Nationally, we are seeing how labor shortages increase risk in the workplace and its effect on the workers’ compensation industry.
By Chris Sullivan, Director of Risk Management and Jean Eydelman, Senior Risk Manager
The pandemic caused a major shift in America’s labor force, leading to a period known as “The Great Resignation.” In 2021, millions of workers quit their jobs, many of whom were searching for an improved work-life balance, flexibility, increased compensation, and strong company culture. So how does this affect workers’ compensation insurance?
An understaffed workplace means the remaining employees may need to work more shifts, work longer hours, and end their days exhausted which inevitably leads to burnout. Additionally, businesses may find the need to hire inexperienced employees or temporary workers to fill in the gaps quickly to keep production moving. This can lead to an increase in workers’ compensation claims due to:
- Overloaded and exhausted workers are more prone to workplace accidents, including vehicle accidents.
- Errors leading to injuries are made at a higher rate by undertrained employees.
- Skipping certain safety protocols due to time constraints.
- Rushing to fill positions and cutting corners to save time can lead to increased injuries
Currently, there are niche industries where workers are truly in short supply, and these industries found those where employers paid higher wages but haven’t attracted enough new workers. Several are:
- Specialized long-haul truckers – Textile mills
- Movers – Sawmills
- Specialty finishing contractors – Healthcare Professionals
- Manufacturing – Retail
With workers’ compensation premiums tied to loss experience (EMR), fewer work-related injuries would mean lower premiums which is good for the bottom line. Unfortunately, shortage in labor force creates an adverse exposure to risk and lowers employees’ morale with overburdening workloads. Inadequately trained staff, longer shifts, and fatigue could lead to increased claims frequency and severity.
So, what can your business do?
5 tips for attracting new employees and keeping your current staff:
- Offer competitive pay rates to potential employees.
- Increase your employee benefits package with a customized policy.
- Provide incentives for existing employees.
- Limit business hours so your staff is not overworked.
- Schedule check-ins and reviews with employees to ensure communication and employee satisfaction
5 tips to decrease business liability risks caused by the labor shortage:
- Ensure effective and thorough employee onboarding practices.
- Provide adequate safety training for new employees.
- Review training and safety procedures consistently.
- Stay connected with SUNZ Risk Management for additional safety training resources.
- Adjust your company human capital retention goals and continue to build effective safety culture.
The trends this year continue to lean towards a return to the office, yet most national surveys reveal that 3 out of 10 workers suggested that if required to come back to the office every day, they’ll move on to another company. As we continue to see labor shortages in some key industries, many more younger workers will inevitably need to replace the seasoned workers retiring. These combined factors impact every business differently so taking precautions with managing your risk continues to be a top priority for SUNZ Insurance Company.