Managing health and safety:health survey-4

Step 4: Measure your performance

Just like finance, production or sales, you need to measure your health and safety performance to find out if you are being successful. You need to know:
■where you are;
■where you want to be;
■what is the difference and why.

Active monitoring, before things go wrong, involves regular inspection and checking to ensure that your standards are being implemented and management controls are working.
Reactive monitoring, after things go wrong, involves learning from your mistakes, whether they have resulted in injuries and illness, property damage or near misses.
Two key components of monitoring systems

■Active monitoring (before things go wrong). Are you achieving the objectives and standards you set yourself and are they effective?

■Reactive monitoring (after things go wrong). Investigating injuries, cases of illness, property damage and near misses identifying in each case why performance was substandard.

You need to ensure that information from active and reactive monitoring is used to identify situations that create risks, and do something about them.
Priority should be given where risks are greatest. Look closely at serious events and those with potential for serious harm.
Both require an understanding of the immediate and the underlying causes of events. Investigate and record what happened find out why.

Ask yourself

1.Do you know how well you perform in health and safety?
2 How do you know if you are meeting your own objectives and standards for health and safety? Are your controls for risks good enough?
3 How do you know you are complying with the health and safety laws that affect your business?
4 Do your accident investigations get to all the underlying causes or do they stop when you find the first person who has made a mistake?
5 Do you have accurate records of injuries, ill health and accidental loss?

Step 5: Learn from experience audit and review

Monitoring provides the information to let you review activities and decide how to improve performance. Audits, by your own staff or outsiders, complement monitoring activities by looking to see if your policy, organisation and systems are actually achieving the right results.  They tell you about the reliability and effectiveness of your systems.

Learn from your experiences. Combine the results from measuring performance with information from audits to improve your approach to health and safety management.

Review the effectiveness of your health and safety policy, paying particular attention to:

■the degree of compliance with health and safety performance standards (including legislation);
■areas where standards are absent or inadequate;
■achievement of stated objectives within given timescales;
■injury, illness and incident data analyses of immediate and underlying causes, trends and common features.
These indicators will show you where you need to improve.

Ask yourself:

1 How do you learn from your mistakes and your successes?
2 Do you carry out health and safety audits?
3 What action is taken on audit findings?
4 Do the audits involve staff at all levels?
5 When did you last review your policy and performance?

Read more »

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Managing health and safety:health survey-3

Step 3: Plan and set standards

    Planning is the key to ensuring that your health and safety efforts really work. Planning for health and safety involves setting objectives, identifying hazards, assessing risks, implementing standards of performance and developing a positive culture. It is often useful to record your plans in writing.

Your planning should provide for:
■identifying hazards and assessing risks, and deciding how they can be eliminated or controlled;
■complying with the health and safety laws that apply to your business;
■agreeing health and safety targets with managers and supervisors;
■a purchasing and supply policy which takes health and safety into account;
■design of tasks, processes, equipment, products and services, safe systems of work;
■procedures to deal with serious and imminent danger;
■cooperation with neighbours, and/or subcontractors;
■setting standards against which performance can be measured.

Standards help to build a positive culture and control risks. They set out what people in your organisation will do to deliver your policy and control risk. They should identify who does what, when and with what result. Three key points about standards
Standards must be:
■measurable;
■achievable;
■realistic.

Statements such as 'staff must be trained' are difficult to measure if you don't know exactly what 'trained' means and who is to do the work. 'All machines will be guarded' is difficult to achieve if there is no measure of the adequacy of the guarding.
Many industrybased standards already exist and you can adopt them where applicable. In other cases you will have to take advice and set your own, preferably referring to numbers, quantities and levels which are seen to be realistic and can be checked.
For example:
■completing risk assessments and implementing the controls required;
■maintaining workshop temperatures within a specified range;
■specifying levels of waste, effluent or emissions that are acceptable;
■specifying methods and frequency for checking guards on machines, ergonomic design criteria for tasks and workstations, levels of training;
■arranging to consult staff or their representatives at set intervals;
■monitoring performance in particular ways at set times.

Ask yourself:

1 Do you have a health and safety plan?
2 Is health and safety always considered before any new work is started?
3 Have you identified hazards and assessed risks to your own staff and the public, and set standards for premises, plant, substances, procedures, people and products?
4 Do you have a plan to deal with serious or imminent danger, eg fires, process deviations etc?
5 Are the standards put in place and risks effectively controlled?

