Abstract
Currently, in some countries occupational health and safety policy and practice have a bias toward secondary prevention and workers’ compensation rather than primary prevention. Particularly, in emerging economies, research has not adequately contributed to effective interventions and improvements in workers’ health. This article, using South Africa as a case study, describes a methodology for identifying candidate fiscal policy interventions and describes the policy interventions selected for occupational health and safety. It is argued that fiscal policies are well placed to deal with complex intersectoral health problems and to focus efforts on primary prevention. A major challenge is the lack of empirical evidence to support the effectiveness of fiscal policies in improving workers’ health. A second challenge is the underprioritization of occupational health and safety partly due to the relatively small burden of disease attributed to occupational exposures. Both challenges can and should be overcome by (i) conducting policy-relevant research to fill the empirical gaps and (ii) reconceptualizing, both for policy and research purposes, the role of work as a determinant of population health. Fiscal policies to prevent exposure to hazards at work have face validity and are thus appealing, not as a replacement for other efforts to improve health, but as part of a comprehensive effort toward prevention.
Introduction
Workers’ health remains a neglected area of social policy and practice in many emerging economies, with South Africa being no exception. 1 Competing interests motivating the behavior of industry, workers, and the state make occupational health a frequently complex policy environment in which to operate. Within a resource-constrained environment and a multitude of competing health and economic priorities, occupational health tends to be overlooked.
This article argues that there is need for a paradigm shift in occupational health research, policy-making, and subsequent practice. This shift entails an understanding of the incentives driving the decisions and behaviors of all actors within the occupational health arena to improve workers’ health by encouraging primary prevention—the priority occupational health and safety (OHS) activity.
A key potential policy lever in achieving primary prevention is “nudging behavior” through state-administered financial incentives. 2 Among these financial incentives are fiscal policies, taxes, and subsidies imposed by the state, which are increasingly being adopted to deal with complex public health problems including tobacco, alcohol, and obesity. A growing literature shows these policies to be effective and cost-effective in improving population health. 3 The reason for their increased utilization, beyond increased cost-effectiveness, is because they are well placed to deal with complex intersectoral problems. Fiscal policies to reduce consumption of unhealthy commodities or encourage the adoption of health-promoting activities operate under a certain set of theoretical assumptions: primary to these assumptions are that individuals and organizations will adjust their behavior, everything else being equal, given a change in an external incentive. For example, increasing the price of tobacco would reduce the demand for tobacco products, which ultimately—through a reduction in consumption—would reduce the burden of tobacco-related diseases. Besides the innate intersectorial characteristic of fiscal policies, these policies are also attractive as their focus is on primary prevention: they reduce the disease-causing exposure by influencing behavior and as such aim to address the social determinants of health.
Based on the above reasoning, there are opportunities in using fiscal policies to improve workers’ health, yet there has been little research or policy work done on how fiscal policies may be utilized in OHS. A rapid assessment of published literature was undertaken to evaluate international experience with fiscal policies for occupational health. Evidence of the use of fiscal policies was found from the United States, 4 European Union and Nordic countries,5–7 Japan, 8 and South Korea. 9 The policy focus was largely aimed at increasing access to occupational health services which took the form of medical surveillance and secondary prevention particularly in small and medium enterprises.5–9 Larger companies were typically regulated to provide this service. 9 A study in the United States reviewed the effectiveness of subsidies to reduce user charges for nonoccupational preventive services in a multinational aluminum producer. 4 Specifically, the subsidies aimed to increase utilization of screening for various cancers and found minimal increase in the utilization following a reduction in user fees. No studies describing fiscal policies aimed at primary prevention for occupational health were identified.
The scarcity of published OHS fiscal policies aimed at primary prevention prompted the writing of this article, which presents a case study of an attempt to introduce such policies in South Africa. This case study presents a methodology for identifying candidate fiscal policy interventions and describes the policy interventions selected, which were subsequently presented for consideration to a South African Department of Finance’s Davis Tax Committee. 10 The article concludes with lessons learned from the undertaking.
The Context
South Africa is a multicultural constitutional democracy and is classified as an upper-middle income country (UMIC) by the World Bank. Of its 54 million people, 15.7 million were employed in the second quarter of 2015; of these 15.7 million, 8.9 million (56.7%) were in formal nonagricultural employment.
