Economical loss due to non-compliance with requirements for personnel safety and health in Lithuanian construction sector

Abstract Research on Economic Losses (consequences) due to Failure to Ensure Occupational Safety and Health Requirements in the Construction Sector was conducted by the order of the Ministry of Social Security and Labour (contract No. 2594-AP). The conducted scientific analysis shows the state of occupational safety and health at work in the construction sector, estimates economic consequences for accidents at work, indicates the economic benefits of investment for occupational safety and health and presents the results of research, findings and recommendations. This would allow to reduce occupational diseases and the number of accidents at work and herewith to avoid economic consequences for state and construction enterprises.


Introduction
Construction works are specific and present one of the most dangerous business fields. The reasons why occupational accidents in the construction field occur have a number of various causes (Šukys 2004;Liaudanskienė et al. 2010;Hola 2007). Significant reasons directly influencing accidents at work in the construction sector include a shortage of knowledge and training, a lack of supervision, awareness about the safe implementation of assigned work, i.e. negligence, apathy and total carelessness (Findley et al. 2004;Duijm et al. 2008). This is called unsafe behaviour and is suppose to be one of the fundamental factors influencing accidents at work, which shows a poor safety culture in a company (Macedo and Silva 2005;Behm 2005;Carter and Smith 2006;Hoła 2006aHoła , 2006bHoła , 2010. The analysis of accidents considering harm factors stumble, falling objects (Halsam et al. 2005;Dėjus 2007;Hinze et al. 2006;Hinze and Giang 2008;Rozenfeld et al. 2010). These factors mostly cause serious and fatal accidents at work. The highest injury probability is for an employee who is working at a new place first year, and injuries are suffered by younger employees (Hoła 2009;Giretti et al. 2009).
Now, when the world of work is changing, health problems related to work are also changing. Occupational health and safety are becoming the priorities of all research fields all over the world (Teo and Ling 2006;Nielsen 2007;López et al. 2008;McDonald et al. 2009;Liaudanskienė et al. 2009). Many construction companies are slowly building safe working items; however, due to injuries, large financial losses are suffered, pecuniary penalties are paid and potential working force is being lost. Today, the prevention of accidents at work in construction companies is a very important issue in Lithuania (Dėjus and Viteikienė 2003;Dėjus 2009;Stankiuvienė et al. 2006). A safe and healthy work environment is the most important condition for leading working life. The employee's efficiency along with general and occupational mordibility depends on the quality of working conditions. Due to employees' mordibility, disability and occupational diseases, significant economic losses are suffered by an employer. In construction business, the risk factor is very high. The risk assessment problem is analyzed by many authors (Vaidogas and Juocevičius 2008;Zavadskas et al. 2010;Zavadskas and Vaidogas 2008;Perera et al. 2009;Hallowell and Gambatese 2009). It is usually impossible to implement all accident preventive measures to eliminate all injury factors. In 2003, attention was paid to safe working conditions at construction sites. This year, the campaign called "Building in safety" launched in all EU countries. During this campaign, special attention was paid to the deaths and injuries caused by a fall from height, falling objects etc. (Čyras et al. 2004;Šukys et al. 2005;Stankiuvienė ing conditions and increasing motivation. All these have an effect on work quality, a decrease in accidents and the number of occupational diseases. What is more, the consumption of material and time for task accomplishment is decreasing, the prestige of company as well as the competitiveness is increasing. The identification of accidents and their economical consequences are very important to economy development. This kind of analyses in the construction field has been performed for the first time. Research objective is to analyse personnel safety and health conditions in the construction sector for the period 2002-2009; to determine the economical loss (consequences) of building companies incurred due to the unsecured requirements for personnel safety and health as well as to prepare recommendations on lowering the incurred loss.
Research methods. In order to achieve the objective, selection, surveying and statistical-analytical as well as mathematical modelling methods were implemented.

