A Review of Compliance with Health and Safety Regulations and Economic Performance in Small and Medium Construction Enterprises

Small and medium enterprises (SMEs) constitute over 90% of construction businesses and are vital to construction industry operation. Health and safety regulations in the UK compel all organisations, regardless of their nature or size to comply with health and safety rules. However, there is evidence that the risk of suffering an occupational accident in SMEs is higher compared to large enterprises. For every 100,000 workers in the European Union SME sector there are more than 4100 accidents involving over three days absence; while the same rate is 3088 in large firms. In terms of cost, SMEs spend more to remedy (considering costs of rectification work, fines, prosecutions and sentences) adverse health and safety incidents. Fundamentally, the high cost of human capital and the destabilising effects of health and safety make the financial performance of SMEs exposed to greater uncertainties and risks. Indeed SME financial performance is often worse than for large firms. Various attempts by previous research work to substantiate the relationship between compliance with safety and financial performance of SMEs seems elusive. The research question is; does compliance with health and safety enhance SME financial performance? It is argued that SME commitment to health and safety spins off into many aspects of business performance and thus they simultaneously also benefit from better profitability. The paper is based on a literature review and an appraisal of HSE prosecutions in the period 2007 2011. It is a supplementary study and part of an ongoing PhD that seeks to appraise the effects of investment in health and safety in the UK construction industry.