Economic costs and Predictors of occupation-related Injuries in Ethiopian sugar industries from the Employer’s perspective: top-down approach and friction method

Occupational injury refers to a physical injury that a worker encounters while working that caused an illness resulting in death or work absences [1]. Globally, 2.78 million workers die from occupational accidents annually, while 374 million suffer from non-fatal occupational accidents [2, 3]. This occupation-related morbidity and mortality are becoming a substantial public health concern associated with high economic costs. Economic costs are borne by those injured workers, the government, and employers. The costs can be in the form of direct and indirect costs [4]. Despite successful declines in developed countries, which could be attributed to a decrease in occupational injury, reliable information on the current trends of the cost of work-related injuries are scarce in developing countries [5]. One study reported that the cost of occupational injuries was $3 trillion [6]. Evidence from international labor organizations showed that work-related injury’s financial costs range from 1.8 to 6% of Gross Domestic Product [7]. In America alone, the total cost of occupational injuries was $250 billion making the compensation cost $4 million per year [8], in Thailand $14 million [9], in the United Kingdom $14 billion [10], in Turkey, the cost of workday loss caused by major occupational accidents was 19,431.75$ [11]. Regarding risk factors, long working hours, shift work, job type, labor-intensive work, age over 65, and prior injury history increase the risk of occupational injury [12‐15].

In Africa, the burdens of work-related injury are a more pervasive problem. The finding from Nigeria shows that the costs of occupational injury were $244,330,386 and $34,416.1 for fatal and severe injuries, respectively [16]. Another evidence from Kenya revealed that about 18.75% of employees missed 1–7 days or more than 1 month due to occupational injuries [17]. In Ethiopia, the prevalence of occupational injuries is a widespread problem [18‐20]. Besides, several studies have documented high magnitude of occupation-related injuries in manufacturing industries [21‐24]. However, sufficient information on the economic burdens and predictors of occupational-related injuries from the perspective of employers is still lacking. The objective of this study was to close this gap by quantifying the economic burden of occupational-related injuries and their predictors from the perspective of the employers in Ethiopia’s manufacturing industries. The employer has legal liability or is obligated to pay compensation for occupational injuries sustained at work. Also, basic benefits such as health insurance and sick leave are standard for employers of choice in our study. This study provides the scientific and policymaking communities with the information they need to intervene in the problem.

The present study’s objective was to estimate the costs of occupation-related injuries and their predictors from the perspective of the employer in Ethiopia. The data-driven evidence on the economic cost of occupational injuries should provide relevant stakeholders with a better understanding. This insight assists them in making improvements to the working conditions of industrial workers and can positively impact policymakers’ decisions, including improving organizational productivity.

Moreover, comparing the costs of work-related injuries is challenging due to the dissimilarity in currency and exchange rates across countries. However, these differences have much in common, like determining eligibility for claims and paying for medical care and other benefits. At times, it was believed that taking into account the proportional contributions of the various costs of injury components may offer a better comparison method. The previous research reported its results without taking into account the variations in currency exchange rates between the various countries. To the authors’ scope of searching, we lacked specific information about how earlier research had presented their results in such circumstances. On the other hand, countries usually peg their currencies to maintain stability for investors, who don’t want to worry about fluctuations in the currency’s value. The present study found that the total cost of occupation-related damage incurred by the employers was incredibly higher than what had been previously estimated in Ghana [34], America [8],Croatia [35], India [36],Malaysia [37], Netherland [38], and Thailand [9]. This substantial amount of cost variation was explained by cost estimates, the particular costing approaches and the perspectives used the data collection methods, and the sizes or composition of industries. The structure of occupational health and safety services may not yet be strong enough to address the rising demands for workers’ health in the context of industrialization, which is another potential explanation for this disparity. We suggested that expenses due to work-related injuries are very high due to the lack of simple preventive measures in the present study location.

Conversely, our cost estimates are considerably lower when compared to a similar study done in South Africa [39], Poland [40], other parts of the United States [41], Australia [42], Finland [43], and Mexico [44]. The estimated disparity is explained by the differences in the sources of data used, the range of cost components included, and the reference period considered. Besides, the cost computations in our study were limited to medical care, compensation, and productivity loss. Also, our cost estimates were limited to the employer side in one calendar year. The previous literature has estimated the cost of work-related injuries from employers, employees, and social perspectives, which might heighten the discrepancy.

Furthermore, a substantial literature has shown that occupation-related fatality is becoming the overwhelming issue accountable for huge economic losses. For instance, the pooled prevalence of occupational injury in Ethiopia was 44.66% [45], in Ghana 57.91% [46], and 57% in the Africa region [47]. These imply that the burdens of work-related injury are elevating; the economic burdens associated with work-related injury will be expected to be high. Additionally, a researcher with different costing approaches and perspectives reported that the total cost of a workplace injury is often underestimated because some cost components are challenging to quantify, and there is an underreporting of uninsured injuries. Also, the indirect costs could be four times higher than the direct costs [48]. Similar to the above study, the present study found that the indirect cost comprised the largest component of the total cost and was much greater than the direct cost incurred. Compared to the direct costs, there are many variations in the proportion of the expenses, but usually, the proportion of indirect costs is potentially more costly than direct costs. This is consistent with evidence from five European Union countries [49], Canada [50], Turkey [51], Malaysia [52], and German [53]. Evidence showed that direct cost is usually something that can be known at the time of the accident. In contrast, indirect cost needs to be quantified after the accident [54, 55].

