Defining Social Responsibility to the Community: Occupational Safety and Health

Posted by: Dr. Richard Rinehart, Certified Industrial Hygienist

Policies and activities that demonstrate microfinance institutions' social responsibility to the community can take many forms. In this guest post, Dr. Richard Rinehart -- a Certified Industrial Hygienist based in Egypt who has worked for the US National Institute for Occupational Safety and Health, the International Labor Organization, and the International Finance Corporation among other organizations -- presents examples of occupational safety and health threats commonly faced by microentrepreneurs in the developing world. What role, he asks, might the microfinance industry play in mitigating the negative impact of these risks on clients and the community at large?

Consider the following scenarios:

(1) A microfinance institution (MFI) client who owns a small grocery shop used a loan to buy a locally made coconut grinder that consists of a powerful electric motor with a mango-size bit that spins very fast. The machine efficiently removes coconut meat from half-shells. Her daughter, who used the machine daily, badly cut her hand because it slipped off a coconut shell and there were no safety guards to protect her from the fast moving part.

(2) Another MFI client who makes wooden boxes used a loan to purchase a spray system to apply a finish on his products to darken the wood, protect them from moisture, and kill insects. The spray system greatly increased the amount of parts he could finish per day. However, he also wet his hands with the chemical spray daily and it contained coal tar, a human carcinogen that is readily absorbed through the skin.

In the two cases above, the MFI loans were used to increase productivity and they probably helped the enterprises financially, at least in the short-term.

But from the perspective of social benefits, did the loans have a long-term positive impact on the enterprises’ workers or the communities in which they operated?

Scenario 1 represents an occupational safety hazard that resulted in an injury to a worker. It likely caused significant interruption to normal business activity when it occurred, and it also cost the owner money in medical treatment and reduced the availability of help to run her business. Yet the injury could have been prevented if a simple device was available for the machine to hold the coconut shells and keep fingers away from the spinning grinder.

Scenario 2 is an example of an occupational health hazard that may lead to cancer in the worker 10 or 20 years in the future. In this case, the risk of dermal (skin) exposure could have been reduced by wearing gloves, using a jig to hold the parts while being sprayed or, better yet, using a less toxic substitute for coal tar.

Occupational safety and health hazards are prevalent in micro and small enterprises and the informal economy. The literature, both scientific and otherwise, is filled with examples of problems in almost every small-scale sector or occupation, most of which could be prevented easily with a little extra information. Many of the most common work-related hazards can be reduced with simple, low-cost, locally available solutions. There are training programs and materials available to better inform local entrepreneurs and the organizations working with them. Some of the programs make explicit links between productivity and safer working conditions.

This reality of unsafe working conditions among MFI clients leads to the following questions:

• Can loan officers or other MFI staff members play a role in the dissemination of good practices in occupational safety and health to their clients in an efficient and effective way?

• If so, should social performance rating systems being developed for MFIs include specific indicators related to occupational safety and health to drive the demand for this type of interaction?

To further discuss these ideas, please contribute your thoughts to this blog.

Comments

[Craig Churchill]

Thanks for this interesting discussion. I hadn't thought about the possibilities that MFIs could be increasing their borrowers vulnerability to OSH risks through the loans, so raising awareness among loan officers is certainly important. I also think that loan officers can incrementally improve the working conditions in the businesses by encouraging clients to use safety equipment, improve lighting, etc. The fact sheets that a.pater mentioned, and the Wise tools Salter mentioned, sound like useful resources for MFIs to incorporate into their loan officer training courses. Should access to subsequent loans be conditional on making specific OSH improvements?

Regarding microinsurance, I would be very interested in seeing examples of coverage that include the workers in informal businesses. Usually microinsurance that is channeled through MFIs to their clients only covers the borrower, and sometimes family members, but I haven't come across examples of coverage for the workers in microenterprises who are not family. The ILO's Microinsurance Innnovation Facility supports the development of better insurance products for more low-income people, and we would be interested in receiving project proposals from folks who have some new ideas. The deadline for submitting proposals is 2 March -- find the application guidelines and the link to the online application through our website: www.ilo.org/microinsurance

[alberic pater]

Our experience with this theme tells us that most MFIs are interested in stimulating their clients to adopt safe working standards. However, how can MFIs identify risks and offer suggestions for improvements?

We have developed a toolkit for MFIs that contains 40 sector fact sheets, showing the major environmental as well as health & safety risks associated with particular sectors. Moreover, these fact sheets enable loan officers do give concrete suggestions for improvement.

These fact sheets are freely available. If you are interested, please get in touch: a.pater[at]triodosfacet.nl

[Bill Salter]

Richard raises important questions. MFIs should be aware of their social responsibilities, but it may be most practical for them to see this as part of their business interests. It isn't good business if clients are injured or become ill, and I'm sure that MFIs are aware of this. It may be less obvious to them what they can do about it, since nobody will expect them to become OSH experts. Making available simple, practical materials that will help micro-entrepreneurs to be both productive and safe (eg like ILO's WISE materials)is one practical step they could take, while encouraging mutual support networks of microentrepreneur clients that could, amongst other things, give attention to OSH concerns, may be another. We would start to see action in these areas, I think, once labour administrations begin to take a more developmental approach that reaches out beyond the formal economy.

[Katherine Oglietti]

Health and safety in the workplace is a theme that is rarely addressed in Latin America and the Caribbean. It has been ignored not only by MFIs but also by governments, which stems from a lack of policies concerning the integrated social security of vulnerable populations. In our case, microentrepreneurs lack integrated support, in terms of safety in their economic activities. This theme merits an urgent and rapid intervention, not only since their physical health is being compromised and microentrepreneurs are being put at risk (and let's not forget the psychological affects), but also because entrepreneurs contribute significantly to the regional and national economies. This theme has caused a large amount of concern, and I would be happy if a network was formed of those in favor of supporting microentrepreneurs and who would work towards guaranteeing their health (physical and mental), which in turn contributes to improving their development as microentrepreneurs and as major contributors to local economies.

*This comment was posted by Clara Elena Piedrahita Patiñoin in Spanish on the Spanish blog. The original can be found at: http://www.espanol.spblog.org/2009/12/definir-la-responsabilidad-social-hacia-la-comunidad-salud-y-seguridad-en-el-trabajo.html

[hasan jamil]

i would like to emphasize on Rania's comment,in addition,OSH and SPM are integrated to achief MFI social responsibilities towards clients and at the same time help the institution to develop new financial and non-financial services to community and clients such as micro-insurance services,taking in consideration that MFI mission and Goals,information system,operational policies and procedures,staff training,clients training,partnership with governmental institution like (vocational Training center,follow up system and incentive system for both staff and clients must be developed and reviewed,ultimately,an MFIs might achieve its double bottom line using OSH in its social goals and objectives

[Ranya Abdel-Baki]

I would like to comment on the two questions that Richard has raised. First, I do belieeve that loan officers (backed by management) can play a role in the dissemination of good practices in occupational safety and health to their clients. I believe it may be important to start off with collecting information on different micro-businesses that the MFI lends to and the health and occupational hazards they may be facing (i.e. through the loan application). That would help MFIs develop some basic health and safety information they can share with the owners of these microenterprises. Moreover, this information could also provide a good database for MFIs that provide micro-insurance or who are contemplating providing this financial service.

There is certainly a role for social performance rating systems in pushing frth for this agenda within MFIs, but also amongst the donor community and SPM specialists who would ensure that OSH is integrated into the SPM tools that are currently being developed so that such interaction is streamlined within MFIs' operations.