11
Figure 1 provides a sectorial breakdown of employment in South Africa from 2002 to 2013.
Percentage employed in South Africa by sector, 2002–2013. Source: Statistics South Africa.
10
Since 2008, economic performance has been muted and combined with high unemployment (particularly among eighteen to twenty-five year olds), and income inequality remains at the top of the official national policy agenda. South Africa’s GDP per capita is below the UMIC average with lower labor force participation rates and higher rates of unemployment among both men and women. Youth unemployment is more than 50%, roughly four times the UMIC average. South Africa has high income inequality and is one of the most unequal countries in the world with a GINI coefficient of 63.4 in 2011. 12
Compared with the UMIC average, South Africa spends more in percentage GDP as well as per capita on health. Largely because it is the epicenter of the HIV and TB epidemic, South Africa’s life expectancy at birth is 17.6 years lower than Brazil’s. The probability of dying between the ages of fifteen and sixty (during adult working life) is greater than 45% and 35% for South African men and women, compared with 18% and 9% for Brazilian men and women, respectively.
In 2012, the government adopted a National Development Plan detailing a road map of how to address the two main social challenges, namely poverty and inequality. A chapter dedicated to health prioritizes prevention and achieving universal coverage by implementation of a National Health Insurance system, but the National Health Insurance fails to mention OHS.13,14 OHS policy recommendations are, however, made in the chapter on Social Protection in the National Development Plan and include a call (i) to reduce work hazards particularly in the informal economy and (ii) to improve access to workers’ compensation, with a focus on informal workers. 13 To date, there has been insufficient political and policy attention afforded to OHS for a number of sectors in the South African economy, among them agriculture, small- and medium-sized enterprises, and the informal sector. Further, efforts have frequently focused on improving compensation systems for workers suffering from occupational diseases or injuries and to increase access to occupational health services, which are primarily poised at secondary and tertiary prevention. Despite a number of attempts to develop and implement a national integrated occupational health system in South Africa, policy and service delivery remain fragmented and there is no cohesive national surveillance system for occupational disease and injuries. More detailed OHS context on South Africa is available in a chapter by Adams and Ehrlich. 15
The context described above is problematic for OHS in South Africa, in part because substantial and complex social and health problems divert attention and resources from the discipline. But, fiscal policies could be of assistance as they potentially present an option to entrain resources into OHS without competing for resources allocated to other programs. Particularly, the prevention of exposure to workplace hazards might lend itself to these interventions.
Methods for Identifying Fiscal Policy Candidates
Framework for identifying best-candidate fiscal interventions for OHS.
Prior to the workshop, a discussion document was circulated to a group of preidentified South African occupational health experts from industry, academia, government, and labor. The document was compiled by the authors and provided a summary of evidence on the burden of occupational disease in South Africa as well as the use and effectiveness of fiscal policies in OHS (see Supplement 1 (available online) for additional information). The experts were prominent practitioners representing OHS professional societies or who had experience managing large OHS services or who had an interest in the financing and economics of OHS. Of the thirty-two experts invited, fifteen attended and constituted a mix of occupational medicine physicians, public health specialists, occupational hygienists, economists, and social scientists.
A framework (Box 1) for identifying candidate interventions and for prioritizing them was developed by the authors prior to the workshop and applied by the expert working group. The framework took a stepwise approach with the aim of identifying interventions that we anticipated would result in an a priori net-social welfare gain. The framework consisted of five questions. First, what is the occupational health and safety objective? This question was answered with reference to the levels of prevention, namely is it to reduce or eliminate an occupational exposure (primary) or to identify occupational disease and injury early (secondary)? Second, what is the fiscal intervention? Would the intervention take the form of a tax or a subsidy and would it be targeted at the firm or the employee? Further, how would the level of the incentive be determined—based on health outcomes, exposure levels, or expenditure on services or capital equipment? Third, consideration of the economic objectives or consequences of the suggested policy was required. What would be the effect on efficiency, equity, and revenue generation? Does the intervention address a market failure by, for example, addressing an externality; what are the equity implications, who would draw relative advantage from such an intervention—large multinational companies or small and medium enterprises; employers or employees? Fourth, what are some of the anticipated unintended consequences of the intervention? Are there opportunities to shift tax burdens, impact negatively on employment by increasing the cost of labor; are there any obvious opportunity costs? Finally, how easily would the intervention be implemented given the current tax system; are the anticipated transaction and monitoring costs acceptable; and are there any obvious opportunities for perversion of the system for financial gain.
