WORK A Journal of Prevention, Assessment & Rehabilitation

ELSEVIER

Work 11 (1998) 243-262

Occupational health and safety and the functions of law: a system's analysis Guy Mundlak* Haifa University, Faculty of Law, Mount Cannel, Haifa 31905, 1srael

Abstract The article suggests a model that can account for the systemic nature of the law's functions with regard to occupational health and safety. The model presents four functions for law's intervention: to establish standards, to ensure the welfare of those injured on the job, to provide incentives for employers and employees to reduce the level of injuries, and to ensure the efficient administration of public expenditures. The model requires observing law's intertwining functions in context and assessing the output according to a weighted index. The article applies this framework for a critical description of the Israeli system. While injury rates in Israel are 'normal', compared to other industrialized countries, the findings suggest some deficiencies in the functions of law including: inadequate adaptation of the standardization process to the challenges of the 'new workplace', incomplete incentives for adopting a high level of care and for compliance with standards, a relative failure of effort to induce a managerial culture that cooperates with workers on issues of health and safety, and a general fragmentation of the system. © 1998 Elsevier Science Ireland Ltd. All rights reserved.

Keywords: Health; Safety; Laws; Functions; Standards

1. Introduction: conceptualizing the functions of law with regard to occupational health and safety

When lawyers think about occupational health and safety they often think about different things. For some, the emphasis is on National Insurance compensation for those injured on the job. For others occupational health and safety law is all about liability of negligent employers or co-

"Correspondence author. Fax: + 972 4 8240681; e-mail: m und lak(a1research. hai fa.ac.il

workers. Still others emphasize penal action against employers who fail to comply with legislated standards. Labor lawyers seek the regulation of health and safety within collective bargaining agreements. Others view health and safety legislation as a technical mass of standards that cannot be deciphered by laymen, and require the interpretation of engineers of all sorts. They are all correct, but their perspective is too fragmented. Law encounters the field of occupational health and safety at many junctions, but all are located on the same road. The purpose of this article is to try and provide a systemic analysis of

1051.9815/98/$ - see front matter eel 1998 Elsevier Science Ireland Ltd. All rights reserved. PI lSI 051-9815(98)00042-4

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G. Mundlak / Work 11 (1998) 243-262

the law's functions with regard to occupational health and safety. Fig. 1 provides a graphic presentation of the suggested model. The model indicates four intertwining functions of law: (1) the standardization function - to establish the appropriate standards

for the protection of health and safety; (2) the to compensate the injured person for her loss of ability to generate income from work; and (3) the incentives function - to provide incentives for employers and employees to comply with standards and to reduce the rate

welfare function -

Efficient use of public expenditures

Incentives for the parties to reduce rate of injuries

1

Ex-ante

II

Ex-post

I

~

Establishing appropriate standards

=

The welfare function: compensating the injured worker

c:::::::J

Health and safety index: Number of injuries and diseases Extent of harm Re-employability Welfare and well-being of injured Sense of fairness Costs

Fig. 1. Occupational health and safety and the functions of law: a systems analysis.

G. Mundlak / Work 11 (1998) 243-262

of injuries; and (4) the administrative function to ensure an efficient use of public funds. To understand how law functions, we need to bear in mind that law does not act in a vacuum, and the various functions of the law operate in a given context that can be characterized by (1) a given level of public expenditure; (2) the state of technological advance; (3) prevailing social values; and (4) the nature of the industrial relations system. Although these variables are deemed here to be exogenous to the functions of law, I do not suggest that they are an act of God. In fact, these variables embody the output of other legal, as well as non-legal, systemic interactions. For clarity, however, the proposed model takes the output of these systemic interactions as given, while acknowledging that the background conditions are dynamic and themselves serve as the subject of law. Finally, the output of the system is a suggested health and safety index that must weigh different dependent variables that include, inter alia, the number of injuries and the extent of harm, the rate of re-employability of those injured, the welfare and well-being of those injured, some sense of fairness that is fulfilled by the provision of aid to those who were injured, and arguably also the administration of retribution, or at least the bearing of responsibility by those responsible for injuries. Given that occupational health and safety is not an absolute right, the economic cost of maintaining the system must be calculated into the index as well. A comprehensive account of this model is outside the scope of this article. 1 Instead, I will use the model as a descriptive tool to highlight some fundamental features of the Israeli legal occupational health and safety system. Section 1 briefly outlines the background conditions within which the law of occupational health and safety functions. Section 2 describes the various functions of law, with emphasis on the incentives function of

1 I have tried to keep the legal jargon and technicalities to the necessary minimum. For a more detailed analysis of Israeli law in this context, see Mundlak (1998b).

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the legal rule. Section 3 describes the system's output. The summary presents the fundamental conclusions from the analysis. 2. The background conditions 2.1. Introduction

The various functions of law do not operate in a social or economic vacuum. A common misperception is that law is a closed system, with its internal logic, and that rigorous observation of law is sufficient for the study of how society functions. Both assumptions are erroneous. Law is not a closed system, but a reflection of prevailing social values. Second, law indeed does direct individual and social behavior, but reading the words of the law does not reveal the full complexity of how law is translated into action. The background description allows us to make sense of the law, to understand its origins and its social context. Moreover, differences in the background conditions can help us account for the fact that similar laws in different contexts are not similarly translated into action. For example Korostoff et a1. (1991) argue that a system in which industrial relations strongly promote labor-management cooperation is more likely to utilize and endorse intra-firm cooperative institutions to reduce and prevent injuries. Similar rules that mandate intra-firm institutions in countries where the industrial relations system is adversarial and weak are more likely to be translated into perfunctory committees of little significance. Similarly, a system that relies on a national insurance scheme to compensate those injured at work is likely to be more vulnerable to political changes and budgetary pressures in countries where human life or dignity is socially undervalued and in countries where strong right-wing governments determine the level of public expenditure. In those countries, relegating the welfare function of law to the private insurance companies may be more feasible, and the effort should move to ensure that each and every worker be covered by adequate insurance. Thus, similarities in law between two countries do not necessarily imply similarities in

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c. MlIndlak /

Work 11 (J998) 243-262

practice, as practices are contingent not on the word of law but on implementation of the law, given the relevant background conditions. The parameters chosen to describe the background conditions are those that seem to me most important to describe a complex environment. Each parameter indicates the output of other systemic interactions, political, social, economic, and technological. Some of these parameters have been the subject of a detailed systemic interaction, such as the industrial relations system (Dunlop, 1993), or technology (Thomas, 1994), so the characterization of these premises is necessarily conflated to the necessary minimum.

2.2. The level of public expenditures Public investment in the system for prevention of work-related injuries and diseases is difficult to measure. No state has a 'bottom line' in its budget that encompasses all expenditures on occupational health and safety. Occasionally, direct funding of a particular agency can be located either in the state budget or in the detailed budget of the ministry in charge. Other components of the public expenditures are more latent, like the funding of the judiciary and other institutions of a general nature that are involved in occupational health and safety as well. Thus, a common proxy for the level of public expenditures is to calculate the percentage of the direct investment in occupational health and safety as a percentage of GNP. A general estimation (Tir, 1993) shows that in Israel the funds channeled to the various institutions dealing with prevention are approx. 0.03% of GNP (1992), compared with 0.5%-2.0% in OEeD countries. In Israel, this equals approx. 6% of the funds paid out by the National Insurance to those injured at work, and is estimated to be only 0.5% of the overall costs incurred by work-related injuries and diseases. These figures indicate a striking disproportion between the costs of work-related injuries and the funds channeled to prevent them. Thus, in both absolute and in relative terms the current level of public expenditures are low.

