The Direct and Indirect Costs of Work Injuries and Diseases in New Zealand

Abstract

Justifications for either increasing or decreasing public and private expenditureon occupational health and safety are increasingly focused on the costs of workinjuries and diseases and their prevention, especially given current fiscalrestraint and business competitiveness. This study estimates the indirect/noninsurance costs of work injuries and diseases in New Zealand and comparesthem to the direct/insurance costs to assess the seriousness of work injuries anddiseases in financial terms. Indirect costs are classified as either employer,employee, or community costs and based primarily on information provided bythe ACC and the Departments of Labour and Social Welfare. The indirect todirect cost ratio is 1:2.9, for estimated indirect costs of $314 696 000 and directcosts of $912 696 000. This low ratio suggests that greater efforts at hazardprevention would yield few savings beyond any reduction in insurance costs.However, better estimates for community and employee costs, in particular,which are underestimated or omitted in this study, would likely lead to a verydifferent conclusion.