Given the burden of disease, international evidence, the degree to which an exposure could conceivably be modified through a fiscal intervention and circumscribed by the framework detailed above, eleven possible interventions were identified from which three were selected for further consideration. Additional expertise from outside the expert group was sought through expert interviews to distil the interventions further.
Fiscal Policies to Promote Buying Quiet
Excess noise exposure results in noise-induced hearing loss (NIHL) with both social and economic consequences. Currently, noise exposure is regulated with the exposure limit at <85 dBA weighted average over an eight-hour shift. However, regulation is expensive, labor-intensive, and does not necessarily prevent exposure in the first place. Further, it is not clear how effective current regulation has been in reducing the burden of NIHL in South Africa, as it has consistently been one of the top compensable diseases in the country. “Buying quiet” is an initiative that aims to reduce NIHL by, among others, promoting the purchasing of less-noisy equipment. Buying quiet is commonly recommended by OHS agencies, the National Institute for Occupational Safety and Health, USA, among them. 16 There have been some sector-specific initiatives in South Africa to adopt “buying quiet,” but these actions are scant and compounded by poor uptake. This outcome is not surprising given that purchasing decisions are typically made on price and the effectiveness of the equipment in performing its productive function, rather than noise emissions. 17 There are no national policies or initiatives to promote the adoption of buying quiet. Therefore, the proposal is to create financial incentives, through subsidization, for firms to purchase less-noise-producing equipment. A relative reduction in the cost of quiet equipment would result in an increased demand and adoption of quiet technology, less noise in the workplace, a reduction in NIHL with consequent reduction in the health, social, and economic burden of NIHL.
Differential Diesel Levy to Promote Use of Cleaner Fuel in Industrial Processes
Diesel exhaust emissions (DEEs) are a complex mixture of gases and diesel particulates. 18 Chemical composition of diesel exhaust is affected by engine technology, fuel type, operating conditions, and the presence of emission control systems (EPA, 2002). 18 Exposure to DEE has been associated with increased risk of respiratory and cardiovascular morbidity and mortality and can result in a number of lung diseases including exacerbation of asthma and lung cancer.19,20 Occupational exposure assessments conducted in five South African mines showed exposure levels as high as 2 mg/m3. 21 Currently, three grades of fuel are available in South Africa 10, 50, and 500 parts per million (ppm) of sulfur. Cleaner grade fuel allows for the application of newer and more effective emission control technology and hence results in less DEE, including particulate matter. Currently, most of the diesel fuel being consumed in industrial processes in South Africa is of the 500 ppm grade. The levies placed on diesel in South Africa are uniform across various grades of diesel fuel. By introducing a differential in the fuel levy, a financial incentive will be created for firms to replace 500 ppm fuel with cleaner grades, resulting in (all else being equal) reduced DEE and a subsequent reduction in DEE-associated health effects. Strengths of this proposal include the importance of price in deciding which fuel grade to purchase and the fact that it would be administratively uncomplicated. Weaknesses of the proposal include that the DEE is a function of both diesel grade and engine efficiency; if engines were inefficient or not well maintained, the marginal gain from utilizing cleaner fuel would be reduced.
