ERC ‘Enterprising Regulation?’ Workshop, 8th November 2013

Enterprise Performance and ‘Decent Work’: The case of Occupational Safety and Health

Ian VickersCentre for Enterprise and Economic Development Research

Middlesex University

Michael QuinlanProfessor at School of Organisation and Management University of New South Wales

Richard CroucherProfessor of Comparative Employment RelationsMiddlesex University Business School

Aims and approach

• Key questions: 1. Is there a link between enterprise performance and

good OSH provision in SMEs ? - as reflected in outcomes such as improved productivity, profitability, staff commitment/ satisfaction and innovation.

2. Under what circumstances is the ‘business case’ for owner-managers to invest in OSH strongest?

3. What are the implications for policy and practice?

• Systematic literature review to inform Decent Work Agenda of International Labour Office (Croucher et al. 2013).

Policy context• Regulatory reform agendas - linking business/national

competiveness with aim of improving or removing regulations (e.g. BRTF, 2000; Hampton 2005; LBRO 2012; OECD 2003, 2010).

• ‘De-centred regulation’ - other economic/civic actors + voluntary approaches (Black 2005; Braithwaite 2006; Hutter 2011).

• OSH business benefits (OSH-BB) - attractive as a promotional tool, esp. given shift of public resources from enforcement/investigation to education etc...

• Is ‘lighter touch’ regulation better ? ..... or deregulation for narrow short term gains at expense of wider economic/social sustainability…? (James et al. 2013; Tombs and Whyte 2012; Vickers 2008).

Red Tape Discourse – Health and Safety Myths?

Source: HSE http://www.hse.gov.uk/myth/index.htm

Costs of OSH Failure: Individual / Social / Economic

• Worldwide/annually over 2.3m deaths + 317m accidents, often resulting in extended absences from work (ILO 2013).

• In the UK 2011/12: o 1.1m people suffered from work-related illnesso 173 killed at worko 27m working days lost to work-related illness and injuryo £13.4 billion – estimated cost of workplace injuries/ill health

(excluding cancer) to society in 2010/11 (HSE 2013)

Small firms and ‘structures of vulnerability’• Resource-constrained - less able/willing to invest in OSH

measures • Informal approaches to management • Short-term planning and decision-making – esp. in highly

cost-competitive conditions• Often bottom of supply chain – disempowered/intense

competition• Low profile - little fear of lost business from adverse

publicity / regulatory attention • Worker insecurity + lack of formal representative

participation + growth of outsourcing/precarious work and informal sector

(e.g. Nichols 1997; Quinlan and Bohle 2008; Walters 2001, 2002; Wright 1998; Walters et al 2011)

What is the evidence for OSH-BB link? (1)

• Health and Safety Management and Business Economic Performance: An Econometric Study: Sheikh et al (2006) Cambridge Econometrics for the HSE.

• Does greater OSH regulation/ stringency lead to: o a fall in output and productivity as firms struggle to meet stricter

regulatory requirements? o OR does it stimulate productivity and innovation? (the ‘Porter

hypothesis’ - Porter and van der Linde, 1995).

• Study is inconclusive – data limitations + complexity of underlying processes and linkages…

What is the evidence for OSH-BB link? (2)

• Some strong evidence in other studies, but often small scale/narrowly based: o focused on ergonomics, occ. medicine/health promotion progs o often involving larger/sympathetic businesses in

high-income/developed country contextso complexities and sometimes contradictory outcomes (e.g. Cagno

et al. 2013; Goetzel et al. 2003; Oxenburgh and Marlow 2005)

• Evidence remains “tenuous and difficult to quantify”, particularly in relation to whether benefits are short-term or long-term (Massey et al. 2006; Lamm et. al. 2007)

OSH compliance costs and perceptions

• Lancaster et al. (2003) survey (n=2,015) confirm costs to be disproportionate across different sizes - large UK orgs more likely to report benefits

• SMEs less likely to have OSH measures/targets + rely on intuitive perception of costs/benefits (also Haefeli 2005).

• Only 10% of SME (56% large orgs) perceived injuries to be a substantial business cost + most uncertain about costs of work-related illness (Haslam et al. 2010).

• Benefits of examining costs of failures only recognised by 12% of SMEs (2/3rds of large orgs) + half unreceptive to use of cost information in OSH promotions.

• SME OSH investments driven by both cost reduction and ‘human costs’ (Haslam et al. 2010).

Supply chains / sub-contracting

• Competitive pressures drive cost-cutting and poor OSH in small sub-contractors (e.g. in construction - Jensen et al., 2010; Yung, 2009).

• OSH requirements in tendering processes - some use of: o OSH performance incentiveso limiting tiers/layers of subcontractingo establishing a regular/preferred chain of subcontractors (e.g.

Jensen et al. 2010; Manu et al. 2012; Underhill and Quinlan 2011)

• Global supply chains some (limited) progressive measures, confined to a few reputation-conscious speciality retailers (e.g. garment sector - Oka 2012).

Under what circumstances is OSH-BB link strongest?

• Multiple levels of influence:

o firms’ resources, capabilities, motivations and cultureso diverse market/institutional contexts

(Barrett et al. 2013; Baldock et al. 2006; Vickers et al. 2003). • Particularly associated with a propensity to make OSH

improvements are (Baldock et al. 2006): o enforcement activity by reg. officials o use of OSH external assistanceo size and growth performanceo management training and experienceo membership of sector/business associations

Framework for differentiating small firm responses

(1) AVOIDERS/OUTSIDERS

(2) REACTORS(a) Minimalists (b) Positive responders

(3) PROACTIVE LEARNERS

Awareness of regulations

Poor to non-existent

Poor to non-existent Some, often obtained from external agencies (regulatory or supply chain)

Relatively good

Attitude and behaviour toward regulation

Avoidance and evasion

An unnecessary burden; will respond under compulsion but may subsequently relapse

Greater acceptance + responsive to intervention, but need clear guidelines

Acceptance of OSHBBPolicy/practice embedded in routines

Employmentcharacteristics

Poor conditions – low pay + vulnerable workers

Poor-averagetypically less skilled/qualified workers

Average-goodSome skilled/qualified

Good training/dev+ highly qualified/skilled staff

Conclusions

• OSH-BB link shaped by competitive conditions in diverse regulatory/institutional contexts.

• Need for OSH interventions that are sensitive to the characteristics of enterprises and circumstances faced.

• OSH-BB message needs to be developed alongside (rather than substituting for) effective enforcement and sanctions to deter bad practice + support and encouragement for good practice.

Thank you - Questions ?

Ian Vickers Michael Quinlan Richard Croucher

i.vickers@mdx.ac.uk