The Economics of Safety: The Business Case for Zimbabwe

Introduction

While occupational safety and health is recognized as a constitutional right and integral part of economic growth, the burden of occupational accidents and diseases remains high in Zimbabwe. This is because occupational safety and health is largely viewed as a cost in most enterprises. There is still limited appreciation of the benefits of investing in occupational safety and health, let alone its impact on the bottom line and ultimately the overall macro-economy.  However, global statistics from the International Labour Organization (ILO) estimate that annually, 317 million workers are injured at work and 2.34 million die from work related injuries and diseases, with the related costs translating to a 4% loss in the global gross domestic product (GDP) (Dorman 2012). Essentially this means that money that could be used for developmental issues is now being channeled towards the reparative costs of occupational accidents and diseases. In view of this, the article aims to provide a quantitative comparative analysis of the burden of occupational injuries and fatalities in Zimbabwe, the related costs and the impact on the economy. The analysis will cover the 10-year period from 2009 to 2018, due to the unavailability of accurate and complete data essential to this article from 2019 to date.

Occupational Safety and Health (OSH) Legislative Profile of Zimbabwe

Legislative provisions have been made for the protection of workers’ safety, health and well-being in Zimbabwe. However, the legislative framework is currently sectoral, fragmented and administered by different regulators. The main laws include the Factories and Works Act Chapter 14:08 of 1996, the Pneumoconiosis Act Chapter 15:09 of 1996, NSSA (Accident Prevention and Workers Compensation Insurance Scheme) SI 68 of 1990, Labour Relations (HIV and AIDS) Regulations SI 105 of 2014 and Collective Bargaining Agreement: Agricultural Industry (Occupational Safety, Health and Environment Code) SI 197 of 2020. These laws are administered by the Ministry of Public Service, Labour and Social Welfare through the National Social Security Authority’s Division of Occupational Safety and Health.

Other laws cover the mining sector, namely the Mining (Management and Safety) regulations SI 109 of 1990 and the Mining (Health and Sanitation) regulations SI 185 of 1995, which are administered by the Ministry of Mines.

The fragmented and sectoral nature of these laws has created regulatory gaps and challenges in industries such as informal and domestic work, which now constitutes the largest economic sector in the country. The Government of Zimbabwe is working towards addressing this gap and ensuring that all workers in all economic sectors are covered. In 2014, the government developed the first Zimbabwe National Occupational Safety and Health Policy that underpins this commitment and is also working on promulgating a harmonized and comprehensive occupational safety and health act (Government of Zimbabwe 2021).

Table 1: Labour force in Zimbabwe

Year	Total labour force (15 years of age and above)	Unemployment rate (%)	Total employed labour force	Total insured labour force (Accident Prevention and Workers’ Compensation Insurance Fund)	Insured labour as % total employed labour force
2009	6 052 658	5.083	5 754 001	1 175 412	20.5%
2010	6 110 955	5.209	5 792 635	1 176 665	20.3%
2011	6 184 085	5.370	5 852 000	990 734	16.9%
2012	6 322 675	5.153	5 996 868	955 636	15.9%
2013	6 465 320	4.982	6 143 218	934 163	15.2%
2014	6 611 175	4.770	6 295 822	946 792	15.0%
2015	6 709 332	4.778	6 388 760	2 151 437	33.7%
2016	6 802 164	4.788	6 476 476	742 732	11.5%
2017	6 909 356	4.785	6 578 743	742 732	11.3%
2018	7 028 775	4.796	6 691 675	872 094	13.0%

Table 1 Sources: The World Bank, 2022; National Social Security Authority, 2018

Table 1 shows that Zimbabwe’s labour force increased from 6,052,658 to 7,156,060 from 2009 to 2018 (The World Bank 2022). During the same period, around 95% of the labour force was employed. However, most of this labour force was employed in the informal sector, which has grown significantly over the years to become the largest sector in the economy. Sources differ on the size of Zimbabwe’s informal sector, but according to a 2018 study by the International Monetary Fund, it is estimated to have grown to over 60% of the economy (Medina and Schneider 2018). This means that over 60% of the labour force is not covered by occupational safety and health law. Furthermore, it also explains the disparity between the total employed labour force and the total insured labour force. On average, only 17.33% of the population is insured under the Accident Prevention and Workers’ Compensation Insurance Fund.

Chart 1: The burden of occupational injuries and diseases in Zimbabwe

Source: National Social Security Authority, 2018

Statistics from the National Social Security Authority’s Accident Prevention and Workers’ Compensation Insurance Fund shows a cumulative total of 49,214 occupational injuries and 768 fatalities recorded between 2009 and 2018 (Government of Zimbabwe 2018). On average, approximately 4,921 injuries and 77 fatalities are being recorded every year. These statistics are mainly from the formal labour force that is insured under the Fund. Statistics for the larger informal and uninsured labour force are not obtainable due to non-reporting.