2.2.1. Technology Like other developed countries, Israel is experiencing two trends. First there is a sectoral shift in which 'old industry', such as textiles is giving way to emerging high-tech industry and the service sector. Second, within existing industries there are dramatic changes in production processes. The manual production line is being converted into automatic processes, and the growing use of digital technology induces new human-resource policies, such as home-working. Moreover, new technology provides workplaces with new raw materials and substances. These two trends have a number of implications for the legal occupational health and safety system. Technological change makes the task of occupational health and safety regulation both simpler and more complex. On the positive side, some workers who in the past were engaged in heavyduty manual work now occupy control centers that oversee the automated production process. Similarly, a growing proportion of the population works in an office environment, as traditional industry is gradually being shut down. While this process creates significant problems in terms of displacement and re-training of production workers, it may be a boom for the future of occupational health and safety. On the negative side, rapid technological advance makes the regulated environment more diverse, and thus more difficult to regulate. The monolithic image of the factory that underlies past standardization efforts is giving way to a plethora of work environments, using an increasing number of substances and varied work routines and practices. Any standardization effort is likely to be either too simple or minimal to make a difference, or too complex or ambitious to be appropriate in each and every workplace. 2.2.2. Social values Israeli society is currently undergoing change. The formative years of the state were marked by a state-endorsed ideology of constructive socialism, coupled with Zionism. Together these two ideological foundations emphasized work as a central component of national growth. Furthermore, they emphasized collective solidarity over individual interests. Ironically, despite the cen-

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trality of work, the individual sacrifice associated with a nationalistic agenda downplayed occupational health and safety. While serious injuries were considered a problem, minor injuries and work-related diseases were conceived as something the worker should ignore because the individual cost was outweighed by the social benefits. Consequently, the overarching system of industrial relations and collective bargaining that developed in Israel did not emphasize issues of health and safety, and preferred to target wages, working conditions and full employment. Recently however, there has been a social trend away from the nationalistic and into a neo-liberal, highly individualistic, set of values (Mundlak, 1998a). On the one hand, this increases attention to individual needs and has a potential to bring occupational health and safety to the forefront. Together with increasing awareness of issues, such as diversity in the workplace and anti-discrimination, the ever-growing private litigation over workplace issues can aid the public effort to ensure individuals' health and safety. The neo-liberal trend, however, has its other side. Neo-liberalism places priority on private ordering and contracts, and is generally hostile to government intervention. Although contractual arrangements in the area of occupational health and safety are not necessarily efficient, the political rhetoric of nonintervention is commonly stronger than reason. The new political climate, marked by the motto of 'let's de-regulate whatever we can', is not friendly to some efforts to increase public intervention in the area of health and safety, and thus counterbalances the positive effects of moving from national to individual social agendas. Culture and collective experience also have their role in shaping public values. For example, the security problems that have pervaded the Israeli experience for the last fifty years, and the number of deaths associated with the state of war, have led to a public discount of lives lost through 'peacetime-related causes', including occupational-related causes. The military orientation that so deeply pervades Israeli society has also resulted in the import of routines, practices, and attitudes from military to civilian life. Improvisation, a 'trust-me-I-know-what I-am-doing'

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attitude, and risk taking have all become part of the Israeli innovative managerial culture, which does not always favor prevention efforts.

2.2.3. The industrial relations system. The Israeli industrial relations system has experienced major changes in the last few years and a description of the current state of the system can be tentative at best. Until recently, its structure was typical of corporatist systeIPS, colored by an encompassing coverage of collective bargaining from national peak-level collective agreements to the single workplace agreements (Shalev, 1992). On the labor side, Israel has one major trade union, The Histadrut, which until a few years ago represented more than 80% of the working population in Israel. Because the Histadrut was the major provider of social services, most notably health care, as well as the second largest employer in Israel and a dominant agent in civil society, it gained enormous power. Bargaining with the Histadrut are the employers' associations, federated under the Coordinating Bureau of Economic Organizations in Israel, which negotiate the sector-wide and national-level collective agreements. Other agreements apply only to the single establishment and are negotiated with the single employer. Until recently, this multi-level web of agreements dominated other modes of labor market regulation, such as state regulation or individual contracts. During the last few years the Histadrut has faced numerous challenges that have considerably weakened its position in civil society. In 1995 the Israeli legislature passed the National Health Care Insurance law which 'privatized' health care away from the unions and nationalized health care insurance. Consequently, the Histadrut lost many members whose trade-union membership was only a by-product of their health-care membership. Other economic pressures, the globalization of markets and changes in social values, have destabilized the industrial relations system, although the strong tradition of labor-market regulation by means of collective bargaining still persists. In light of the central role accorded to the social partners in Israel, one would expect to see

G. Mundlak / Work 11 (1998) 243-262

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the issues of occupational health and safety imbedded in the overarching collective agreements system. However, it is an anomaly that occupational health and safety has often been neglected by the social partners, and left either to state regulation, judicial enforcement, and various experts who function for the most part outside the industrial relations system. Thus, occupational health and safety is mostly regulated by law and is not a common topic for collective bargaining. Nevertheless, the extensive labor-management regulation of the labor market in Israel serves as the basis for regulatory schemes that draw on this alliance to promote intra-firm cooperation on issues of health and safety (see Section 3 below). 2.3. Interim conclusion

The background conditions seem for the most part quite difficult for the various functions of occupational health and safety law. Yet rather than dealing with these features in terms of 'good' or 'bad', it is important to bear them in mind when assessing the current system of law, and how to improve it. To summarize: • •

• • •

unsympathetic political climate is reflected in a very low level of public expenditures; rapid and dynamic change of technology renders past efforts to promote occupational health and safety inadequate and unfit for current needs; there is a move away from the social-democratic and nationalistic to a neo-liberal set of values; culture and social values downplay the severity of occupational injuries and diseases; and the well developed industrial relations system has not picked up occupational health and safety as an important component of collective bargaining.

