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Promoting sustainable enterprises: safe work is also good business

“Sustainable enterprises cannot afford to have injuries and diseases at work, which would not only interrupt operations but may have strong economic and reputational consequences”. Eleven enterprises from the Leningrad region in Russia’s North-West had a chance to check this statement from an ILO report to the International Labour Conference against daily practice. Olga Bogdanova reports from North-West Russia.

Article | 21 June 2007

ST. PETERSBURG, Russian Federation (ILO Online) – “I will make no secret of it: practically all participants in our group were quite sceptical at the beginning”, says Gennady, chief safety engineer at a pulp-and-paper mill. “Indeed, I have worked at this enterprise for almost 15 years and I thought I knew everything about it, especially on occupational safety. ‘What can they teach me’, I thought to myself….”

Gennady works for one of the 11 pilot enterprises selected under an ILO project funded by Finland to improve occupational safety and health (OSH) systems in North-West Russia. The pilots tested a new ILO methodology for recording and reporting the economic costs of occupational accidents.

Gennady and the other project participants soon realized that they were mistaken with their sceptical attitude towards the project. The new accident cost methodology, developed in Finland, Canada and the United Kingdom was adapted by the ILO project to the specific conditions in Russia.

Thanks to the new methodology, the Russian OSH experts realized that the real cost of accidents was in some cases four to five times higher than they previously thought.

“We always thought about accident costs only in terms of equipment damage and medical expenditures for injured workers. We have never considered indirect costs related to the interruption of the work process, investigation costs, additional measures to prevent similar accidents in future etc. Moreover, enterprises with high accident rate make higher payments to the Social Insurance Fund. When we summed up all our losses, we were literally shocked”, says Gennady.

The pilot group applied the new methodology to 58 occupational accidents revealing considerable costs up to 700,000 roubles (US$ 28,000) in 33 cases.

Project participants further developed their newly acquired knowledge at a series of workshops organized by the project in cooperation with the Leningrad Regional Committee on Labour and Social Protection. With their calculators at hand, they learned that it can cost them up to four to five times less to prevent occupational accidents than to deal with their consequences.

“What’s more, good working conditions improve productivity”, explains Wiking Husberg, senior ILO OSH specialist in Moscow.

In addition, the project published a brochure entitled “Reduce Risks – Cut Costs” that presents the new methodology in a very simple way and may be used as a reference at the enterprise level.

The 11 pilot enterprises are now introducing the ILO-OSH 2001 management system which is based on a systematic approach to occupational safety and health.

“This project has a very good political and practical impact at all levels – from enterprises to decision-makers”, says Husberg. “This clearly demonstrates that the ILO’s systematic approach to OSH can be effectively applied to the concrete situation in Russia. We expect that the North-West experience will be further replicated – a number of Russian regions and even neighbouring countries, like Kazakhstan and Armenia, have already expressed their interest”, he concludes.

The need to radically improve occupational safety and health in Russia is now recognized at the highest level of government. At a recent meeting with business leaders, Russian First Deputy Minister Dmitry Medvedev quoted alarming figures. “Every year 190,000 people die in our country as a result of hazardous working conditions. In 2006, one third of those who died in Russia were at an economically active age – 4.5 times more than in the EU. All this undermines the labour potential of the country”, he said.

This is a view shared by the Committee on Sustainable Enterprises of the International Labour Conference (Note 1). In its conclusions concerning the promotion of sustainable enterprises, the Committee states that protecting workers’ health and safety at the workplace is a very important aspect of the promotion of sustainable enterprise development.

The conclusions of the recent Committee discussions also recognize, however, that occupational safety and health is only one in a large array of factors, the relative importance of which may vary at different stages of development and in different cultural and socio-economic contexts.

“Other factors at the enterprise level include social dialogue and good industrial relations, sound human resource development practices, conditions of work, productivity, wages and shared benefits, corporate social responsibility, and corporate governance. In addition a number of other factors that help shape a conducive environment are essential, including peace and political stability, good governance and the rule of law, social dialogue, respect for universal human rights and international labour standards, entrepreneurial culture, sound economic policies, fair competition and access to financial services, physical and technological infrastructure, education and training, and environmental sustainability are generally considered to be essential for the promotion of sustainable enterprises”, says Michael Henriques, Director of the ILO’s Job Creation and Enterprise Development Department.

As for the enterprises themselves, their position was probably best expressed by one of the pilot enterprise directors: “We are not rich enough to waste our money on accidents; we should better invest in prevention.”

Note 1The promotion of sustainable enterprises, report VI. International Labour Conference, 96th session 2007, Geneva. ISBN 978-92-2-118143-9.