Moreover, the present study revealed that the total indirect cost incurred was much higher than the finding from Mexico [44, 56], Ghana [57], and Europe [49]. The possible reason for this discrepancy might be due to the cost categories considered and the costing approach used. However, our study estimated the indirect cost only from productivity losses, and other indirect cost components were not included. In our research, presenteeism cost was the largest component of indirect costs than absenteeism borne by the employers. These increased costs of productivity losses imply that the injured worker was present at work but contributed a sub-normal individual output due to incomplete recovery, which could be leading to lower productivity. The other literature supported our findings [58, 59]. Additionally, the decrease in productivity translates to the inability to perform routine tasks [60]. Also, reduced on-the-job productivity due to health issues affecting the overall performance of companies with negative economic implications to be associated with presenteeism [59, 61].

Similarly, the compensation cost consists of the most significant direct cost component compared to direct medical costs. On the other hand, the direct medical price is much higher than the finding in Turkey [62]. The more accidents organizations have, the more expensive the coverage gets. Workers’ compensation payments are determined by the cost of worker injuries that could be elevated then next year’s premiums more likely. Also, it might be related to the nature and the size of the industries.

Furthermore, knowing the factors influencing cost variability allows the employers and policymakers to identify the area of focus for better decision-making. Our generalized linear model indicates that long-term absence from work considerably increases the total cost variation, which is in line with previous studies conducted in different countries [63, 64]. Employers’ economic expenses are quite significant when people are absent from their occupations for an extended period of time, which affects productivity. Employers also have a legal obligation to provide compensation and cover the costs of a long absence, which adds to the cost disparity. Long-term sick leave also raises the likelihood of chronic impairment, putting employers under additional hardship.

In the context of our search, no literature has examined the influence of unsafe actions of workers on employers’ ‘side total cost variability. Yet, our findings revealed that an unsafe act by the workers was a significant predictor of the total costs. This is mainly associated with unsafe acts of workers that could lead to severe injury or death and which raise the economic burdens of employers as unsafe behaviors of workers are essential contributors to occupational injuries. Related studies found that 88% of workplace incidents in the industry were caused by unsafe behaviors and 10% by unsafe physical conditions [65‐67].

Likewise, our finding documented that having co-morbid illness causes raised employers’ expenditures. This could be because when individual workers are absent from work due to poor progress health, the financial expenses born by employers are expected to be elevated. Also, co-morbid health problems may reduce the workers’ work performance and efficiency and potentially impact the workers’ skills. Thus, our finding was supported by evidence from Florida [68], and England [69]. Similarly, our results indicated that sleep disturbance significantly influenced the total costs, which ultimately can lead to a significant economic weight on employers. This means that as sleep disturbance is responsible for a significant driver of fatigue, the cost of work-related injury was hugely higher among employees presented with sleeping disturbance. The other possible explanation for why sleeping disorders could be potential predictors of the total cost is that workers are more prone to slow thinking, disorientation, and mistakes and loss of work function the longer they go without sleep. As a result, the risk of harm and death to workers and anyone nearby rises, which is expected to raise the cost of a work-related injury. Numerous well-known industrial tragedies have been linked to fatigue as one of the primary contributing factors. The present finding is supported by the result from Australia [70], Iran [71], Switzerland [72], America Insomnia Survey [73], and Korea [74]. However, we suggest an in-depth estimation of the real cost of sleeping disorders; such a study would have paramount importance.

Besides, our results demonstrated that the severity of the injury was suggested as the predictor of the variation of the total cost. This means that as the injured workers didn’t recover in the shortest period due to the severity of injured body parts and associated complications, the prices of injury from employers’ views were considerably large. One study has also revealed similar results as we did [75]. The literature showed that most common costs are sickness absenteeism, health care, individual productivity losses or presenteeism, insurance and pension costs, and indirect costs, such as hiring a replacement and paying for overtime [76, 77].

One of the study’s strengths was selecting the most significant manufacturing industries to make the results representative of most of Ethiopia’s manufacturing industries. We also applied a generalized linear model that is more robust to the non-normal distribution of estimate. The other strength of our study was that we incorporated a top-down approach and a friction cost estimation method. The findings from our research have their own set of limitations. One limitation is that we didn’t consider occupational diseases. The other limitation is that the costs of occupational injury from workers’ perspectives and societal levels were not considered. In addition, all components of indirect costs and direct non-medical costs incurred by employers were not covered within the scope of the current study. Also, the cross-sectional nature of the study limits the external validity of the study. Finally, we are unable to compare time and industries in Ethiopia due to a lack of comparable research.

Occupation-related injuries exert a substantive impact (cost) on the employers and have severe economic implications. This study adds to the growing body of evidence that improving the working conditions of industrial workers could positively affect the economic burden of work-related injuries. Moreover, the long-term absence from work, unsafe acts of the workers, co-morbidity, sleeping disorders, and severity of injury were influential factors that elevated the total cost variation.