3. The functions of law 3.1. Introduction

Health and safety in the workplace can be

described as a matter of human rights. Each individual is morally and legally entitled to a working environment that is safe and secure. This right is a derivative of the right to life and security on the one hand, and of the right to minimal subsistence and favorable conditions of work on the other (State of Israel, 1997). Because individual rights supersede other considerations one could argue that human life and safety has no price tag, and thus the right to a secure workplace is absolute. The right confiscates the subject from free market forces, and cannot be defined according to the forces of supply and demand. This, however, is not the prevailing perception. The discussion on health and safety in the workplace is often phrased in economic terms. Reducing accidents and occupational diseases is a matter of investment in prevention. The more the enterprise invests in prevention, the lesser the injuries and diseases. But owing to the human factor involved, the enormous number of risks posed in each and every workplace, and the uncertainty associated with new technology, the investment needed to eliminate injuries and diseases altogether is infinite, and there is a decreasing marginal effect of investment. Economic and social rights are caught in the fundamental assumption of economics - scarcity of resources. The economic perception of health and safety is still a matter of individual rights, yet it suggests that it is not an absolute right but like other economic and social rights it requires a constant and endless effort at improvement, within the economic constraint. Assuming the dominance of economic considerations with regard to health and safety, should law have any function in the regulation of occupational health and safety? The economic perspective usually holds free markets to be the optimal regulator. If that view applies to health and safety then law's function must be limited to the structuring of markets, and render the rest to the operations of the market itself. According to this view, when the worker enters the employment contract, she bargains for her wages and working conditions. The level of health and safety is part of the employee's working conditions, and like monetary benefits has an economic price tag

G. Mundlak / Work 11 (1998) 243-262

that the parties to the employment contract calculate into the overall package of rights and duties the parties assume. Consequently, health and safety are regulated by forces of supply and demand. Although over-simplistic, this portrayal of market regulation serves as the starting point for the economic analysis. The suggested portrayal of market regulation is deficient on two accounts. First, market regulation may lead to results that lack social legitimacy and certainly does not correspond to any view of health and safety as a human right. Second, it is commonly acknowledged that health and safety are not like simple commodities and that the level of risk one takes during working hours is not determined by free exchange. Various market failures exist that render the market inadequate to regulate health and safety by itself (Shapiro, 1998). First, health and safety in the workplace are commonly a public good, like a clean environment or security, in which each individual enjoys the socially determined level of safety regardless of her individual contribution to secure that level. Second, work-related injuries and diseases impose a negative externality on the broader society, as the injured person occasionally becomes unemployed, or unemployable, and a burden on her close environment and on the welfare state. Third, issues of health and safety are often highly technical and require advanced skills to understand. We cannot assume that contracting between the employer and employee on matters of health and safety is conducted with full information. Instead, most matters of health and safety are beset by imperfect and asymmetric information. Finally, in some sectors, and in some regions, employers act as monopolies that can determine the level of health and safety at a sub-optimal level. These market failures at least partially account for the undesirable social costs of market regulation. Yet at time of high unemployment or under-employment, even in the absence of grave market failures, employees would be willing to give up much protection for their health and safety in return for slightly higher wages or monetary benefits. Health and safety seems too remote, too vague and too complex to bargain over. A society that cannot accept slavery for moral

249

reasons may also object to lesser violations of human dignity through total disregard of the moral, rather than the economic, value of human life. If markets cannot regulate occupational health and safety by themselves, then law must provide additional measures to secure the optimal level of health and safety. Once the function of law is extended beyond the establishment of markets, its objective is to act as a social engineering device. This extended task of law can be collapsed into four functions. First, law sets the appropriate standards, or at least minimum standards, for occupational health and safety. It is assumed that the level of exposure to carcinogenic substances, for example, is not a matter that can be, or should be, determined by powers of supply and demand. Second, law must induce both employers and employees to increase the level of workplace health and safety and to bring it to an optimal level. This requires the correct incentives that will ensure that the parties comply with, and improve on, the statutory standards. The third task of law is concerned with the need to ensure adequate aid to those who have already been injured or taken ill in the course of work. Whether law, as an instrument of the nation-state, should engage in this task, rather than leave it to private insurers, is an ideological question. Where the nation-state perceives itself a welfare state, as Israel still does, this function of law is central to legislation on health and safety. This task is not concerned with social engineering and focuses solely on compensation. Although the two perspectives seem non-exclusive they are in tension, as will be demonstrated in the following sections. Finally, owing to the need for intensive intervention by means of standards-setting, enforcement, and the provision of welfare, the state strongly implicates itself as a partner to the otherwise private relationship between the employer and the employee. This of course requires the use of public funds. These are channeled to research and development, establishing standards, passing relevant legislation, ensuring enforcement of laws and regulations, the adjudication of law suits, whether private or penal, education and training,

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aiding those who become unemployable owing to their injury, and more. Determining the level of public expenditure is mostly part of the political process when the annual budget is prepared and within the ministries responsible for the administration of the budget. However, the legal regime strongly affects the efficiency of use at any determined level of expenditure. Consequently, the fourth task of law is to attain the highest level of prevention at any given level of public expenditure. 3.2. The agents

Assuming the multiple functions of law in the occupational health and safety system, it is now possible to account for the complex nature of the Israeli system. Prior to the description of each function, a brief survey of the legal agents participating in the system is useful. The Labor Inspection Service in the Ministry of Labor and Welfare was established by the Labor Inspection (Organization) Law (1954). The Service supervises compliance with every enactment with whose implementation the Minister of Labor and Welfare is charged, particularly safety, vocational hygiene, and welfare in the workplace. There are currently approx. 75 inspectors in the agency, dispersed in six regional offices. Together with the Institute for Safety and Hygiene, this is the central agency responsible for occupational health and safety. The Institute for Safety and Hygiene was established by the Labor Inspection (Organization) Law (1954). The law requires the Institute to disseminate information and instruction, to aid establishments in forming workers' health and safety committees, to aid the Labor Inspection Service in its activities, and to advise the Minister of Labor and Welfare on matters of health and safety in the workplace. The Institute further aids establishments by providing laboratory testing of a limited scope. The Institute is governed by a council structured according to the principles of tri-partitism, with an equal number of representatives of employees, employers, and various ministries concerned with issues of workplace health and safety. At present this is the only forum

where all institutionalized agents engaged in occupational health and safety come together. The Israeli Standards Organization was established by the Law of Standards (1953). The law entrusts the organization with the task of standardization and quality assurance through the setting of standards, the preparation of surveys, tests and research studies, and holds the Organization to be the sole agency that provides certification of compliance with standards. The Organization also represents Israel in international bodies dealing with standardization, including ISO and lEe. The National Insurance Institute was established by the National Insurance Law (1968). It provides comprehensive coverage for all citizens and residents of Israel, including old age basic pensions, compensation during maternity leave, support for families with children, unemployment fund, aid to the handicapped, accidents insurance, military reserve duty fund, insurance for workers in the event of the employer's bankruptcy, and compensation for workplace-related injuries and illnesses. The Institute is thus the central entity in Israel for providing a safety net for individuals at different stages of their life cycle. Occupational health clinics: occupational health services are part of the services provided by the various health care providers. Under the new National Health Care Law (1994) all health care providers are obligated to provide occupational health services as part of the basic bundle of privileges to which every citizen and resident in Israel is entitled. The formerly Histadrut-owned health care provider operates the largest occupational health department. These perform, inter alia, examinations of applicants before being accepted for work, and workers after work-related injuries and with occupational diseases, as well as examinations required by various regulations, to find, for example, traces of various substances, such as arsenic and lead, dust, and effects of noise. Other agencies involved in the occupational health and safety legal system: These include various committees established by the Ministry of Labor and Welfare, the Ministry of Health, the Ministry of Transportation and Traffic, and the Ministry of

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Environment. The Histadrut has an active department dealing with health, safety, and the quality of life at work, as do most employers' associations. 3.3. The functions of law

