Wednesday, 8 August 2018

He's A Lumberjack & He's Okay!!

Just now I stumbled upon this article in Construction News about health and safety protocols in the industry, dating back as far as John Prescott in 2001. Here is what we are told:

"Many firms in this bracket think of H&S as a drain on time and money, and that it is limited only to physical safety.”

I can’t say I’m surprised. Health and safety legislation is a bit like eating a juicy steak: if there’s the right amount of it, it’s fine, but if it’s too large it becomes uncomfortable to swallow. Here’s why.

Recently I observed out of my window a gentleman who had been paid by the council to cut down three huge trees to create the space for a car park. What struck me was how risky his job looked: he was climbing near the top, sawing through branches while being finely balanced on a nearby branch, and he would swing down to lower of levels of the tree with apparent alacrity. I don’t know what the health and safety regulations are surrounding his role, but one thing of which I’m fairly certain is that a job like that is precarious, and therefore that precariousness will be compensated for in his wages.

Put it this way, a firm that provided health and safety equipment, such as scaffolding or a crane or a highly expensive tree-cutting device to greatly minimise his risk would not be paying him as much. The corollary of this is that a minister who forced the firm to purchase the health and safety equipment would be enforcing lower pay for the worker in question. The point being, there are many times where health and safety regulations are justified, especially with asymmetry of information, when the workers need protection against unscrupulous bosses - but those occasions are mostly limited to when employees do not have sufficient information to measure the risk of doing a job.

When employees have sufficient information to assess the risk of their own jobs against the rewards of doing those jobs, no state legislation needs to exist. The reason being; workplace health and safety regulations are not free to those who are forced to mandate them, but just as important, they are not free to those who benefit from them either. The more risky or socially undesirable the job, the fewer people will be willing to do it, and the more the wages will have to be bid up in order to attract prospective employees.

Being forced to make your workplace safer is not always a desirable law, especially in cases where individuals can make rational choices based on the known risks and rewards. This is because different people make different trade-offs between risk and reward (higher pay). People in high risk jobs, like our aforementioned lumberjack, tend to, on average, put a lower monetary value on low risk than people doing low risk jobs.

Employers only benefit from improving workplace health and safety regulations when the cost of doing so is lower than the savings they make on reducing wages. Similarly, these health and safety measures must be worth more to workers than the cost borne in reduced wages. This means that, while there are plenty of beneficial health and safety regulations, there are also plenty of times when individuals can make their own decisions based on risk and reward strategies, and therefore, need not be subjected to extraneous regulations that impede rational decision-making based on perceived risks and rewards.