Analysis of Personnel Safety and Health in the Construction Sector for the Period 2002-2009
According to the data acquired by the Department of Statistics in 2008, there were 5476 active entities where the number of active individual entities made 1198. During 2009, building companies implemented works on their own resources for LTL 166.3 million, i.e. 2.1 times more than during 2002. The amounts of construction works, comparing with those in 2002, increased by 118%, the amount of personnel -decreasing by 12%, loss due to accidents -by 47% and the number of accidents -by 52% (Fig. 1).
Comparing the number of accidents related to the construction sphere (a considering number of accidents per 100,000 employees), it can be mentioned that the number of accidents in 2009 compared to 2005 decreased by half. Data about the level of work accidents related to construction (accidents per 100,000 workers) for the period 2002 to 2009 is shown in Fig. 2.  After the analysis of accidents in the construction sector, according to trauma factors, it was estimated that the largest amount of traumas -24% was caused due to a fall from height (2005 year). The danger of falling and tumbling is always faced on construction sites when work is carried out on roofs, in buildings, on constructions, decks, platforms, stages, passages etc. The highest amount of accidents due to a fall from height reached 145 in 2006. Data on the accidents due to a fall from height in the construction sector is provided in Fig. 4. After the analysis of accidents considering reasons, it was noticed that the major part of the accidents occurs due to the violation of safety and health acts at work (508 cases in 2007). In 2007,89 accidents occurred also due to other violations: criminal acts of violence, an unpredicted natural phenomenon, the violation of orders determining working and rest time etc. Data on accidents at work according to their reasons for the period 2002-2009 is provided in Fig. 5.
Approximately 23% of seriously injured and approximately 37% killed workers in construction were drunk during the accident. Considering all drunken workers killed at work, almost every second worker worked for building companies. This is one of the biggest problems in the construction sector (Fig. 6).
Approximately 55% of accidents occur in building companies with the number of personnel from 50 to 249. This happens in medium-sized companies due to the following reasons: − the scope of construction objects is relatively small, their number is large; nature, technology and working conditions often vary; risk assessment is not carried out; − site managers take part in several construction sites at the same time; therefore the supervision of personnel safety and health is poor. Approximately 50% of injured workers were drunk in these companies; − the managers of subdivisions do not explain the personnel about the dangers on the construction site, their consequences and means of precaution, do not instruct the personnel before the commencement of work on a new construction site, and therefore workers take decisions themselves. Collective protection measures are not used on all sites. Mostly, accidents are experienced by the workers during the first year at work. They are not informed about dangers on the construction site, their consequences and protection measures and do not have the required qualification ( Fig. 7).  Workers at the age from 35 to 54 experience injuries most frequently. An increase in the injuries to the workers of this age is caused by the following reasons: − lately, the extent of construction works has decreased considerably; at the same time, demand for working force and salaries have decreased; − workers who has worked in the constructions sector for more than 10 years do not pay proper attention to risk factors because they feel experienced and knowing everything about construction works; − every day, before the commencement of work, the managers of subdivisions do not inform workers about risk factors and carry out only formal instruction.

Nationwide Loss Due to Accidents in Building Companies
The following costs were estimated during the evaluation of economical nationwide consequences of accidents at work: − Social insurance benefits per year due to accidents at work; − Non-produced GDP part during non-working days due to the accidents; − Loss due to partial disablement: -due to accidents at work per year; -due to accidents at work within the period remaining till retirement; − Cost-related to social insurance contributions due to the accidents that occurred at work. The non-produced GDP part in the country during non-working days due to accidents (n a ) is calculated by the following equations (Čyras and Šukys 2003;Stankiuvienė 2008;Šukys et al. 2008): where D S P G d / / = -GDP part produced by one worker during 1 working day; P -GDP produced in the country during a year (Table 1); S -the number of working days in a year (Table 1); D -the number of workers (Table 1); S na -the number of non-working days per year due to accidents at work: where N na -the number of accidents in the construction sector (Table 1); V na -the number of days lost due to one accident at work (Table 1). Loss incurred after partial disablement due to serious accidents (P 1na ) per year is calculated by using the following formula: where k -the ratio estimating the average reduction of efficiency in percentages due to the accidents per year.
(Calculations show that this ratio is equal to 0.2, i.e. an average 20% of efficiency is lost); N na -the number of workers that experienced serious accidents (Table 1); G m -the amount of GDP part generated by one worker per year. It is calculated as follows: Loss incurred due to not worked years when a worker would be able to work till his/her retirement if not disablement due to the accident (P 2na ): where n -the average number of years when a worker could work till his/her retirement if not disablement due to the accident. Statistically, the average number of years left till the retirement of a person that experienced an accident at work is 22. G vm -GDP created by one person within the last year; N s -the number of serious accidents in the construction sector. Loss due to fatal accidents per year P m is calculated as follows: where K 1 -the conditional cost of one fatal accident.
According to the estimations of English economist Andrew Oswald, one death in a country of the European Union "costs" EUR 21000 per month. After Lithuania became a member of the EU, this estimation can be applied conditionally. Within one year, this estimation can reach LTL 869.4 thousands. N m -the number of fatal accidents at work per year in the construction sector (Table 1). When estimating the loss, the percentage of workrelated accidents that occurred in the construction sector was used. Calculation results on the occurred accidents at work nationwide are provided in Table 2.
Calculations implemented according to formula (6)