Read more »

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Managing health and safety:health survey-2

Step 1 :Set your policy

             The events that cause injuries and illness can also lead to property damage and interrupt production so you must aim to control all accidental loss.

Identifying hazards and assessing risks,* deciding what precautions are needed, putting them in place and checking they are used, protects people, develops quality, and safeguards plant and production.

Your health and safety policy should influence all your activities, including the selection of people, equipment and materials, the way work is done and how you design and provide goods and services. A written statement of your policy and the organization and arrangements for implementing and monitoring it shows your staff, and anyone else, that hazards have been identified and risks assessed,eliminated or controlled.

*A hazard is something with potential to cause harm. The harm will vary in severity, some hazards may cause death, some serious illness or disability. Risk is the combination of the severity of harm with the likelihood of it happening.

Ask yourself:

1 Do you have a clear policy for health and safety; is it written down?

2 What did you achieve in health and safety last year?

3 How much are you spending on health and safety and are you getting value for money?
4 How much money are you losing by not managing health and safety?
5 Does your policy prevent injuries, reduce losses and really affect the way you work?

Be honest!

Step 2: Organise your staff

For making your health and safety policy effective you need to get your staff involved and committed. This is often referred to as a 'positive health and safety culture'.

The four 'Cs' of positive health and safety culture

1 Competence: recruitment, training and advisory support.

2 Control: allocating responsibilities, securing commitment, instruction and supervision. 

3 Cooperation: between individuals and groups.
4 Communication: spoken, written and visible.

Competence:

■Assess the skills needed to execute all tasks safely.

■Provide the ways to ensure that all employees, including your managers, supervisors and temporary staff, are adequately instructed and trained.

■Ensure that people doing especially dangerous work have the necessary training, experience and other qualities to carry out the work safely.

■Arrange for access to sound advice and help.

■Carry out restructuring or reorganisation to ensure the competence of those taking on new health and safety responsibilities.

Control:

■ Lead by example: demonstrate your commitment and provide clear direction let everyone know health and safety is important.

■Identify people responsible for particular health and safety jobs especially where special expertise is called for, eg (doing risk assessments, driving forklift trucks.)

■Ensure that managers, supervisors and team leaders understand their responsibilities and have the time and resources to carry them out.

■Ensure everyone knows what they must do and how they will be held accountable set objectives.

Cooperation:

■Chair your health and safety committee if you have one. Consult your staff and their representatives.

■Involve staff in planning and reviewing performance, writing procedures and solving problems.

■Coordinate and cooperate with those contractors who work on your premises.

Communication:

■Provide information about hazards, risks and preventive measures to employees and contractors working on your premises.

■Discuss health and safety regularly.

■Be 'visible' on health and safety.

Ask yourself:

1 Have you allocated responsibilities for health and safety to specific people are they clear on what they have to do and are they held accountable?
2 Do you consult and involve your staff and their representatives effectively?
3 Do your staff have sufficient information about the risks they run and the

preventive measures?
4 Do you have the right levels of expertise? Are your people properly trained?
5 Do you need specialist advice from outside and have you arranged to obtain it?

Read more »

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Managing health and safety:health survey-1

Five steps to success

This booklet summarises the key messages of Successful health and safety management  which retains the well received framework for managing health and safety set out in earlier editions, as well as providing improved guidance on:

1. planning for health and safety;
2. accident and incident investigation;
3. health and safety auditing.

This booklet also explains what is involved in good management of health and safety and the cost of getting it wrong.
It is aimed at directors and managers and should also help supervisors, owners of small firms, employee representatives, insurance companies, trade associations and other key players.
Many of the messages will be of interest to small and medium sized firms, who will find further information in Essentials of health and safetya twork and Five steps to riskassessment see page 11 for details.

Why manage health and safety?

Every working day in Great Britain at least one person is killed and over 6000 are injured at work.
Every year three quarters of a million people take time off work because of what they regard as workrelated illness. About 30 million work days are lost as a result.

Accidents and ill health are costly to workers and their families. They can also hurt companies because, in addition to the costs of personal injuries, they may incur far greater costs from damage to property or equipment, and lost production.

With very few exceptions, employers have to have liability insurance cover for injuries and ill health to their employees.

They will also have insurance for accidents involving vehicles and possibly third party and buildings insurance.
However, insurance policies only cover a small proportion of the costs of accidents. Costs not covered by insurance can include:

• sick-pay;
• damage or loss of product and raw materials;
• repairs to plant and equipment;  
• overtime working and temporary labour;
• production delays;
• investigation time;
• fines.