Table 2: Economic burden of occupational injuries, diseases and fatalities

Year	Total claims costs (USD)	Total GDP (USD)	% of claims costs against GDP
2009	1 537 470	9.666 billion	0.02
2010	5 526 555	12.042 billion	0.05
2011	3 899 336	14.102 billion	0.03
2012	9 555 868	17.115 billion	0.06
2013	11 726 493	19.091 billion	0.06
2014	13 722 096	19.496 billion	0.07
2015	13 768 966	19.963 billion	0.07
2016	11 154 605	20.549 billion	0.05
2017	10 001 015	17.585 billion	0.06
2018	13 304 508	18.116 billion	0.07

Sources: The World Bank, 2022; National Social Security Authority, 2018

Table 2 shows the annual costs of claims that were submitted to the Accident Prevention and Workers’ Compensation Insurance Fund. These claims were from the insured and mostly formal labour force (17.33%) only. As shown, costs of claims constituted less than 1% of the GDP annually, which is significantly lower in comparison to the ILO estimated global loss of 4% (Dorman 2012).

Furthermore, the costs shown are those that are insured against under the Accident Prevention and Workers’ Compensation Insurance Fund. These costs include lump sum and periodic payouts to affected workers, medical and rehabilitation expenses, related travel and subsistence payments for medical visits or reviews, and funeral grants for fatalities. However, there are other hidden costs that are not covered under the Fund, such as lost productivity/business and goodwill, investigation time, repair and replacement costs, et cetera. While some of these costs could be insured elsewhere, others are uninsurable and unrecoverable to the detriment of an enterprise’s bottom line profits and ultimately the macro-economy. Additionally, according to safety and health literature, these hidden or uninsured costs are often much higher than insured costs. Several schools of thought vary on the ratios of the insured and uninsured costs but they range from 1:1 to 1:30 (Manuele 2011). Therefore, the costs could be proportionately much higher than those reflected in the table.

Conclusion

The human and monetary losses caused by occupational injuries, diseases and fatalities in Zimbabwe could be significantly higher than reflected in this article. This is because of missing data due to non-reporting in the much larger uninsured and mostly informal sector. Nevertheless, these unreported and uninsured losses still have an impact on Zimbabwe’s economy as they not only affect enterprises’ capacity utilization but are often paid for directly from the enterprises’ bottom line profits, which ultimately affects the country’s GDP.

In view of this, and in line with Sustainable Development Goal 3 (Ensure healthy lives and promote well-being for all) and Sustainable Development Goal 8 (Promote inclusive economic growth and decent work for all), it is imperative for the government to prioritise and expedite safety and health regulatory reforms to ensure that all economic sectors, especially the informal sector, are protected. The lack of occupational standards also calls for both formal and informal enterprises to prioritise and invest in safety and health as a key business and economic driver.

Bibliography

Data Sources
The World Bank. “Unemployment, total (% of total labor force) (modeled ILO estimate) – Zimbabwe.” The World Bank Group, 8 February 2022, https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?locations=ZW.
The World Bank. “Zimbabwe.” The World Bank Group, 2022,https://data.worldbank.org/country/zimbabwe?view=chart.

Government Sources
Ministry of Public Service, Labour and Social Welfare. “The Zimbabwe National Occupational Safety and Health Policy (OSH)”. Government of Zimbabwe, Revision No. 1, 2021.
National Social Security Authority. “NSSA Annual Report 2009–2018.” NSSA, 2018, https://www.nssa.org.zw/downloads/financial-reports/

Research Reports
Dorman, Peter. “Estimating the economic costs of occupational injuries and illnesses in developing countries: Essential information for decision-makers.” International Labour Organisation, 12 December 2012, https://www.ilo.org/safework/info/publications/WCMS_207690/lang–en/index.htm.
Labour and Economic Development Research Institute of Zimbabwe. “Employment creation potential analysis by sector (June 2016).” International Labour Organization, 7 March 2018, https://www.ilo.org/global/docs/WCMS_619735/lang–en/index.htm.
Manuele, Fred A. “Accident Costs: Rethinking ratios of indirect to direct costs.” Professional Safety, January 2011, pp. 39–46, https://kipdf.com/accident-costs-presentations-to-management-on-rethinking-ratios-of-indirect-to-d_5ac258411723dd857261a303.html.
Medina, Leandro and Schneider, Friedrich. “Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?” IMF Working Papers, Volume 2018: Issue 017, 24 January 2018, https://doi.org/10.5089/9781484338636.001.