Loss of Building Companies Due to Accidents
While estimating the loss of building companies due to accidents at work, the data obtained conducting a survey of building companies, was used. The total amount of loss due to accidents at work increased from LTL 4.2 millions in 2002 to LTL 11.7 millions in 2007; in total, for the period 2002-2007, the amount of loss made LTL 42.7 millions. The major part of loss is related to the reconstruction of safe working conditions at an accident site (LTL 1.4 million) as well as to the cost for investigations into the accidents (LTL 1.94 million) (in 2007). Data on the loss of the overall building companies due to the accidents for the period 2002-2007 is provided in Table 3.

Calculation of Loss Adopting the Method of Direct and Indirect Costs
Loss estimation methodologies applied in foreign countries (Jurvansuu et al. 2000;TCO Development 2000) and loss due to the accidents is divided into direct costs and indirect ones. Direct costs due to the accidents are as follows: − payment costs for temporal disability; − social benefit after professional disablement or death; − benefits to the injured or persons having a right to receive such benefit in case of death of the injured; − medical, social and professional rehabilitation expenses and other fixed costs. The benefits of the social insurance fund are classified as direct costs (Table 2).
Indirect costs are as follows: − costs related to investigation into the accident; − unfinished production on an accident day; − damage to equipment and tools; − loss of raw materials, other materials and production, etc. Various methodologies are applied for estimating indirect costs in foreign countries. American scientists suggested estimating the ratio between direct and indirect costs as 1:5 (this suggestion is accepted as reasonably accurate). In Finland, this ratio ranges from 1:4 to 1:6.
Results on the loss incurred due to accidents at work obtained by estimating direct and indirect costs by applying 1:5 ratio between direct and indirect costs are provided in Table 4.  Year  2002  2003  2004  2005  2006  2007  2008  2009  Direct costs  3281  3263  6243  6971  9557  8945  9535  6938  Indirect costs  16405  16315  31215  34855  47785  44725  47675  34690  Loss according to the direct and indirect costs  19686  19578  37458  41826  57342  53670  57210  41628 The loss incurred due to accidents at work, after estimation according to direct and indirect cost, reaches LTL 328.4 millions for the period 2002-2009. The difference between the loss incurred due to accidents at work, calculation methodology when direct and indirect costs are used and the ratio between the direct and indirect cost of 1:5 are applied, and the suggested loss calculation methodology (without the estimation of loss due to not worked years when a worker could work till his/her retirement if not disablement due to the accident) is equal to approximately 17%.

Economical Benefit of Investment in Personnel Safety and Health
Investment in personnel safety and health is considered as company's operating costs. Investment in personnel safety and health contributes to the personnel health and welfare, improves working conditions and increases motivation, which improves work quality. As a result, the number of accidents and occupational diseases, expenditure for materials and the period of work implementation decrease. The company's status as well as competitive ability increase, which is very important in the context of crisis.
After the estimation of these factors, company's costs can be lowered and financial indexes could be improved at the same time, i.e. this leads to economical benefit. When the profitability of a company is high, benefit is achieved immediately. However, investment buys off also for the case when profit is not immediately noticed.
The majority of small and medium-sized companies invest in personnel safety and health reluctantly, i.e. the owners of the companies consider this investment as cost, i.e. loss, that is attempted to avoid thereof. The loss of small and medium-sized companies related to personnel safety and health is "paid" by the workers themselves and public, i.e. the state.
The economical benefit of investment to occupational health and safety could be computed according to the recommendations of Finish scientists (Jurvansuu et. al. 2000;National Safety Council 2000). They have determined that in low and medium-size construction companies, investment to human health and safety retrench losses three times. This computation, in their opinion, is quite accurate. Thereinafter, economical benefit assessment made according to these recommendations is given.
According to data from construction companies, these are spending approximately 443 LTL of investment to occupational health and safety. In 2007, there were 108.5 thousands of employees in construction companies. The total costs of construction companies regarding occupational health and safety during year 2007 were LTL 48.1 millions (443x108500), or about 0.44 percent of construction work volume.
If the companies increased their finances by 0.5 percent of construction work volume and devoted to occupational health and safety, construction companies would increase their profit by LTL 19.5 millions.

