The Effect of Safety Costs on Productivity and Quality: A Case Study of Five Steel Companies in Ahvaz

The implementation of a safety program is one of the most effective factors in increasing productivity. A look to safety from the perspective of efficiency can indicate necessary investment in safety for all, especially the managers of companies.
The aim of this study was to evaluate the effect of safety costs on some indicators of productivity and quality in industrial companies.
This study was a retrospective analysis and was implemented in five steel companies in Ahvaz. The data relating to the safety costs such as staffing costs and total safety costs, and productivity and quality indicators were collected in five years. This information and data were collected according to statistics from documents and archives of safety, accounting, and production sectors of companies. Costs as well as numbers and figures of variables were expressed in the form of per capita and percentage to make the data comparable. Linear and generalized regression models and Wald Chi-Square test were used by the SPSS 22 software to determine the relationships between them.
Safety costs such as capita labor safety costs and capita total safety costs or percentage safety labor costs to labor costs, showed a significant positive effect on labor productivity, labor competitiveness, total factor productivity, quality index and production rates (in some cases, P = 0.001).
The total safety cost and safety labor compensation generally, regardless of the nature and quality of the safety management system, can impact productivity, quality and quantity of production in addition to other factors of production. Surely if safety programs are targeted and codified, the effect of the investment will be doubled.