On workplace deaths, and Italy’s threat to Europe

It has been a bad week for those who think that business can be safely left to regulate itself. Workplace safety failures have been revealed in evidence to both the Pike River inquiry, and at the inquest into the coolstore fire near Hamilton in 2008. At the coolstore fire inquest , testimony painted a grim picture:

… The gas detection system at the coolstore was not designed for the highly flammable refrigerant being used. An inspection three years earlier had found some safety issues, but there was no obligation for that to be followed up. Department of Labour inspector Keith Stewart told the Coroners Court that it is the owners of coolstores who must make sure plants comply with the law, because the industry is self-regulating. He says no-one can be sure a similar event will not occur again.

At the inquiry into the Pike River disaster – and keep in mind the first explosion occurred on November 19, 2010 – the evidence presented has told a not dissimilar story:

The commission’s own chronologies, detailing what happened in the hours and days after the blast, were released this morning. They note that on November 23, mine employee Les Treddinick reported to Pike River management that gas was leaking around a drainage line seal on November 17.

Mines Rescue considered this was a potential cause of the explosion.

Down the mine, the self-rescue equipment was plainly inadequate as mine survivor Daniel Rockhouse has movingly testified:

[Rockhouse] headed to a nearby phone and rang the emergency number 555, but it clicked to an answering service for Pike River Coal, so he phoned the control room and was passed to the mine’s general manager, Doug White. White told Rockhouse to head to the fresh air base….Once there, [Rockhouse] was furious to discover it was open and had no working phone or extra self-rescuers because it had been decommissioned.

Unfortunately, this state of affairs seems fairly typical. As the Department of Labour recently reported, in the 12 months to June 2011 there have been 85 deaths, 445 serious non-fatal injuries and 30,800 ACC entitlement claims arising from incidents at New Zealand workplaces. The sectors with consistently high workplace death and injury tolls are: construction, agriculture, forestry, fishing and manufacturing. Moreover, occupational disease is estimated to lead to 700–1,000 fatalities and 17,000–20,000 new cases a year – asthma, skin diseases and asbestos-related cancer are big contributors. In this realm of workplace-generated disease, the DoL is still barely out of the starting blocks:

Monitoring occupational disease is difficult as there is often a long latency period between exposure and onset and attributing causation to work-related factors can be difficult. There is currently no effective ways of measuring incidence or prevalence, but the Department of Labour is developing an occupational disease surveillance system, due to be piloted by December 2011.

Annually, the work toll costs billions in suffering and premature death – and the majority of this cost is absorbed by society, not by business. The deadly toll can be seen as the human cost of the political rhetoric about red tape and regulation and compliance cost being an intolerable burden for business… Within a political climate where DoL safety inspection is undervalued and under-resourced, workers will continue to be put at risk of paying the price with their lives, and with poor health outcomes.

Officialdom has also failed to use even the powers put in its hands. Even though a legislative amendment was passed back in 2003 that allowed the courts to impose a five-fold increase in fines for breaches of the Health, Safety and Employment Act (HSEA) of 1992, the actual penalties have only gradually increased.

Belatedly, the DoL now seems to be coming to the party. In mid-2010, the department launched a three-year programme of investigating workplace injuries caused by defective or poorly guarded machinery. To a limited extent, the department is also becoming more pro-active. This year, for instance, the Kiwi Plastic Company Limited was fined $45,000 for a safety standard lapse following an un-announced DoL inspection. Clearly, the company has been given every latitude and opportunity to mend its ways, and had been able to operate in the interim:

In the latest incident, Kiwi Plastic Company Limited was convicted of failing to guard two of its bag sealing machines. During an unannounced visit, Department of Labour inspectors found that the guards had been removed for approximately three months. The Department’s investigation also found that an employee had been taught to over-ride automatic shut down mechanisms. Kiwi Plastics and its director, Angelus Tay, were prosecuted for similar offences in 2002 when three employees were seriously injured.

The Department has made several visits to the company since then and issued a number of warnings and improvement notices.

Clearly, firms have to consistently and flagrantly put workers at risk –and even after seriously injuring workers, such firms can still for years afterwards, be engaged in similar disregard for the safety rules. As yet, there is no research into the interaction between the 90 day trial period for new workers introduced by the Key government, and workplace safety. Intuitively though, one can ask the question – would a young worker still on a 90 day trial period be more – or less – likely to query whether the conditions on site are putting their life and health at risk? I think we all know the answer to that one.


Italy does a U-Turn Last week, I praised Silvio Berlusconi for including a special tax-the-rich proposal within the austerity programme he was promoting, and which the Eurozone has been demanding as a pre-condition for buying government bonds and propping up the Italian economy. The austerity package also included proposals to cut funding to local authorities, and to the public services they deliver.

The [Berlusconi austerity package] tax increases included a “special levy” on income above €90,000 per year as well as tax increases on income from financial investments. More specifically, there would be a surcharge of 5 percent on incomes above €90,000 and a 10-percent surcharge on incomes above €150,000. The tax rate on financial income would increase from the current level of 12.5 percent to 20 percent. The government also pledged to crack down on tax evasion.

Well, I spoke too soon. Berlusconi has reneged, and the austerity package is on the ropes.

In Italy nothing is safe from modification, and on August 29th Mr Berlusconi unpicked his package, throwing out the measure he most disliked, a surtax on top incomes in the private sector…..To placate Italy’s irate local mayors and governors, Mr Berlusconi lightened the burden of savings they were supposed to have made….

This is drastic. Italy’s economy is bigger than the economy of Greece. And with the Italian austerity package now in tatters, what will this mean for the European Central Bank’s readiness to continue buying Italian debt? Not a lot. Berlusconi may be going down in flames in a lurid series of court cases – but unfortunately, there is a now a risk that he could end up taking the rest of Europe (and not just Italy) down with him.


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