As noted, legal intervention has four major functions in the area of occupational health and safety. The following description critically observes Israeli law with regard to each function, and emphasizes the more complex function of creating incentives for prevention of occupational-related injuries and diseases. 3.3.1. Establishing appropriate standards

The primary source for substantive standards on occupational health, safety and welfare is the Work Safety Ordinance. The Ordinance was initially enacted by the British Mandate over Palestine, which ruled at a time when technology was simpler and establishments were more homogeneous (or so it was thought) and the task of regulation considered easier. By contrast, more recent legislation tends to suffice with establishing the procedural framework and underlying principles, and to leave the act of substantive regulation to the executive branch. The Workplace Safety Ordinance applies to most workplaces where manufacturing or manual work takes place. While its provisions are broadly sketched and set general standards, extensive secondary legislation has been enacted according to the authority delegated in the Ordinance to the Minister of Labor and Welfare. The secondary legislation is for the most part prepared by the legal advisors of the various ministries and by the Labor Inspection Service, and there is little involvement of the other agents, except where required by law. This secondary legislation is detailed, highly technical, often using advanced chemical and engineering terminology to specify the type of products being regulated and the appropriate standards. While most regulations are of broad applicability, some sectors (construction, agriculture) and some groups of workers (women and youth) receive particular regulatory attention. In addition to formal laws and regulations, the

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Israeli Standards Organization designs various standards, of which some are relevant to occupational health and safety. Standards established by the Organization are voluntary. A producer (or employer) who wants certification of compliance must present the product or the production process for periodical tests. There is no mandatory requirement for a producer (or employer) to obtain certification. However, if the Minister of Industry and Commerce decides that a standard is necessary for the protection of public health or safety, or for the protection of the environment, he can declare the standard to be an official standard, which then becomes binding on all producers or employers. In sum, the regulatory process is multi-tiered, including primary and secondary legislation, as well as voluntary standards. However, given the rapid technological advance, the regulatory process is not sufficiently developed and encounters a number of fundamental challenges. First, despite the need for ongoing adaptation of the regulatory standards, the Ordinance has remained almost unchanged since it was enacted over fifty years ago. The issues regulated in the Ordinance are viewed by many of the agents currently dealing with its application as irrelevant in light of the changing technology. Its terms are outdated and the problems it seeks to address are not always the critical problems that pervade the modern workplace. It is also striking that the Ordinance was legislated with the old image of the 'factory' in mind. In later stages it was amended to include more non-factory establishments, although many offices and non-production establishments remain outside the scope of this legislation. Many issues, such as ergonomics and psychological well-being, are not regulated, for they are deemed to be a 'white-collar problem'. No doubt that compared with crane operators, office employees are not subject to the same level of risk. But if we multiply the number of workers at risk by the probability of injury and diseases and by the extent of injury, it is not clear that office workers, as a group, are less at risk than crane operators. Similarly, new human resource policies that draw on new technology, such as home-working

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also raise new problems. While state inspectors can conduct on-site inspections for compliance with standards, they cannot conduct inspections in a person's home. As long as we assume that occupational health and safety is solely a problem of production workers, then home-working requires marginal attention. But if we realize that occupational health and safety are facing new frontiers, then home-working necessitates changing some assumptions, for example, that potentially all workplaces can be regulated. The new workplace may be outside the reach of external inspectors, and the difficulty in the enforcement of compliance must also affect the way we think about the substantive standards themselves. The ever-growing use of new substances and raw materials in production further indicates the problems regulation currently faces. Some production establishments introduce new substances into the production process on a monthly basis. Detailed regulations that instruct the users of various substances are often not applied because employers find it too time- and money-consuming to inquire into the composition of so many new substances. There is also a considerable gap between the time a substance is used in production and the time scientific research discovers its effects. More generally, usage precedes knowledge, and knowledge precedes regulation, rather than the reverse. Finally, an inherent problem in the process of establishing regulatory standards is that the more precise the standards are, the more difficult they are to comprehend and to implement. Occupational health and safety regulation requires a high level of expertise, thus affecting the incentive function of law as will be demonstrated in Section 3.3.3. below. 3.3.2. The welfare function National insurance offers coverage to all employees injured on the job, regardless of the determination of fault. National insurance coverage distinguishes occupational injuries and occupational-related diseases, the latter being registered on an exclusive list. The list has been developed on the basis of medical research that correlates diseases with work conditions. Where no significant correlation has been proven, the disease has not

been included in the list. The list's determinism and inflexibility has often been accepted halfheartedly by the labor courts, leading to the development of the micro-trauma doctrine which holds various diseases (e.g. back pain, hearing impairment, cardiovascular disorders) to be work-related injuries, and therefore not confined to the National Insurance Institute's detailed list of diseases. The judicial inclination is therefore to expand the safety net. For those injured at work, the Nationallnsurance Institute provides a number of benefits, including benefits in kind (medical care, convalescence, medical and vocational rehabilitation), injury allowance (compensation for inability to work at the rate of 75% of income, up to a period of 180 days), pensions or grants to work invalids (compensation for those whose work capacity has been permanently impaired, including a special pension for personal upkeep and vocational rehabilitation), and benefits for dependents (when an occupational injury or disease has resulted in the death of the worker). The major objective of this compensation is to provide the employee and her dependents an economic safety net. As such, it has no deterrent value. This creates the problem of moral hazard, where a no-fault insurance reduces the incentive of the parties to adopt high standards of care. However, a number of provisions in the National Insurance law and regulations are intended to moderate the moral hazard associated with this type of insurance. First, the employer must refund the National Insurance Institute with the amount of injury allowance paid by the Institute during the first nine days of injury allowance. The National Insurance Law holds this to be an insurance contribution by the employer. This is only a mild form of incentive. In the past efforts were made to tie the employer's payment rate to the level of injuries in the workplace, but this arrangement was soon terminated because of administrative difficulty. The National Insurance scheme also provides little incentive, if any, for employees to take extra precautions in their work, as a generally high level of compensation is provided. Admittedly, the hardship that accompanies injuries, whether workplace-related or not, is generally considered

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to be sufficient to induce workers to take the needed precautions. But this may not be enough, and it is common wisdom in the study of torts that monetary incentives do matter. There is a mild effort to deal with the problem of moral hazard, where the law holds that a negligent worker will not be entitled to the Insurance benefits if she acted negligently, but entitlement will not be withdrawn if the injury resulted in the death of the worker, or if she has become incapacitated for ten days or more. Thus, like the incentive to employers, the incentive to employees is incomplete because it deals only with relatively mild injuries that incapacitate the worker for less than ten days.

gies. The more important distinction is between ex-ante and ex-post incentives. Ex-ante incentives try to prevent accidents from happening, while ex-post incentives sanction those who are responsible for an accident that has already taken place so as to deter the party responsible directly for the accident, as well as other parties similarly situated. Ex-ante incentives are, by definition, more efficient, as they seek to deter accidents and diseases by means of prevention. By contrast, ex-post incentives use the occurrence of accidents as a vehicle for future deterrence. The limitation of ex-ante incentives is rooted in the human factor involved in these situations. It is difficult to persuade both employers (i.e. managers at various levels of the hierarchy) and employees to take responsibility for future actions by way of greater care. Ex-ante measures must therefore be complemented by ex-post incentives. I thus look first at the adequacy of the ex-ante measures. These can be further divided into extra-firm and intra-firm measures. The latter are

3.3.3. Incentives to reduce the rate of injuries

The major function of law is to induce the parties -to reduce the level of occupational injuries and diseases. Fig. 2 illustrates the various legal means that exist in the Israeli system. Incentives can be sorted into various typolo-

Ex-ante

Ex-post

~ ~

External to the finn

+

Education and support On-site inspections

Overseeing of compliance with intra-finn requirements

Intra-finn

Penal sanctions

\

Safety plans

Safety Delegates

Safety Committees

Safety Officers

Fig. 2. Legal incentives.

