Workplace safety is not only a fundamental component
of employee well-being but also a central issue
affecting the global economy. The International Labour
Organization alarmingly notes that work-related injuries
and diseases result in approximately 2.3 million fatalities
each year, with associated costs representing roughly
4% of the world's GDP. This grim statistic highlights the
persistent tension between economic advancement and
social welfare — a conflict that has become even more
pronounced in our current times due to the influences
of climate change, technological progression, and the
dominant focus on maximising shareholder value.
A series of research studies undertaken by experts from
the College of Business seeks to articulate a clear and
comprehensive story about the consequences that these
factors have on workplace safety.
The unintended consequences of green policies
As the world confronts climate change, governments are
implementing policies to mitigate its effects. However,
the intersection of environmental reform with social and
economic issues presents challenges in policy evaluation.
Our research team has looked into the consequences of climate regulations on workplace safety, recognising the
need to balance environmental and societal objectives.
Our working paper, "The Unseen Cost of Green
Policies: The Impact of Environmental Regulation on
Workplace Safety," authored by Ebenezer Effah, Yaxuan
Qi, and Rengong Zhang, reveals a paradox. While
environmental policies are vital for planetary well-being,
they may inadvertently introduce heightened risks to the
workforce.
Our empirical analysis focuses on three environmental
regulatory frameworks: the 2013 California Cap-and-Trade Program, the 1990 Clean Air Act Amendments,
and the staggered nonattainment designations of
counties under the National Ambient Air Quality
Standards. Our findings consistently indicate that
stringent environmental regulations correlate with an
uptick in safety violations for regulated firms.
This correlation is attributed to the financial strain
and operational changes required for environmental
compliance. Firms are prompted by policy to integrate
new technologies or revise processes to meet environmental standards.1 These adjustments, such as
installing pollution-control equipment or adopting cleaner
inputs, can inadvertently introduce new workplace
hazards as employees adapt to unfamiliar procedures or
machinery, potentially inflating safety violations.
Given that operational shifts necessitate significant
investment, financially constrained firms are more
prone to safety oversights during transitions to
stricter environmental standards. In contrast, firms
with ample resources can manage these changes
without compromising worker safety, suggesting that
financial support is vital for resource-limited entities
and developing nations to adopt sustainable practices
without undermining worker protection.
Another insight from our study is the influence of
stakeholder priorities concerning environmental versus
social issues on workplace safety. Using an index of
environmental concern derived from surveys and Google
search volume data on climate change as a barometer
of stakeholder interest, we observe a more pronounced
association between safety violations and environmental
regulatory rigour when stakeholder focus on climate
issues intensifies.
Our research adds to the discourse on policy-making
that aligns carbon reduction goals with social equity, contributing to the broader debate on corporate
Environmental, Social, and Governance (ESG)
performance. Workplace safety is a critical component of
the "social" dimension of corporate ESG performance.
While the ESG debate frequently addresses the full
spectrum of ESG concerns, there is limited discussion on
how these components interrelate. Our study addresses
this lacuna by shedding light on potential conflicts
between the "Environmental" and "Social" facets of ESG.
Stock market listing and its influence
on safety
The dichotomy of capital and labour is a foundational
tension within the fabric of modern capitalism, as
highlighted in Thomas Piketty's bestselling book Capital
in the Twenty-First Century. The stock market, a symbol
of capitalist enterprise, is renowned for its role in capital
accumulation and wealth generation. However, its
impact on a facet as critical as employee safety remains
underexplored.
Amid concerns over the stock market fostering a culture
of short-termism — where managerial focus may skew
towards immediate financial returns at the expense of long-term, socially beneficial initiatives — our
research team has probed the relationship between a
company's stock market listing and the safety of its
workplace.
Our paper, "Does Sunlight Kill Germs? Stock
Market Listing and Workplace Safety," by
Claire Liang, Yaxuan Qi, Rengong Zhang,
and Haoran Zhu published in the Journal of
Quantitative Financial Studies in June 2023,
leverages a unique dataset encompassing
injury and safety records from both publicly
traded and privately held firms. We
evaluate the impact of a stock market
listing on workplace safety by comparing
injury rates across similar private
and public entities. Through various
methodologies designed to mitigate
endogeneity issues, we present an
unexpected discovery: public companies,
on average, exhibit lower injury rates than
their private counterparts.