HSE studies have found that uninsured costs outweigh those covered by insurance policies.
In a wide range of business sizes and activities, the total uninsured losses from daytoday accidents ranged from twice up to 36 times the total paid in insurance premiums in the same year; the average was around ten times the amount paid in premiums.

So in some cases, you could think of accident costs like an iceberg, with the majority of the losses uninsured and hidden below the water line.

Directors and managers can be held personally responsible for failures to control health and safety. Can you afford such failures? Do you really manage health and safety?

This bookletshows you how. It lists five steps to success.
You will have fewer stoppages, higher output, and better quality. By complying with the law and avoiding fines you will avoid damaging publicity.

You cannot be a 'quality' organisation unless you apply sound management principles to health and safety.
Inspectors visiting your workplace will want to know how you manage health and safety.

If an accident occurs, you, your systems, procedures, and employees will come under scrutiny. Will they stand up to examination? Read about the five steps and ask yourself the five questions after each one. Get your managers and staff to discuss them.

Read more »

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Attitudes to Mental Illness - 2011 survey report:part 3

Causes of mental illness and the need for special services

Introduction

This section reports on statements about the causes of mental illness and the need for
special services.
The statements reported here are:

1.  ‘There are sufficient existing services for people with mental illness’
2.  ‘One of the main causes of mental illness is a lack of self-discipline and will-power’
3.  ‘There is something about people with mental illness that makes it easy to tell them from normal people’.

Analysis is based on the level of agreement with these statements, which have been included in all surveys since 1994.

Trends over time

Figure 10 shows levels of agreement with these statements since 1994.

 

Since 1994, the percentage agreeing that there are sufficient existing services for people with mental illness has increased from 11% in 1994 to 24% in 2011, although there has been no significant change since 2009.
The percentage agreeing that ‘there is something about people with mental illness that makes it easy to tell them from normal people’ decreased from 29% in 1994 to 22% in 2011, although again there has been no significant change since 2009.
Agreement that one of the main causes of mental illness is a lack of self-discipline and willpower stands at 16% in 2011, not significantly different from the 1994 figure of 15%, and again with no significant change since 2009.

Differences by age and sex

Differences in agreement by age group are shown in Figure 11.

 The youngest age group (16-34s) had the most negative attitudes towards mental illness, being more likely than the 35-54 and 55+ groups to agree that there are sufficient existing services, and more likely than the 35-54s to agree that there is something about people with mental illness that makes it easy to tell them from normal people.
Significant differences by gender are shown in Figure 12.

 Women again held more positive views towards people with mental illness, being less likely
than men to agree with these three statements.

Read more »

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Attitudes to Mental Illness - 2011 survey report:part 2

Understanding and tolerance of mental illness

Introduction

This section explores understanding and tolerance of mental illness. These statements have all been included in each survey since 1994.

Analysis in this section focuses on the understanding/tolerance dimension of each statement.

For some statements this is the percentage agreeing, for others it is the percentage disagreeing. This is indicated for each statement in the list below.

The statements included are:

1.  ‘We have a responsibility to provide the best possible care for people with mental illness’ (% agreeing)
2.  ‘Virtually anyone can become mentally ill’ (% agreeing)
3.  ‘Increased spending on mental health services is a waste of money’ (% disagreeing)
4.  ‘People with mental illness don't deserve our sympathy’ (% disagreeing)
5.  ‘We need to adopt a far more tolerant attitude toward people with mental illness in our society’ (%agreeing) ‘People with mental illness have for too long been the subject of ridicule’ (% agreeing) ‘As far as possible, mental health services should be provided through community based facilities’ (% agreeing) 

Trends over time

Levels of understanding and tolerance of mental illness were generally high.

The percentage of respondents with understanding attitudes on these statements ranged in 2011 from 74% for ‘As far as possible, mental health services should be provided through community-based facilities’ to 91% for ‘We have a responsibility to provide the best possible care’ and ‘Virtually anyone can become mentally ill’ (Figure 4).

 Since 1994, the percentage of respondents voicing more tolerant opinions on several of these statements has decreased.

For example, the percentage disagreeing that ‘Increased spending on mental health services is a waste of money’ also fell, from 89% in 1994 to 82% in 2011. 