Civil suits (torts)

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preferable because they reduce the level of public expenditure and roll the responsibility for reduction of injuries and diseases onto the employer, and to a lesser degree onto the employees. This preference for intra-firm measures can be accounted for in both economic and moral terms, as individual responsibility is efficient and an end in itself. External measures include two major components. The positive incentive is entrusted with the Institute for Safety and Hygiene. The Institute is responsible for the dissemination of information to employers and employees, by means of courses, an information center, publications, and the like. The institute seeks to encourage the development of an appropriate corporate culture that views prevention as an investment rather than a cost. The Institute operates separately from the Labor Inspection Service in order to assure employers who need advice and assistance that their problems will not be revealed to the enforcement agency. Its success relies mostly on developing a good reputation among employers and employees, and its intervention in the workplace is only upon request. Currently there are indications of a growing demand for aid from the Institute. It provides over 6000 workshops and courses annually, offering education to approx. 20000 workers. Its information center receives a myriad of queries regarding compliance and prevention and serves as the major source of information regarding health and safety issues in the Israeli workplace. Unfortunately, despite the Institute's efforts, external encouragement is usually not enough, and further incentives are required. While the Institute is responsible for holding out the carrots for prevention, the Labor Inspection Service is entrusted with the stick. The Service has the authority to conduct routine inspections and to investigative after an accident has taken place. The Service is given the legal authority to enter a workplace, inspect, investigate, sample products, and even be accompanied by a police officer if there is reason to anticipate interference. The Inspectors are authorized to issue various warrants for improvement, some involving a temporary stoppage of production. While the power provided to the Service by law

is indeed significant, it is under-utilized. Generally, the agency is under-staffed and underfunded. It has been estimated that to conduct a routine call at every establishment covered by the relevant laws it would take approx. 3.5 years. While large establishments are routinely visited, the smaller establishments are rarely visited and are often neglected by the inspectors. With some small establishments it was found that no inspector from the agency had paid a visit for over a decade. The Israeli Comptroller recently noted that even under the assumption of shortage in funds, the Service does not use its resources efficiently (State of Israel, Comptroller's Office, 1992). The task of inspection has become increasingly more complex as inspections require a wide familiarity with advanced engineering. The Service does not draw on the different areas of expertise held by each inspector, and instead divides the work on a geographical basis. The Service lacks accurate data on the number of injuries and diseases. Compared with the payments to injured workers made by the National Insurance Institute, the agency has information on only 30% of accidents. Similarly, in 1990 only 6.6% of accidents resulted in an inspector's report after conducting an investigative visit. The figures seem to be lower for consecutive years. On-site visits are conduced mostly at large and medium-sized establishments, while small establishments, which are usually inadequate in implementing the intra-firm requirements (or exempted by law), are not frequently visited. It seems that the work-load of each inspector is too high, and each inspector conducts, on the average, between 600 and 700 inspections a year. Inspections therefore tend to cover mostly the more easily traceable features, such as compliance with fencing requirements, but occasionally disregard the assessment of compliance with more complex standards. The problems associated with the Service are by no means unique to Israel. Bureaucracy tends to be underfunded, and the task of inspectors too complex given the rapid technological developments in the modem workplace. Similar problems have been reported in other industrialized countries, and render external inspections insufficient to assure compliance with occupational health

G. Mundlak I Work 11 (1998) 243-262

and safety standards. The well developed industrial relations system in Israel, with the high level of collective bargaining and labor-management 'adversarial cooperation', would thus suggest the possibility of complementing external inspections with intra-firm institutions. These indeed are required by law. The Labor Inspection (Organization) Law (1954) requires three intra-firm institutions: safety delegates, safety committees, and a safety officer. These intra-firm institutions are complemented by four general requirements: the duty to devise a safety scheme, the duty to disclose information to workers regarding special risks at the workplace, the duty to provide workers with training in prevention and avoidance of occupational injuries and diseases, and the duty to report accidents and diseases to the Labor Inspection Service. Together, the institutional bodies and the general duties required by law add up to what seems to be a comprehensive regulation of health and safety management. However, this intensive legal intervention in the managerial scheme of the workplace is not translated well into practice. The general duties imposed by law are difficult to monitor as they require active engagement by the Labor Inspection Service. The vast set of tasks delegated to the Service, as described above, suggests that the Service cannot possibly enforce compliance with these duties in an effective way. Enforcement exists, but it is anecdotal rather than systematic. The problem is worse in respect of implementation of the legal requirement to establish intra-firm institutions. The advantage of intra-firm institutions is that they seek to expand the responsibility managers and employees for their own well-being. This requires a high degree of cooperative effort towards what is deemed a common goal. At the same time, intra-firm institutions must consider the inherent conflict between employees and their employer, as investment in prevention can be made at the expense of either profits or wages. The dialectic nature of the employment relationship suggests that employees and managers can cooperate, but cooperation is not spontaneous. Similarly, employees and mangers are in conflict, but conflict is not irresolvable. Regarding imple-

255

mentation of the legal requirements to establish intra-firm institutions, the current situation suggests that the legal mechanism has not succeeded in translating the dialectic shopfloor reality into an effective cooperative scheme. Safety delegates are the overseers of occupational health and safety in the workplace. They come from within the workforce, and it is assumed that they are particularly knowledgeable about shopfloor processes and the risks they pose. They serve as an address for both employees and employer. Safety committees are joint labormanagement committees, in parity, that are entrusted with the internal regulation and enforcement of health and safety standards. They serve as a link between the safety delegates and management, as well as between the workplace and the Labor Inspection Service. A safety officer is a professional person in charge of overseeing the whole health and safety system within the workplace, similar to an in-house accountant or lawyer. The three institutions are expected to act in tandem towards shared goals and induce an appropriate corporate culture in which considerations of health and safety are well integrated in decision-making processes. The reality, however, suggests that this objective is not achieved. The safety delegates are generally quite powerless and frequently lack the needed expertise to carry out their functions. They are not granted any substantial power, such as stopping the production line in the event of an emergency or a high probability of risk. They are not accorded adequate protection from dismissal should they tend to be 'over-critical' of the employer's practice. The legal provisions on safety delegates are thus too weak to induce significant change in the managerial culture. In large establishments where high priority given to health and safety, delegates are often integrated into the overall safety improvement scheme, and the employer's policy extends the minimum required by law. In most other establishments, however, the institution of safety delegates ranges from weak to nonexistent. Unlike the safety delegates, the safety committees are granted more substantial power in law. One would also expect their responsibility to be