This surprising trend is attributed to the
heightened scrutiny and regulatory oversight
faced by public companies, which compels
them to foster safer working environments.
Public firms are subject to intensified examination
due to their increased visibility and susceptibility to
media coverage. Media outlets play a critical role in
disclosing work-related accidents, thereby informing
current and potential employees of risks. As a result,
public scrutiny appears to give public firms an edge over
private firms in terms of workplace safety.
This study underscores the pivotal role of media
attention in enhancing safety. This implies that public
exposure serves as a regulatory mechanism, steering
firms towards improved safety measures and compliance
with regulations. Our findings paint a picture of public
attention as a double-edged sword: while market
pressures for short-term performance may induce
myopic behavior in public companies, the balancing
force of media and regulatory oversight can contribute
to the betterment of employee welfare.
Automation: a double-edged sword
Automation has profoundly transformed workers' roles
within the production process and has significantly
restructured labour markets, sparking debates on the
potential of technology to obliterate jobs. Scholars have invested substantial efforts in deciphering and
forecasting the disruptions technology might pose
on labour markets. Yet, research focusing on how
technological advancements may influence workplace
safety is surprisingly sparse.
With automation reshaping production processes
and redefining the interaction between workers and
machines, its impact on safety becomes an area of
inevitable concern. Workers with lower skill levels are
particularly susceptible to the incursion of technology,
making safety a vital component of employee welfare.
As the technological landscape evolves, it is imperative
for regulators to advance their expertise and tools to
ensure compliance.
The GRF-funded study "Does Automation Make
Workplaces Safer?" by Xiaoli Hu, Yaxuan Qi, and Rengong Zhang, delves into the nuanced interplay
between human labour and machinery, aiming to
inform policymakers and the public about the critical
intersection of employee welfare and automation.
The burgeoning integration of robots and AI in
the workplace presents a dual-edged effect. Initial
impressions might suggest that automation leads to
safer working conditions, as robots can undertake
tasks that are physically demanding and perilous,
potentially sparing humans from such risks. However,
the introduction of robots may also jeopardise safety.
Automation reduces the significance of human labour in
the production chain, tipping the balance of bargaining
power in favour of capital. Firms may become less
inclined to allocate resources for safety measures if
workers are readily replaceable by machines. Moreover,
the shift towards automation necessitates that workers acquire new competencies and adjust to increasingly
complex job environments, which could lead to a rise
in injuries, particularly severe ones. Additionally, the
looming threat of being supplanted by machines may
induce mental stress among workers, contributing to a
higher incidence of accidents.
This intricate dynamic indicates that the repercussions
of automation on workplace safety are not
unidirectional and deserve thorough empirical scrutiny.
The investigation offers invaluable perspectives for
policymakers and the broader populace, underscoring
the urgency for modernised regulatory mechanisms to
confront the challenges posed by evolving technologies
in the labour market.
Toward a balanced regulatory framework
and public oversight
The collective insights from these studies point to
the necessity of an inclusive path to progress, one
that does not neglect the fundamental aspects of
workplace safety amid the pursuit of technological and
environmental advancements. These findings together
make a compelling case for an integrative regulatory
approach that champions environmental sustainability,
technological advancement, and worker protection.
This harmonised strategy is crucial for fostering a future
where economic growth and social welfare are not
conflicting aims but complementary forces. The role
of media visibility and public oversight is also critical.
These elements are fundamental in holding corporations
accountable and maintaining rigorous safety standards
in the workplace.
Navigating the path to sustainable development is a
multifaceted endeavour, but the research emerging from
CityU-CB provides clear guidance: adopting a holistic
and proactive approach is essential.
1 In fact, the Environmental Protection Agency (EPA) offers guidance to
encourage companies to embrace innovative technologies for environmental
protection. For illustrative information, please refer to the Clean Air
Technology Center Products page:
https://www.epa.gov/catc/clean-airtechnology-
center-products#factsheets
