In factories where large or highly dangerous machines are installed, even a small mistake can lead to a major accident. If an accident occurs, work will be interrupted, and there will be a lot of damage such as compensation costs for the victims. The losses incurred by such companies and managers due to occupational accidents are called disaster costs, and are an issue that cannot be ignored in management.
Therefore, this time, we will introduce an example of accident costs caused by occupational accidents.
Direct costs paid to victims themselves
When a worker is injured in an industrial accident, various types of compensation are paid to the worker. These costs paid directly to victims are called direct costs.
Direct costs include statutory coverage as insurance benefits and company coverage outside insurance benefits. The former includes medical care compensation, lost work compensation, disability compensation, and bereaved family compensation, etc., while the latter includes leave allowances, medical expenses, consolation payments, disability allowances, and additional retirement benefits. For example, in the case of the death of a worker who was caught between the arm of a transport robot and a machine. The direct costs incurred in this case include hospitalization costs of approximately 850,000 yen, lost-workday compensation costs of approximately 240,000 yen, funeral costs of approximately 4.3 million yen, and bereaved family compensation costs of approximately 48 million yen. As you can see from this example, if a worker dies in a work accident, the direct cost jumps up significantly.
Indirect costs that are often greater than direct costs
Direct costs are not the only costs incurred by occupational accidents. Indirect costs are costs other than the costs paid to victims. In fact, these indirect costs often weigh more heavily than the direct costs.
There are various categories of indirect costs, such as human loss, material loss, and production loss. Human loss includes wages for time spent in rescue, communication, assistance, etc., wages for investigation, countermeasures, recording, etc., wages for negotiations with relevant government agencies, wages for waiting time, etc. I have. Physical damage includes loss and restoration costs for buildings and equipment, and loss and restoration costs for materials and products. Production losses include losses due to production reductions due to disasters and expenses to recover production reductions.
The relationship between direct and indirect costs was mentioned in a report published by Heinrich in 1926. The report showed that indirect costs are four times higher than direct costs. The concept of direct ratio of 1:4 has had a great influence on subsequent ideas related to disaster costs.
However, direct and indirect costs are not always in a 1:4 relationship. For example, in the case of the fatal accident introduced in the previous section, the direct cost was about 54 million yen, while the indirect cost was about 44 million yen. In another example of a non-lost accident (minor accident that does not leave the victim), the direct cost was about 100,000 yen, while the indirect cost was about 2.2 million yen. In this way, the amount of direct and indirect costs fluctuates greatly depending on the extent of damage to victims and the scale of the accident. Heinrich advocated an indirect ratio of 1:4 based on the statistics of the cases he himself investigated, but in Japan, he also thinks that the indirect ratio will converge to about 1.15 to 1.5 times, except for explosions and fires that cause large damage to facilities. It is
As we have seen in this article, the loss due to work-related accidents is very large. Even if the direct cost to be paid to the victim is not so large, it is not uncommon for the indirect cost, which is the other loss, to be large. A study at a British university found that indirect costs are 8 to 36 times higher than direct costs.
If an occupational accident occurs, not only will there be such a loss in terms of costs, but it will also lead to various problems such as a deterioration in the corporate image, worker turnover, and a decrease in the retention rate. Safety management to prevent accidents is related to all profits of the company, so it is necessary to be careful not to neglect it.