Agreement that ‘We need to adopt a more tolerant attitude towards people with mental illness’ fell from 92% in 1994 to 86% in 2011.
There has been a significant change in attitudes between 2010 and 2011 in two statements in this section – the percentage disagreeing with ‘Increased spending on mental health services is a waste of money’ fell from 87% in 2010 to 82% in 2011 (reversing a similar increase between 2009 and 2010), and the percentage agreeing that ‘As far as possible, mental health services should be provided through community-based facilities’ fell from 79% in 2010 to 74% in 2011

Read more »

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Attitudes to Mental Illness - 2011 survey report

Attitudes to mental illness

Grouping the statements

The 27 attitude statements are grouped into four categories for analysis purposes:

1. Fear and exclusion of people with mental illness

2. Understanding and tolerance of mental illness

3. Integrating people with mental illness into the community

4. Causes of mental illness and the need for special services.

Fear and exclusion of people with mental illness

Introduction

This section explores fear and exclusion of people with mental illness. These statements have all been included in each wave of the survey since 1994.

The statements covered in this section are:

• ‘Locating mental health facilities in a residential area downgrades the neighbourhood’

• ‘It is frightening to think of people with mental problems living in residential

neighbourhoods’

• ‘I would not want to live next door to someone who has been mentally ill’

• ‘A woman would be foolish to marry a man who has suffered from mental illness, even

though he seems fully recovered’

• ‘Anyone with a history of mental problems should be excluded from taking public office’

• ‘People with mental illness should not be given any responsibility’

• ‘People with mental illness are a burden on society’

• ‘As soon as a person shows signs of mental disturbance, he should be hospitalized’

The statements in this section all portray less favourable or ‘negative’ attitudes towards

people with mental illness. Analysis in this section focuses on the percentage of respondents

agreeing with each of these statements (that is, displaying a negative attitude).

Trends over time

Figure 1 shows the levels of agreement with these statements from 1994 to 2011.

Overall, the levels of agreement with these negative statements about people with mental

illness were low, ranging in 2011 from 6% to 21%. 

The highest levels of agreement in 2011 were with the statements ‘Anyone with a history of mental illness should be excluded from taking public office’ (21%) and ‘As soon as a person shows signs of mental disturbance, he should be hospitalized’ (21%).

The percentage of people saying that locating mental health facilities in a residential area downgrades the neighbourhood stood at 17% in 2011. (Figure1).

Data source:

Table 1

Levels of agreement with several of these statements have fallen since 1994. Acceptance of people with mental illness taking public office and being give responsibility has grown – the percentage agreeing that ‘Anyone with a history of mental problems should be excluded from taking public office’ decreased from 29% in 1994 to 21% in 2011, while the percentage agreeing that ‘People with mental illness should not be given any responsibility’ decreased from 17% to 13% over the same period. There were no significant changes in levels of agreement with these statements between 2010 and 2011.

Differences by age and sex

Looking at the three age groups 16-34, 35-54 and 55+, there were significant differences by age group in agreement with several of these statements in 2011 (Figure 2). Statements from this section where there were no significant differences by age group are not shown on the chart.

                                              

In general the oldest group (age 55+) had the most negative attitudes towards people with mental illness, being significantly more likely than younger groups to agree that a woman would be foolish to marry a man who has suffered from mental illness.

 Those aged 55+ and 35-54 were more likely than the youngest group to agree that anyone with a history of mental illness should be excluded from public office.

Those aged 16-34 were more likely than the older groups to agree that as soon as a person

shows signs of mental disturbance, he should be hospitalised.

Statements in this section where there was a significant difference in 2011 between men andwomen in the percentage agreeing are shown in Figure 3.

Where there was a difference between men and women, women were less negative towardspeople with mental illness.

Read more »

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Survey Form(sample): Health Survey

Instructions for completing the questionnaire:

Please answer every question. Some questions may look like others, but each one is different.

Please take the time to read and answer each question carefully by filling in the bubble that best represents

your response.

Patient Name: _____________________________________________________________

SSN#:________________________________________Date:________________________________

Person helping to complete this form: ___________________________________________________

1. In general, would you say your health is:

•  Excellent
•  Very good
•  Good
•  Fair
•  Poor

2. Compared to one year ago, how would you rate your health in general now?

•  Much better now than a year ago
•  Somewhat better now than a year ago
•  About the same as one year ago
•  Somewhat worse now than one year ago
•  Much worse now than one year ago

3. The following items are about activities you might do during a typical day. Does your health now limit you in these activities? If so, how much?

a. Vigorous activities, such as running, lifting heavy objects, participating in strenuous sports.

