The impact of workers' compensation premium incentives on health and safety

Abstract

The 1980s was an era of deregulation in which socially desirable ends were thought to be best achieved through the operation of market forces rather than by government intervention. Such thinking touched every corner of public policy, including occupational health and safety. It was widely argued that the best way to reduce injury and disease was to impose the costs back onto employers, by means of variable workers' compensation premiums. Employers would then have an incentive to improve health and safety. Incentive schemes were introduced in the late 1980s in several States, penalising employers with poor records and rewarding those with good records. The big question is: have they worked? This paper reviews the available data and concludes that there is as yet no convincing evidence that the schemes are working as intended. Show more