256

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enforced and extended by collective bargaining agreements. Given the philosophy underlying the requirement for safety committees that are expected to promote cooperation, flow of information, and increased responsibility, their failure is striking. It is estimated that there are currently 2000 committees statewide. Many establishments that are required by law to operate a safety committee have failed to do so. In others, the committees seem to have little impact and significance. These committees do not meet frequently, and for the most part they only technically convene. There could be a number of reasons for the failure of this important institution. Some explanations echo those that account for the structural weakness of safety delegates, most notably lack of expertise. Unlike internal grievance procedures on matters, such as dismissals, the regulation of health and safety requires more than familiarity with the local corporate culture and ongoing labor-management cooperation. It requires a technical and mechanical understanding of the production process. The committee cannot even set the proper agenda, nor do the employees' representatives have the knowledge of alternatives to existing machinery and production processes that can reduce risks. A different explanation that can be offered to the committees' structural weakness is that even in unionized establishments (which still cover most manual production undertakings), not enough attention is given to the possibility of intra-firm cooperation towards common ends. The labor scene in Israel is for the most part adversarial, emphasizing the labor-capital conflict, and under-valuing the potential for labor-capital shared interests. Furthermore, until 1995, the Israeli industrial relations system was highly centralized and much of the unions' efforts were located at levels higher than the single firm. The unions' workers committees at a single establishment range from very weak to extremely powerful, but their approach emphasizes the conflictual dimension of the labor-management relationship. Similar efforts in the past at cooperation venues in the single establishment, such as productivity committees resulted in the same structural weakness that characterizes the safety committees. In

sum, the combination of highly centralized, conflict-oriented unionism, and the internal dynamics of the union has produced an unfavorable environment for the functioning of safety committees. The situation is even more difficult in non-unionized undertakings, where employers fear that the safety committees are a Trojan horse of workers' collective representation. Considering the absence of a collective workers' voice in non-union undertakings, the lax enforcement of the requirement to establish safety committees, and the weakness evinced by these committees in the unionized sector, there is little hope for such committees to function properly in the non-unionized sector. Finally, the safety officer is accorded by law, and by recent (1996) regulations, a central role in the intra-firm triplex of institutions. The requirement to appoint a safety officer extends to many establishments. The regulations require proper creditation, an academic degree in engineering or exact sciences, ongoing training, and previous work experience. Unlike the safety delegates, the safety officer is accorded with the legal power to facilitate her tasks. The new regulations thus mark a new strategy. They give prominence to the role of expertise over labor-management cooperation (the safety committees) or shopfloor self-management (the safety delegates). Requiring a safety officer indicates a new division of labor, where the complexity of the issues involved demands specialization. The specialization of the safety officer is firm-specific and cannot be substituted by the operations of the Labor Inspection Service or by the firm's employees and production managers. It is still too early to test implementation of these new regulations, but some caution is necessary regarding the new strategy. The specialization of health and safety and the centralization of these issues in the hands of the safety officer has some potential shortcomings. First, specialization distances the problem of health and safety and removes the responsibility for these matters from the production managers and from the employees themselves. Second, the fact that the officer is appointed by management indicates that her loyalty is primarily to managerial considerations and not to the employees. The

G. Mundlak /Work 11 (1998) 243-262

institution of safety officers may therefore fail because it does not adequately consider the inherent tension between management and employees. At the same time, the safety officer is responsible for an area that entails high costs, unlike other managerial figures who are charged with expanding profits. This can lead to the isolation of the safety officer from the managerial team. The history of marginalizing occupational health and safety in the Israeli corporate culture indicates the real potential for the continuing isolation of safety officers. For the safety officers to succeed in their task, it is important to strengthen both the safety committees and the safety delegates, so as to provide a comprehensive intra-firm institutional design. Meanwhile, the incentives in law to develop such a web of institutions seem greatly deficient. Given the weak ex-ante incentives for reduction of injuries and diseases, and for compliance with regulatory standards, it is worthwhile to examine the existing ex-post incentives, namely penal sanctions and civil litigation. It seems that these are as deficient as the ex-ante solutions. Penal sanctions are administered mostly by the labor courts, and the Labor Inspection Service functions as the prosecuting agency in these cases. Most violations of health and safety standards can be sanctioned with a fine and up to six months imprisonment. When the labor courts were established, almost thirty years ago (1969), there was a relatively large number of prosecutions, although since then the number of prosecutions has constantly declined and is currently almost negligible (Adler and Bar-Mor, 1992). There are a number of reasons for this decline. On the positive side, the use of the penal sanction has been substituted by a growing use of administrative warrants. Where failure to comply with regulations has not resulted in an injury, it is more common to address the problems detected by the Labor Inspection Service by issuing a warrant. Moreover, most offenses defined in the health and safety legislation have been declared 'administrative offenses' in which employers can pay a fine and relieve themselves from a trial. On the negative side, the failure of the penal sanction to deter employers from violating statutory stan-

257

dards can be attributed to the low level of punishment. Most verdicts impose a fine in the range of $1500 for each offense. The court has been generally reluctant to apply the sanction of imprisonment. Consequently, punishment is minuscule against the money saved by employers for not conforming with the level of care required by law. In two decisions of the National Labor Court, given in February 1998, the court raised the level of punishment on appeal, emphasizing the need to deter employers from violating statutory standards. The sanctions, however, remain quite low (although not as outrageously low as in the past), and whether these decisions have any impact in the future remains to be seen. Where public law does not provide an adequate incentive, private litigation, mostly in the area of torts, may achieve a similar effect. While there is a growing use of torts litigation by those injured on the job, these cases do not have a strong deterrent value either. The objective of compensation in torts litigation is to compensate the injured in full as well as to act as a social engineering device that signals to individuals the expected level of care they should take. As such, torts litigation can serve as a deterrent against sub-optimal levels of health and safety in workplaces. Given the low levels of criminal litigation pursued by the Labor Inspection Service, torts litigation can serve as the private law substitute to induce compliance with existing standards. Owing to the lower level of proof required in torts and the broader scope of liability under the law of torts, than under criminallaw, torts litigation can even be assumed to be a better device than criminal law. The two major torts that govern most of the law suits on workplace-related health and safety (negligence and breach of statutory duty) open a rather broad gate to workers injured on the job and promise a generally good chance of success. The courts usually have little problem in finding fault, and have developed numerous doctrines that aid the suing employee to claim damages. Given these doctrinal rulings developed by the courts, it would seem that litigation over workplace-related accidents is highly accessible, and the opportunities for plaintiffs to obtain compen-