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

b. Moderate activities, such as moving a table, pushing a vacuum cleaner, bowling, or playing golf?

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

c. Lifting or carrying groceries.

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

d. Climbing several flights of stairs.

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

e. Climbing one flight of stairs.

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

f. Bending, kneeling or stooping.

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

g. Walking more than one mile.

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

h. Walking several blocks.

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

i. Walking one block.

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

j. Bathing or dressing yourself.

•  Yes, limited a lot.
•  Yes, limited a little.
•  No, not limited at all.

4. During the past 4 weeks, have you had any of the following problems with your work or other regular daily activities as a result of your physical health?

a. Cut down the amount of time you spent on work or other activities?

    Yes  No

b. Accomplished less than you would like?

    Yes  No

c. Were limited in the kind of work or other activities

    Yes  No

d. Had difficulty performing the work or other activities (for example, it took extra time)

    Yes  No

5. During the past 4 weeks, have you had any of the following problems with your work or other regular daily activities as a result of any emotional problems (such as feeling depressed or anxious)?

a. Cut down the amount of time you spent on work or other activities?

     Yes  No

b. Accomplished less than you would like

     Yes  No

c. Didn't do work or other activities as carefully as usual

     Yes  No

6. During the past 4 weeks, to what extent has your physical health or emotional problems interfered with your normal social activities with family, friends, neighbors, or groups?

•  Not at all
•  Slightly
•  Moderately
•  Quite a bit
•  Extremely

7. How much bodily pain have you had during the past 4 weeks?

•  Not at all
•  Slightly
•  Moderately
•  Quite a bit
•  Extremely

8. During the past 4 weeks, how much did pain interfere with your normal work (including both work outside the home and housework)?

•  Not at all
•  Slightly
•  Moderately
•  Quite a bit
•  Extremely

9. These questions are about how you feel and how things have been with you during the past 4 weeks. For each question,

please give the one answer that comes closest to the way you have been feeling. How much of the time during the past 4 weeks.

a. did you feel full of pep?

•  All of the time
•  Most of the time
•  A good bit of the time
•  Some of the time
•  A little of the time
•  None of the time

b. have you been a very nervous person?

•  All of the time
•  Most of the time
•  A good bit of the time
•  Some of the time
•  A little of the time
•  None of the time

c. have you felt so down in the dumps nothing could cheer you up?

•  All of the time
•  Most of the time
•  A good bit of the time
•  Some of the time
•  A little of the time
•  None of the time

d. have you felt calm and peaceful?

•  All of the time
•  Most of the time
•  A good bit of the time
•  Some of the time
•  A little of the time
•  None of the time

e. did you have a lot of energy?

•  All of the time
•  Most of the time
•  A good bit of the time
•  Some of the time
•  A little of the time
•  None of the time

f. have you felt downhearted and blue?

•  All of the time
•  Most of the time
•  A good bit of the time
•  Some of the time
•  A little of the time
•  None of the time

g. did you feel worn out?

•  All of the time
•  Most of the time
•  A good bit of the time
•  Some of the time
•  A little of the time
•  None of the time

h. have you been a happy person?

•  All of the time
•  Most of the time
•  A good bit of the time
•  Some of the time
•  A little of the time
•  None of the time

i. did you feel tired?

•  All of the time
•  Most of the time
•  A good bit of the time
•  Some of the time
•  A little of the time
•  None of the time

10. During the past 4 weeks, how much of the time has your physical health or emotional problems interfered with your social activities (like visiting friends, relatives, etc.)?

•  All of the time
•  Most of the time
•  Some of the time
•  A little of the time
•  None of the time

11. How TRUE or FALSE is each of the following statements for you?

a. I seem to get sick a little easier than other people

•  Definitely true
•  Mostly true
•  Don't know
•  Mostly false
•  Definitely false

b. I am as healthy as anybody I know

•  Definitely true
•  Mostly true
•  Don't know
•  Mostly false
•  Definitely false

c. I expect my health to get worse

•  Definitely true
•  Mostly true
•  Don't know
•  Mostly false
•  Definitely false

d. My health is excellent

•  Definitely true
•  Mostly true
•  Don't know
•  Mostly false
•  Definitely false

Read more »

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Global Competitiveness:part 6

Eleventh pillar: Business sophistication

                   Business sophistication is conducive to higher efficiency

in the production of goods and services.

