Economics of Loss Control

I. Legal Framework On Occupational Safety And Health

  The Philippine Constitution, 1987
“labor shall be entitled
to…humane conditions of work…”

Philippine Labor
OCCUPATIONAL SAFETY
Code, 1974
Book IV is devoted to prevention
AND HEALTH STANDARDS
and compensation of work-related
injuries and illnesses A set of specific
rules on OSH
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 Article 106: Contractor or
sub-contractor
“In the event that the contractors or sub-contractor
fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and
severally liable with his contractor or sub-contractor
to such employees to the extent of the work performed
under the contract, in the same manner and extent
that he is liable to employees directly employed by
him. employees.”
 Rule 1012.02 – Abatement of
Imminent Danger
When an imminent danger exists in the workplace, the DOLE through the
Regional Director shall cause the issuance of an Order for Stoppage of
Operation or other appropriate action for the abatement of the danger.
“An imminent danger is a condition or practice that could
reasonably be expected to cause death or serious physical
harm before abatement under the enforcement procedures
can be accomplished.”

“The order shall remain in effect until the danger is removed

or corrected.”
 “Occupational safety and
health is a non-negotiable issue.
”
 Philosophy of Accident Prevention
Society as a whole has a moral responsibility to
prevent needless destruction of life and health,
particularly in the workplace.

The employer is primarily responsible for ensuring

a safe, healthy work environment.

Employees are held accountable for following

prescribed safety standards and guidelines.

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 results to

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 COST of ACCIDENTS
This “iceberg” demonstrates the relationship between direct and indirect costs or
accidents. On the average, indirect
Direct Costs costs exceed direct costs
•  Medical Costs by a 4:1 ratio.

•  Compensation/Indemnity

Indirect Costs
•  Lost Time By: •  Spoiled Product •  Training New
Injured fellow Employees
•  Unhappy customers
Worker •  Overhead Costs
Supervisor •  Cleanup Time
•  Legal Fees
•  Schedule Delays
•  Increase in
Insurance Cost
An Actual Cost of accidents
 Amount Paid by the Employer
(due to violations)

  Underpayment of wages :P 305,077.00

  Non-payment of 13th month pay : P 2,474,081.02

  Non-payment of regular holiday : P 1,107,056.08

  Salary of 461 workers
(during the time when the operation
was still suspended) :P 1,714,764.99
Additional underpayment of wages :P 1,133,643.16

  Total Amount Paid : P 6,734,622.25

Payment to Victims’ Families
& Dependents
Financial /Medical Assistance and Compensation
(Sub-contractor)
  Victim 1 P 248,048.64
  Victim2 P 255,207.00
  Victim 3 P 313,702.88
  Victim 4 P 313,702.88
  Victim 5 P 323,788.64
  Victim 6 P 310,733.09
  Victim 7 P 368,686.02
  Victim 8 P 320,871.39
  Victim 9 P 294,893.49
  Victim 10 P 338,324.99
  (Survivor) P 314,787.04

TOTAL =P 3,402,746.06
 Expenses on Training

  Orientation/seminar  on  Construction  Safety  and  

Health  conducted  for  all  the  Project  Managers,  
Safety   Officers   and   construction   workers   of  
Contractors  &  Sub-­‐contractors    
Training Expenses shouldered by the Company:

686 workers
•  1 day training for = P452,700

•  5 day-COSH for 52 Safety Officers = P182,000

Total = P634,700.00
 Other Expenses

A. COST shouldered by the government/other agencies

•  Livelihood Package: P 50,000.00 x 11 families = P550,000

•  Burial Expenses (SSS) P20,000x10 = P200,000
•  Disability Benefits (ECC) P15,000x11 = P155,000

Total = P905,000.00
B. Other hidden/undeclared Cost
-  Legal/Attorney’s Fee
-  Repair of Damaged Equipment
-  Purchase of New Equipment/Materials
-  Clean-up Cost
 Summary of Actual Expenses/
Cost of Accidents
Direct Cost Indirect Cost
Wages P Training-
6,734,622 P634,700.00
Other government
Medical/other expenses
Financial P905,000.00
Assistance P 3,402,746
Total =P1,539,700
TOTAL=P10,137,368 (Excluding cost of
equipment repair, clean
-up, legal fees, etc.)
 Workers Employers
-  physical pain/injury - compensation
-  financial burden -emergency medical
expenses
- medical expenses -material/equipment
repair
- SUFFERING - production time
- image/reputation

ECONOMIC LOSS
 How to Prevent Accidents

ENGINEERING

EDUCATION/TRAINING

ENFORCEMENT
(Means COMPLIANCE/Implementation
of OSH programs and activities )
 Reduced cost from injury and diseases
Cost savings through minimal production downtime

Greater employee commitment and motivation

Improved workplace systems and procedures

Create positive culture/attitude among workers

 More workplace accidents that
take place result to higher
company insurance premium.

and

Higher company premiums means

lower profit on each product unit sold/
services rendered.

“Accident costs money,

Safety saves money.”
 The way to do it for OSH
Leadership from senior Integrate OSH as
management and part and parcel
commitment from the of day-to-day
top to drive operations to avoid
successful change. costly problems.

“It is not just talk, it is action

to follow talk.”
 The way to do it for OSH

Employee Training and

Participation - the education to
most effective provide workers
means in knowledge, skills in
improving safety performing the job
and health by safely.
providing them
more fulfilling
roles.
 A safe and healthy Is free from unsafe
workplace Conditions and
Unsafe acts

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 Happy and
motivated Efficient

People working
in a safe and
healthful workplace
are…
Productive Competitive