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G. Mundlak / Work 11 (1998) 243-262

sation from their employers is quite high. At the same time, when observing the level of compensation ordered by the courts in these matters, the deterrent effect of such litigation seems lower than expected. The reason for the relatively low verdicts is that the courts deduct from the amount of compensation determined in favor of the plaintiff all the sums the plaintiff received, and will receive, from the National Insurance Institute. Owing to the extensive safety net provided by the National Insurance system, and its no-fault principle, the deduction of National Insurance compensation carries the problem of moral hazard into the torts system as well. From the compensatory point of view, this doctrine is correct for it is wrong to compensate the injured employee twice for her injury. On the other hand, the deterrent value of the torts' compensation system is lost if a substantial part of the compensation rewarded to the employee is already covered by the no-fault, fixed-contribution, insurance system, and in which the employer is not motivated to take any action to reduce workplace-related injuries. Consequently, unlike the Experience Modification Rate calculated in the United States as part of the Workman's Compensation Insurance, which ties the level of safety as measured in the number of injuries to the employer's rate of insurance, the Israeli torts and National Insurance system has not succeeded in overcoming the problem of moral hazard. The Israeli system does quite well in terms of providing injured individuals adequate compensation, but the deterrent value of the system is diminished. In conclusion, none of the legal means seems to have greatly succeeded in creating a significant incentive to reduce the level of injuries and occupational diseases and to increase compliance with regulatory standards. Obviously, the sum of imperfect means does have significance, and it would be very wrong to paint the occupational health and safety scene as a 'lawless land'. A reform, however, is needed, which will comprehensively consider the different incentives and how they interrelate with the welfare function of law and the establishment of standards.

3.3.4. Efficient use of public funds A final concluding comment on the incentives function of law directly reflects on the relative inefficiency of the occupational health and safety system in Israel. The multiple agencies and modes of legal intervention can be a vice or a virtue. On the one hand, the overlap between different agencies and legal incentives produces a 'net effect', where there are many holes in the system, but it still works. Moreover, the separation between the Labor Inspection Service and the Institute for Safety and Hygiene is necessary to create a separation of powers between the enforcement agency and the assisting agency. On the other hand, the system seems to function without a clear perception of how its various components are interrelated. Although the board of trustees in the Safety and Hygiene Institute consists of representatives from all the agencies associated with occupational health and safety, the system seems to lack a single coordinating agency. Budgets are therefore fragmented and efforts are uncoordinated. The economic link between the costs of National Insurance contributions to those injured on the job and the costs associated with occupational injuries is unaccounted for. It is also unclear how public monies allocated to prevention and compliance with health and safety standards can be most efficiently used. Studies have found that the current level of investment is insulated from this inquiry, and thus does not even take the necessary first step of assessment (Tir, 1993). Given the low level of public expenditures, as described in the previous section, the system does too little to ensure that the funds are efficiently channeled. When coupled with the substantive shortcomings in the incentives function of the law, the system's output is not satisfying, as described in the following section.

4. The system's output In 1979 an independent committee (the Gonen Committee) was commissioned to assess the issue of health and safety in the Israeli workplace. The committee succinctly stated that 'despite the dif-

G. Mundlak / Work 11 (1998) 243-262

ficulties of conducting a statistical comparison to other countries, we are under the impression that the state of safety in the workplace is alarming'. Since then there have been no indications that the situation of occupational health and safety has improved. To give a sense of the problem in Israel, I will limit the discussion here to the most obvious parameter in the proposed occupational health and safety index - the level of injuries. The other dimensions of the proposed index and how to weigh them merit a more elaborate discussion outside the scope of this introductory article. Table 1 provides the data for Israel from 1989-1996. The data are based on the number of

259

workers who reported their injury to the National Insurance Institute in order to claim benefits. These data are more reliable than those of injuries reported by employers to the Labor Inspection Service because many employers do not comply with the rules requiring them to report all injuries. The figures indicate a general trend of increase in the rate of work-related injuries and an almost constant increase in the rate of fatal injuries. It is difficult to assess the significance of these figures without an indication of the relative severity of the problem in Israel, compared with other industrialized countries. An international comparison of injury rates is a complicated task because

Table 1 Rates of occupational injuries and deaths in Israel

Number of injured workers who claimed benefits from National Insurance

1989

1990

1991

1992

1993

1994

1995

1996

57546

59139

66779

74213

74701

81179

84884

92140

The number of workers in Israel (in thousands)

1460.8

1491.9

1538.1

Rate of injury (per 1000 workers)

39.3

39.6

42.2

Number of workrelated deaths a

37

49

54

1650.2

1846.9

1969.2

45

40.4

41.2

40.5

43.1

61

74

66

81

89

2093

2133.7

Rate of workrelated deaths (per 1000 workers)

0.025

0.033

0.034

0.037

0.04

0.033

0.038

0.041

Same as above, including deaths from occupational diseases b

0.038

0.049

0.052

0.055

0.06

0.049

0.057

0.061

Same as above, including trafficrelated accidents to /from work

0.050

0.066

0.068

0.079

0.066

0.D75

0.083

Source: Ministry of Labor and Welfare. traffic-related accidents and work-related diseases. b Estimation. For the method of estimation, see Griffil et al. (1998). a Without

0.074

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G. Mundlak / Work 11 (1998) 243-262

different countries adopt different measurement systems. Some measure work-related accidents together with work-related diseases, while others separate the two measures. In some countries work-related traffic accidents are included in the statistical records while in others they are excluded. Some countries exclude minor injuries as measured by days of absence, and so injuries that have led to less than 2 or 3 days of absence from work are not recorded. When comparing the rate of accidents (number of accidents per 1000 workers) some calculate the rate of injuries in relation to the overall number of workers, while other countries calculate only the number of workers exposed to risk. In a comprehensive study conducted under the auspices of the Israeli Institute for Safety and Hygiene (Griffil et aI., 1994), the researchers tried to overcome these discrepancies in the methods of measurement. Their study is based on lLO statistics, but is complemented by a sUlvey to which ten countries responded and which gives a

more accurate picture. I will therefore rely on their study, despite the fact that it is not fully updated, to give an indication of the current situation in Israel. Table 2 compares the Israeli data with those of some other industrial countries. They indicate that Israel ranks in the middle. However, Table 3 which provides evidence of the rate of workrelated deaths, indicates that Israel tends to be closer to the higher levels that prevail in other countries. The comparative evidence indicates that the existing rate of occupational-related injuries and diseases is within a 'normal' range for industrialized countries, although it leaves much room for improvement. It is difficult to account for what is the 'optimal rate' of injuries and diseases, especially because for every person injured on the job the statistical analysis is of little comfort. Moreover, the rhetoric that holds a certain rate of deaths to be 'optimal', even if true from a rational point of view, may have the effect of distorting

Table 2 International comparison of occupational injuries (1989-1991) (rate per 1000 workers)

Table 3 International comparison of work-related deaths (1989-199]) (rate per 1000 workers)

---_._-_. - - State

Average rate (1989-1991)

United Kingdom Netherlands Denmark Sweden United States Israel Switzerland Finland Belgium Germany France Spain Portugal

6.9 10.6 16.9 18.3 26.0 38.0 40.5 41.9 42.4 53.0 54.0 54.3 63.7

Comments'

2 D D

D,2 D 2

T D,T T

Source: Griffil et al. (1994) • Unless otherwise noted all data refer to the rate of injuries excluding work-related diseases, traffic accidents on the way to/back from work, and injuries leading to less than 3 days absem;e from work. Abbreviations. D indicates the data includes diseases; T, indicates that the data include traffic accidents on the way to /back from work; and 2, indicates that the data include those occupational injuries that resulted in only 2 days absence.