This leads, in turn, to increased productivity, thus enhancing a nation’s

competitiveness.

Business sophistication concerns the

quality of a country’s overall business networks as well as

the quality of individual firms’ operations and strategies.

This is particularly important for countries at an

advanced stage of development,

when the more basic sources of productivity improvements have been exhausted

to a large extent.

The quality of a country’s business

networks and supporting industries, as measured by the

quantity and quality of local suppliers and the extent of

their interaction, is important for a variety of reasons.

When companies and suppliers from a particular sector

are interconnected in geographically proximate groups

(“clusters”), efficiency is heightened, greater opportunities

for innovation are created, and barriers to entry for new

firms are reduced.

Individual firms’ operations and strategies

(branding, marketing, the presence of a value chain,

and the production of unique and sophisticated products)

all lead to sophisticated and modern business processes.

Twelfth pillar: Innovation

              The final pillar of competitiveness is technological innovation.

Although substantial gains can be obtained by

improving institutions, building infrastructure, reducing

macroeconomic instability, or improving human capital,

all these factors eventually seem to run into diminishing

returns.

In the long run, standards of living can be enhanced only by technological innovation.

Innovation is particularly important for economies

as they approach the frontiers of knowledge and the

possibility of integrating and adapting exogenous technologies

tends to disappear.

Although less-advanced countries can still improve

their productivity by adopting existing technologies or

making incremental improvements in other areas, for

those that have reached the innovation stage of development,

this is no longer sufficient for increasing productivity.

Firms in these countries must design and develop

cutting-edge products and processes to maintain a competitive

edge.

 This requires an environment that is conducive

to innovative activity, supported by both the

public and the private sectors. In particular, it means sufficient

investment in research and development (R&D),

especially by the private sector; the presence of highquality

scientific research institutions; extensive collaboration

in research between universities and industry; and

the protection of intellectual property.

 Amid the present

economic uncertainty, it will be important to resist pressures

to cut back on R&D spending—both at the private

and public levels—that will be so critical for sustainable

growth going into the future.

The interrelation of the 12 pillars

While we report the results of the 12 pillars of competitiveness

separately, it is important to keep in mind that

they are not independent: they tend to reinforce each

other, and a weakness in one area often has a negative

impact on other areas.

For example, innovation (pillar 12)

will be very difficult without a well-educated and trained

workforce (pillars 4 and 5) that are adept at absorbing

new technologies (pillar 9), and without sufficient

financing (pillar 8) for R&D or an efficient goods market

that makes it possible to take new innovations to

market (pillar 6). 

Read more »

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Global Competitiveness:part 5

Eighth pillar: Financial market development

                  The recent financial crisis has highlighted the central

role of a sound and well-functioning financial sector for

economic activities.

 An efficient financial sector allocates

the resources saved by a nation’s citizens, as well as those

entering the economy from abroad, to their most productive

uses.

 It channels resources to those entrepreneurial

or investment projects with the highest expected rates

of return rather than to the politically connected.

 A thorough and proper assessment of risk is therefore a

key ingredient.

 Business investment is critical to productivity.

Therefore economies require sophisticated financial

markets that can make capital available for private-sector

investment from such sources as loans from a sound

banking sector,

 properly regulated securities exchanges,

venture capital, and other financial products.

 The importance of such access to capital was recently underscored

by the liquidity crunch experienced by businesses and

the public sector in both developing and developed

countries.

 In order to fulfill all those functions, the

banking sector needs to be trustworthy and transparent,

and—as has been made so clear recently—financial

markets need appropriate regulation to protect investors

and other actors in the economy at large.

Ninth pillar: Technological readiness

             In today’s globalized world, technology has increasingly

become an important element for firms to compete

and prosper.

 The technological readiness pillar measures

the agility with which an economy adopts existing technologies

to enhance the productivity of its industries,

with specific emphasis on its capacity to fully leverage

information and communication technologies (ICT) in

daily activities and production processes for increased

efficiency and competitiveness.ICT has evolved into

the “general purpose technology” of our time,

given the critical spillovers to the other economic sectors and

their role as industry-wide enabling infrastructure.

Therefore ICT access and usage are key enablers of

countries’ overall technological readiness.

Whether the technology used has or has not been

developed within national borders is irrelevant for its ability

to enhance productivity.