Tax Incentive to Promote Adoption of Multistage Filtration Systems in Mines
Silica dust exposure, which is particularly prevalent in gold mines, causes silicosis—a debilitating and progressive lung disease. 22 Silica exposure has also been identified as a cause of lung cancer and increases susceptibility to tuberculosis.23,24 Dust levels in mines are currently regulated. However, there has been broad failure to adequately reduce exposure and the resultant burden of occupational lung disease among miners remains high. Silicosis prevalence has been found to be between 18.3% and 19.9% among current and former long-service gold miners.25,26 Due to the long latency of silicosis, the economic, social, and health burden is largely externalized to the state, private households, and the public health system. 27 Combined with a readily available pool of low- to semi-skilled workers and suboptimal effective implementation of regulation, there exists little economic incentive for firms to invest in engineering controls to reduce dust levels in mines. Recent litigation by silicosis sufferers may, however, have changed the economics in favor of engineering controls. 28 The failure to control dust has led to an epidemic of silicosis among miners and ex-miners affecting local as well as migrant labor from beyond the country’s borders. There are numerous high dust level activities and sites within a gold mine, one of which is at ore tipping sites. Improved ventilation targeted at these sites was identified as an area requiring improvement and potentially modifiable through fiscal intervention. Multistage filtration systems are estimated to reduce respirable dust by up to 98% and have been identified as a key intervention by industry in reducing exposure to silica dust.29,30 A possible fiscal intervention to fast-track industry wide adoption of multistage filtration systems is to allow for accelerated depreciation on current ventilation assets. Improved ventilation would reduce exposure to silica dust and the incidence of silicosis, tuberculosis, and other silica-associated conditions.
Competing Policy Options
List of fiscal policy options ranked by votes by the PRICELESS South Africa Panel.
The comments column refers to comments made by the members of the Second Expert Committee.
Lessons Learned and Future Direction
This article details the process by which OHS fiscal policy options were identified and prioritized in South Africa. None of the OHS candidate options were taken forward for formalization. There may be many reasons for these decisions, but a general one is that power relations among employers and organized labor favor the former, resulting in a generally poor appreciation of the importance of protecting workers’ health in the country. There are two more specific reasons why none of the OHS candidate options were taken forward for formalization. First, this approach to OHS is unconventional and as a result hypotheses on fiscal policies for OHS have not been formulated or tested. Second, relative to other risk factors amenable to fiscal intervention, occupational risk factors as they are currently being measured do not seem to contribute significantly to the overall burden of disease in South Africa. However, they do contribute to high burdens in relatively small exposed populations and are very high cost and perpetuate the cycle of poverty and disability. Further, it has been shown that risk factors not typically attributed to work in burden-of-disease studies, such as stress and cardiovascular disease, can be directly attributed to organizational structures within the workplace. 31 Finally, it is the employers’ responsibility to protect workers’ health and hence fiscal policies affecting enterprises should be acceptable, even if direct impact at a general community level is not substantial.
Both reasons for failure can and should be addressed, the first through empirical investigation and the second through advocacy and a popular reconceptualization of the role of work in disease and injury. An important empirical question in the OHS setting, just as in the early days of tobacco tax, should specifically be focused on establishing the effectiveness of fiscal policies in reducing disease burdens and what form they should take in order to maximize their effectiveness. Underlying the potential success of this effort are improvements in the availability and quality of data on the burden of occupational disease and occupational risk factors potentially modifiable by fiscal intervention. The second empirical question is whether a given fiscal policy is welfare-maximizing from a societal point of view: balancing the extent to which employers, workers, and the state benefit and carry the associated costs, and whether or not it meets various normative criteria such as equity.
In theory, fiscal policies to prevent exposure to hazards at work have face validity and are thus appealing; efforts to provide an evidence base for them are therefore likely to be rewarding.
Footnotes
Acknowledgments
The authors would like to thank the members of the occupational health and safety expert workshop, and in particular Mrs. C Pretorius from the Council for Scientific and Industrial Research (CSIR) and Mr. J. J. Havenga, Occupational Environment Manager, AngloGoldAshanti for providing additional expert information on diesel emissions and mining ventilation systems.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Authors affiliated with PRICELESS SA (Priority Cost Effective Lessons for Systems Strengthening South Africa) received funding from the Bill and Melinda Gates Foundation (Grant number: OPP1098574 Fiscal Polices to Improve Health through the Center for Disease Dynamics, Economics & Policy, Washington, DC).
Author Biographies
) based at the Wits SPH. This research to policy program plays a pivotal role in developing sound processes to guide choices for investments to improve health by engaging with experts, policymakers, and the public. Karen previously spent a decade on faculty at Johns Hopkins and has served as Policy Director at the US NIH, Fogarty International Center.