-------------State

Average rate of deaths (1989-199])

United Kingdom Netherlands Sweden Denmark Finland Switzerland Israel Germany United States Belgium France Spain

0.016 0.017 0.026 0.030 0.037 0.046 0.046 0.047 0.054 0.060 0.087 0.141

Commentsa

D

D,R D

R R

R

Source: Griffil et al. (1994) aUnless otherwise noted all data refer to the rate of injuries excluding work-related diseases, traffic accidents on the way to/back from work, and injuries leading to less than 3 days absence from work. Abbreviations. D, indicates the data include diseases; R. indicates that the data provide the rate of death among workers that arc considered to be exposed to work-related special risk. In these cases the rate of death in the general population is lower.

C. Mllndlak / Work II (J998) 243-262

our perception of the problem's severity. Despite these caveats, the absolute numbers are distressing and certainly merit further legal and non-legal attention. Clearly, the rate of occupational injuries and diseases cannot serve as the sole indication of the system's success in achieving its goals. A more rigorous implementation of the proposed model must take into consideration the comprehensive compensation provided to those injured on the job. Moreover, it must account for recent efforts in legislation to provide for adaptation of the workplace environment for the disabled. This description of the output must also consider the cost of the system. As described earlier, the level of public funds channeled to occupational health and safety is relatively low, so it is arguable that compared with the investment the output is quite good. This argument fails because the costs associated with injuries and diseases are more extensive than the public expenditures that formally appear in the budget, and include costs to families, costs to the macro-economy associated with the loss of working days, payments to insurance companies, machinery that must be replaced, and much more. The cost-benefit analysis must therefore observe the numerous costs associated with the problem, rather than only at those that appear in the state-budget. A similar argument may be made, holding that other countries regulate too much, but the slightly lower level of injuries does not justify similar intensive regulatory intervention. However, most problems described in this article pervade other national systems as well and are not unique to Israel. Complex standards, a slow regulatory process, a serious problem with regard to the incentives function of the law, and a fragmentation of the system are common problems world-wide. The fact that some countries have attained better performance rate despite the inherence of these problems signifies the definite need for a systemic improvement in the Israeli system.

261

functions are complex and do not always indicate the same trajectory, as was demonstrated most clearly with regard to the welfare and the incentives functions. The output of the system, while within 'normal' range, at least when measured by the technical proxy of injury rate, indicates much room for improvement. The isolation of occupational health and safety from the industrial relations system, from the public's interest, and from managerial culture raises much concern regarding the feasibility of a fundamental reform and of increasing budgets in the future. More specifically, the following are five concluding observations. 5.1. The system is fragmented

The regulation of occupational health and safety is conducted by many agents. On the one hand, fragmentation is sometimes translated into positive specialization. At the same time, no one agency has an overall view of the regulatory system and its administration. The Israeli Standards Organization, the Labor Inspection Service, the Institute for Safety and Hygiene, the courts, and the agents of the industrial relations system each carry out their assigned function, but weaknesses of one agent are not compensated by another. 5.2. The adaptation problem

The current system is based on the industrial reality of the past. Standards are developed for manual production, but there are few efforts to expand the regulatory function of occupational health and safety and to apply it to the problems of office workers, or to new horizons, such as psychological well-being. The enforcement of existing standards is similarly caught up in the image of an economy with large factories that can be inspected rather easily. The concept of external inspection must be rethought so as to address the fragmentation of production and the workplace venue.

5. Summary: five comments on the Israeli system 5.3. The incentives problem

To summarize, the Israeli system operates in a difficult social and economic environment. Law's

The problem of fragmentation is acute given

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O. Mundlak / Work 11 (1998) 243-262

the problem of incentives. Ex-ante incentives have been demonstrated to be weak, except for the educational function carried out by the Institute for Safety and Hygiene. The intra-firm institutions are not strong enough to be adequately significant. Ex-post sanctions are also not adequate. The use of criminal prosecutions is underutilized. The incentive created by civil litigation is undermined by the safety net provided by National Insurance. 5.4. The budget problem

Some of the incentive problems could be remedied by increasing the budget for prevention and ensuring compliance, but that is not enough. Given the fragmentation of the system and the systemic nature of the incentives problem, there should be a careful consideration of where and how to channel additional funds. For example, adding more inspectors to the Labor Inspection Service is likely to help, but there are also inherent problems in the external inspection of the modern workplace, where technology, the complexity of the production process, and the increasing number of potentially hazardous substances in use make the external inspection all the more difficult. Funds may therefore be better used for the administrative effort required to tie National Insurance payments to existing risk levels, or to strengthen workers' representation in intra-firm institutions. 5.5. Growing reliance on expertise and decreasing importance of co-management

The recent legislation on safety officers indicates that a fresh emphasis is being placed on expertise in the regulation of occupational health and safety. The advantage of expertise is that it matches the complexity of the subject. On the other hand, expertise removes the concern for improving occupational health and safety from both managers and employees. Expertise replaces co-management, which is all the more striking given the impact of trade unions and collective

bargaining in Israel. The lack of effort at autonomous regulation by means of collective agreements and the safety committees, indicates that individual and collective responsibility are not sufficiently encouraged. Observance of health and safety standards is highly correlated to the labormanagement climate, where an amicable relationship and cooperation induce higher levels of responsibility and compliance. Thus, expertise cannot wholly substitute individual and collective involvement, and responsibility must be brought back in. References Adler S, Bar-Mor H. Occupational safety legislation. The labour yearbook [Hebrewl1992;3:13-45. Dunlop J. Industrial relations system. Cambridge, MA: Harvard Business Press, 1993. Griffil A, Carmel R, Dongy A. The rate of labour injuries in Israel and in European countries. Jerusalem: The Committee for Prevention and Research on Health at Work, 1994. Korostoff JE, Zimmerman LM, Ryan CEo Rethinking the OSHA approach to workplace safety: a look at worker participation in the enforcement of safety regulations in Sweden, France and Great Britain. Comp Labor Law J 1991;13:45-95. Mundlak G. Labor law as a social text: reflections on social values in flux. 3 Israel Studies, 1989a: forthcoming. Mundlak G. Health and safety in Israel. In: Kilimnik K, editor. Health and safety regulations, Kluwer, 1989b: forthcoming. Shalev M. Labour and the political economy in Israel. Oxford: Oxford University Press, 1992. Shapiro SA. Occupational safety and health. In: Encyclopedia of law and economics. Edward Elgar Publishers, 1998: forthcoming. State of Israel. Combined initial and second report of the state of Israel concerning the implementation of the United Nations Covenant on Economic Social and Cultural Rights, 1997. State of Israel, Comptroller's Office. Annual report 1992; 43:413-433. Thomas R. What machines can't do: politics and technology in the industrial enterprise. Berkley: University of California Press, 1994. Tir N. Economic aspects of state intervention in the prevention of work accidents in Israel: the case of the National Safety and Hygiene Institute. Unpublished MA thesis, TelAviv University, 1993.

Occupational health and safety and the functions of law: a system's analysis.

The article suggests a model that can account for the systemic nature of the law's functions with regard to occupational health and safety. The model ...
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