 The central point is that the

firms operating in the country have access to advanced

products and blueprints and the ability to use them.

Among the main sources of foreign technology, FDI often

plays a key role.

 It is important to note that, in this context,

the level of technology available to firms in a country

needs to be distinguished from the country’s ability to

innovate and expand the frontiers of knowledge.

 That is why we separate technological readiness from innovation,

which is captured in the 12th pillar below.

Tenth pillar: Market size

             The size of the market affects productivity since large

markets allow firms to exploit economies of scale.

Traditionally, the markets available to firms have been

constrained by national borders.

 In the era of globalization,

international markets have become a substitute for

domestic markets, especially for small countries.

 There is vast empirical evidence showing that trade openness is

positively associated with growth.

 Even if some recent research casts doubts on the robustness of this relationship,

the general sense is that trade has a positive effect

on growth, especially for countries with small domestic

markets.

Thus exports can be thought of as a substitute for

domestic demand in determining the size of the market

for the firms of a country.

By including both domestic and foreign markets in our measure of market size, 

we give credit to export-driven economies and geographic

areas (such as the European Union) that are broken into

many countries but have a single common market

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Global Competitiveness:part 4

Fifth pillar: Higher education and training

        Quality higher education and training is crucial for

economies that want to move up the value chain

beyond simple production processes and products.

In particular, today’s globalizing economy requires countries

to nurture pools of well-educated workers who are able

to adapt rapidly to their changing environment and the

evolving needs of the production system. 

This pillar measures secondary and tertiary enrollment rates as well

as the quality of education as evaluated by the business

community.

 The extent of staff training is also taken into

consideration because of the importance of vocational

and continuous on-the-job training—which is neglected

in many economies—for ensuring a constant upgrading

of workers’ skills.

Sixth pillar: Goods market efficiency

Countries with efficient goods markets are well positioned

to produce the right mix of products and services given

their particular supply-and-demand conditions, as well

as to ensure that these goods can be most effectively

traded in the economy.

 Healthy market competition,

both domestic and foreign, is important in driving market

efficiency and thus business productivity, by ensuring

that the most efficient firms, 

producing goods demanded by the market, are those that thrive.

 The best possible environment for the exchange of goods requires a minimum

of impediments to business activity through government

intervention.

 For example, competitiveness is

hindered by distortionary or burdensome taxes and by

restrictive and discriminatory rules on foreign direct

investment (FDI)—limiting foreign ownership—as well

as on international trade.

 The recent economic crisis has

highlighted the degree of interdependence of economies

worldwide and the degree to which growth depends on

open markets.

 Protectionist measures are counterproductive

as they reduce aggregate economic activity.

Market efficiency also depends on demand conditions

such as customer orientation and buyer sophistication

For cultural or historical reasons, customers may be 7

more demanding in some countries than in others. 

This can create an important competitive advantage, as it

forces companies to be more innovative and customer

oriented and thus imposes the discipline necessary for

efficiency to be achieved in the market.

Seventh pillar: Labor market efficiency

The efficiency and flexibility of the labor market are critical

for ensuring that workers are allocated to their most

efficient use in the economy and provided with incentives

to give their best effort in their jobs.

 Labor markets must

therefore have the flexibility to shift workers from one

economic activity to another rapidly and at low cost, and

to allow for wage fluctuations without much social disruption.

The importance of the latter has been dramatically

highlighted by the difficulties countries with particularly

rigid labor markets—such as Spain—have encountered

in recovering from the recent major economic

downturn.

Efficient labor markets must also ensure a clear relationship

between worker incentives and their efforts, as

well as equity in the business environment between

women and men.

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Global Competitiveness:part 3

Third pillar: Macroeconomic environment

 The stability of the macroeconomic environment is

important for business and, therefore, is important for

the overall competitiveness of a country.

Although it is certainly true that macroeconomic stability alone

cannot increase the productivity of a nation, it is also

recognized that macroeconomic disarray harms the

economy.

The government cannot provide services

efficiently if it has to make high-interest payments on

its past debts.

 Running fiscal deficits limits the government’s

future ability to react to business cycles.

Firms cannot operate efficiently when inflation rates are out of

hand.

 In sum, the economy cannot grow in a sustainable

manner unless the macroeconomic environment is stable.

This issue has captured the attention of the public most

recently through discussions on exit strategies to wind

down deficit spending, and in the context of the recent

buildup of sovereign debt.

