norm was named ‘OHS Lawyer of the Year’ by OHS Canada magazine for 2023 and 2024, is the author of 13 books including his latest, Safety on Trial (Lexis Nexis, 2024), which may be reviewed for 30 days free of charge at https://store.lexisnexis.com/en-ca/products/safety-on-trial-understanding-and-improving-workplace-safety-law-in-canada.html.

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