Study: Demand conditions and worker safety: evidence from price shocks in mining

SourceYale Insights

Findings: The study examines the relationship between demand and safety. While it’s often speculated that higher demand could lead to improved profits and more investment in safety, the authors found that it incentivized firms to focus on production over safety. “In economic terms, the opportunity cost of focusing on safety – that is, the potential profits lost – goes up when demand is higher. And that creates a second force counteracting the greater ability to invest in safety.”

The research is based on the mineral mining industry in the US, where accident reporting is carefully monitored and the global price reflects demand. Researchers found that a 1% increase in price led to an increase of .15% in serious injuries and mortality – evidence supporting the opportunity cost hypothesis. Records from the mine inspections provided even starker evidence that high demand leads mines to prioritize production over safety. A 1% increase in price led to a .13% increase in violations of health and safety regulations; many deemed from a negligent or willful act by the employer.

Takeaway: For years, safety and production were viewed as competitors suggesting workers and managers had to choose whether to work safely or get the job done quickly at any cost. Smart employers ingrain safety into production by treating it as an integral part of the systems and processes and this relationship is not compromised when production pressures intensify. If there’s a race to beat the clock, there are no winners – injuries and losses inevitably occur.

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