Conclusions and Recommendations
For the period 2002-2009, in the construction sector, 4136 workers were injured, 413 of which seriously and 193 were killed. During this period, the major part of the accidents occurred due to falls from height and made 839 cases.
Approximately 55% of the accidents occur in building companies where the number of personnel varies from 50 to 249. In the majority of cases, workers experience accidents during their first year at work. The workers at the age from 35 to 54 experience injuries most often. Approximately 25% of seriously injured and approximately 40% of killed workers felt drunk during an accident.
The main reasons for the accidents are noncompliance with requirements for legal regulations and inappropriate work planning. Other significant reasons cover a lack of knowledge and training as well as understanding safe implementation of the assigned work and the carelessness and negligence of workers. Unsafe behaviour is one of the factors leading to accidents at work and this shows a poor safety culture in a company.
The biggest economic losses are stemming from falls from height (about 22%, 2006), the violation of safety and health acts at work (about 73%, 2007), the insobriety of workers (about 11%, 2003 and 2004) and short work experience (one year) (about 53%, 2007). This affects a lack of discipline, a lack of workers' control in organizations and minimum investment in improving working conditions. The existing problems have a negative impact on the country's economic development because of high social insurance and accident benefits.
Nationwide loss due to work accidents that occurred in building companies per year decreased from LTL 37. For the period 2002-2009, the GDP part of LTL 35.0 millions was not produced due to the accidents that occurred in the construction sector. The amount used for the benefits of social insurance fund was LTL 54.7 millions, and loss due to fatal accidents reached LTL 167.8 millions within the period concerned.
The amount of the loss of building companies due to accidents at work increased from LTL 4.2 millions (in 2002(in ) to LTL 11.7 millions (in 2007, and in total, for the period 2002 It is necessary to improve the preparation of technology projects for construction works, because the situation created during the preparation of technology projects for construction works is not satisfactory. Therefore, these projects are not prepared and the prepared projects are not detailed, finished and concrete. The workers who should work according to the prepared projects are not informed about their content.
Work planning is the main factor directly influencing accidents at work. In this case, the role of personnel safety and health coordinators as well as contractors and subcontractors is very important.
Designers, construction managers, supervisors, planning and carrying out building tasks must assess the risks associated with work at heights and to provide and implement security measures to protect workers from falls from height. Coordinators must participate in the preparation and implementation of technical design.
Workers must participate in the risk estimation process. An employer/a worker must understand how to complete every assignment safely. During risk estimation, it is necessary to foresee all dangers, especially when the sequence of works planed in construction design changes.
Employers, after risk estimation, must take means of precaution by considering the existing dangers, including ones appearing during work. Attention, mainly, must be paid to works at height, to the workers working their first year, to the prevention of drinking and to work planning. The personnel must be trained and instructed about risk.
Employees with less than one year seniority should be granted probation in order to better understand health and safety requirements at work. It is very important for small and medium-sized companies.
Construction companies must take more stringent measures for inebriation cases. The employer must verify the employee's sobriety before starting work and during working hours.
Considering the results of estimating professional risk, conditions for personnel safety and health, financial availabilities and market situation and competition, the companies have to prepare plans for implementing safety and health requirements, schedule deadlines and allocate the required fund and create a personnel encouragement system towards the improvement of safety and health. Especially economically valuable decisions are those improving work planning.
Using the resources of the social insurance fund for prevention from accidents at work is very important for small and medium-sized companies. In 2006, only two It is important to oblige an employer to allocate a particular part of resources to object estimates from the overall tender prices to secure personnel safety and health. It is necessary to introduce a special tendering procedure (by improving the Public Procurement Law) where the winner would be selected not only according to the lowest proposed price, but also according to the secu-rity of personnel safety and health on the construction site. The employer, in order to ensure the safety of workers should promote the employees. While promoting staff, it is useful to remember that money is not the most important aspect taken by people. Accolade, award, prize, access training or free Friday -all these are excellent ways of promotion, especially if applied according to particular needs of employees.