THROUGH my work in industry consultation, I have encountered companies that genuinely want to improve workplace safety but struggle to justify the expenditure to management.
Others recognise what needs to be done but simply do not have sufficient funds available.
There are also situations where resources may be available, yet safety improvements struggle to receive the same priority as other business investments. These are different circumstances, and understanding them has gradually shaped how I look at the economics of workplace safety.
It is easy to recommend improvements from a technical perspective. Understanding how an organisation can accommodate those recommendations within its financial and operational realities is another matter. Businesses have customers to retain, production schedules to meet and competing demands on their resources. Still, there is a difference between being unable to afford an improvement and choosing not to prioritise it. Neither circumstance removes the responsibility to manage occupational risks, but each may require a different response.
Sometimes the challenge is access to funding. At other times, it is helping decision-makers recognise the value of prevention before something goes wrong.
A company may know exactly how much it spends on workplace safety, yet have difficulty explaining what that expenditure protects. The cost of engineering controls, protective equipment or employee training can be identified readily. The value of an accident that never
happened, an occupational illness that was prevented or an experienced worker who remained healthy and productive is much harder to demonstrate.
The expenditure is visible. The losses avoided are often less so.
This is where Safety Economics deserves a place in the wider business conversation. It encourages us to look beyond the immediate cost of compliance and consider how occupational risks affect productivity, business continuity and long-term financial performance. It also raises a question about what we regard as economic efficiency. When businesses reduce costs, are those savings achieved through better ways of working, or have some costs simply been deferred or passed on to others?
Malaysia has already established an important foundation for addressing these questions. The Occupational Safety and Health (Amendment) Act 2022, which came into force on June 1, 2024, extended the Act's application to workplaces throughout the country, including public services and statutory authorities, subject to specified exclusions.
Occupational risks are no longer a concern associated mainly with traditionally hazardous industries. They are also relevant to offices, educational institutions, healthcare facilities, retail businesses and other service operations, even though the nature and severity of the risks may differ.
Of particular interest is Section 18A, which addresses the duties of principals towards contractors and subcontractors in circumstances specified by the Act. Among the measures it identifies is the allocation of sufficient time, budget and other resources to ensure safety and health.
Section 18B also establishes duties concerning risk assessment and the implementation of necessary controls. The law therefore recognises that workplace safety depends not only on technical knowledge and regulatory compliance, but also on how organisations plan work and allocate resources.
This brings us to a practical business question. If adequate resources are necessary for workplace safety, how do organisations determine what is adequate when financial priorities compete? A business may be willing to invest but lack the immediate cash flow. Another may have the financial capacity but remain unconvinced that prevention deserves priority over investments with more visible returns. Treating these situations as identical risks overlooking the different forms of support, financial reasoning and management decisions needed to address them.
Consider the evaluation of contractors. A lower quotation may reflect genuine efficiency, but it does not necessarily show whether adequate provision has been made for competent workers, safe equipment, supervision and realistic completion schedules. Equally, a higher price does not automatically guarantee better safety. A meaningful assessment should consider foreseeable occupational risks alongside the initial contract value. An accident may interrupt operations, delay delivery, damage equipment or remove an experienced worker from a project. Some consequences are borne by the company, while others may fall on workers, their families, insurers and the wider community.
What appears to be a saving for one party may not represent a saving for the economy as a whole.
Belanjawan 2027 (Budget 2027) offers a timely opportunity to examine these relationships. Among its announced initiatives is a RM160 million package jointly financed by the government and Grab, beginning in 2027, to improve the income and welfare of e-hailing and p-hailing workers. The package includes support for vehicle maintenance, insurance and contributions to the Social Security Organisation (Socso). The budget also announces a 35% matching incentive for Socso contributions among these workers, increasing to 50% if platform companies participate. A separate 70% matching incentive is intended to support 200,000 self-employed individuals across 17 non-mandatory sectors.
These measures deserve recognition, particularly for workers whose livelihoods may be disrupted by injury or illness. The budget also includes preventive measures for commercial transport, including plans for vehicle telematics and driver health screening. Such initiatives reflect the importance of both financial protection and reducing the risks workers face. Yet the two serve different purposes. Social insurance helps people manage the consequences when something goes wrong, while preventive investment aims to reduce the likelihood or severity of harm in the first place. Both are necessary, and the opportunity lies in understanding how they might work more effectively together.
Could Malaysia's economic and business policies do more to help organisations prevent occupational harm while continuing to strengthen financial protection for workers? The answer need not begin with another layer of regulation. Existing responsibilities already provide a foundation. A practical starting point may be to consider occupational risks more explicitly in procurement, capital expenditure and operational planning. For smaller enterprises, this may need to be accompanied by accessible technical guidance or suitable financing arrangements. Where resources exist but prevention receives limited priority, clearer economic evaluation may help management understand the consequences of its choices.
Within the occupational safety and health profession, we have responsibilities of our own.
The Malaysian Qualifications Agency's Programme Standards recognise Occupational Economics within the profession's Body of Knowledge. However, translating that knowledge into business decisions requires closer cooperation with financial managers, employers, policymakers and workers. We need to become better at explaining not only the technical aspects of occupational risks, but also what prevention protects in terms of workforce capability, business continuity and organisational sustainability.
I approach this discussion not as an economist, but as an academic and practitioner working within the occupational safety and health system. My experience in industry consultation has taught me that organisations face different circumstances and that meaningful improvements rarely come from technical recommendations alone. We need to understand the people making decisions, the constraints they face and the responsibilities they must fulfil. Malaysia has made important progress in extending workplace safety obligations and strengthening social protection. Recognising that progress should not prevent us from considering how the different parts of the system might work better together.
Safety Economics should never become an exercise in deciding whether a worker's health is worth the investment. Protecting people remains a responsibility regardless of whether prevention produces an attractive financial return. Nevertheless, better economic
understanding can help make prevention more visible when organisations decide where their resources should go.
Perhaps the real challenge in Safety Economics is not convincing businesses that workplace safety matters. It is helping them recognise its value before that value becomes visible through a loss.
Dr Marziah Zahar is a senior lecturer in Safety, Health and Environmental Management at the School of Business Management, Universiti Utara Malaysia. The views expressed are her own.