It is important to note that this pillar evaluates the

stability of the macroeconomic environment, so it does

not directly take into account the way in which public

accounts are managed by the government. This qualitative

dimension is captured in the institutions pillar

described above.

Fourth pillar: Health and primary education

A healthy workforce is vital to a country’s competitiveness

and productivity.

Workers who are ill cannot function

to their potential and will be less productive. Poor health

leads to significant costs to business, as sick workers are

often absent or operate at lower levels of efficiency.

Investment in the provision of health services is thus critical

for clear economic,

 as well as moral, considerationsIn addition to health, this pillar takes into account

the quantity and quality of basic education received by

the population, which is increasingly important in

today’s economy. 

Basic education increases the efficiency

of each individual worker.

 Moreover, workers who have

received little formal education can carry out only simple

manual work and find it much more difficult to

adapt to more advanced production processes and techniques.

Lack of basic education can therefore become a

constraint on business development, with firms finding

it difficult to move up the value chain by producing

more sophisticated or value-intensive products.

For the longer term, it will be essential to avoid

significant reductions in resource allocation to these

critical areas,

 in spite of the fact that government budgets

will need to be cut to reduce public debt brought

about by the present stimulus spending.

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Global Competitiveness:part 2

communities to core economic activities and services.
Effective modes of transport, including quality roads,
railroads, ports, and air transport, enable entrepreneurs
to get their goods and services to market in a secure and
timely manner and facilitate the movement of workers
to the most suitable jobs.
Economies also depend on
electricity supplies that are free of interruptions and
shortages so that businesses and factories can work
unimpeded.
Finally, a solid and extensive telecommunications
network allows for a rapid and free flow of information,
which increases overall economic efficiency by
helping to ensure that businesses can communicate and
decisions are made by economic actors taking into
account all available relevant information.
This is an area where the crisis may prove to have positive longer-term
effects, given the significant resources earmarked for
infrastructure development by many national stimulus
packages, including those of the United States and China.

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Global Competitiveness

The 12 pillars of competitiveness

There are many determinants driving productivity and

competitiveness. 

Understanding the factors behind this

process has occupied the minds of economists for hundreds

of years, ranging from Adam Smith’s focus on

specialization and the division of labor to neoclassical

economists’ emphasis on investment in physical capital

and infrastructure,3 and, more recently, to interest in

other mechanisms such as education and training, technological

progress, macroeconomic stability, good governance,

firm sophistication, and market efficiency, among

others.

 While all of these ideas are likely to be important,

they are not mutually exclusive—two or more of

them can be true at the same time,

This open-endedness is captured within the GCI

by including a weighted average of many different components,

each measuring a different aspect of competitiveness.

These components are grouped into 12 pillars

of economic competitiveness:

First pillar: Institutions

The institutional environment is determined by the

legal and administrative framework within which individuals,

firms, and governments interact to generate

income and wealth in the economy. 

The importance of a sound and fair institutional environment has become

even more apparent during the economic crisis, given

the increasingly direct role played by the state in the

economy of many countries.

The quality of institutions has a strong bearing on 

competitiveness and growth.5 It influences investment

decisions and the organization of production and plays

a key role in the ways in which societies distribute the

benefits and bear the costs of development strategies

and policies. 

For example, owners of land, corporate

shares, or intellectual property are unwilling to invest in

the improvement and upkeep of their property if their

rights as owners are not protected.6

The role of institutions goes beyond the legal

framework.

Government attitudes toward markets and

freedoms and the efficiency of its operations are also very

important: excessive bureaucracy and red tape,7 overregulation,

corruption, dishonesty in dealing with public

contracts, lack of transparency and trustworthiness, and

the political dependence of the judicial system impose

significant economic costs to businesses and slow the

process of economic development.

In addition, proper management of public finances

is also critical to ensuring trust in the national business

environment.

Indicators capturing the quality of government

management of public finances are included here

to complement the measures of macroeconomic stability

captured in pillar 3 below.

Although the economic literature has focused

mainly on public institutions, private institutions are

also an important element in the process of creation

of wealth.

The recent global financial crisis, along with

numerous corporate scandals, has highlighted the relevance

of accounting and reporting standards and transparency

for preventing fraud and mismanagement,

ensuring good governance, and maintaining investor

and consumer confidence

 An economy is well served by businesses that are run honestly, where managers

abide by strong ethical practices in their dealings with

the government, other firms, and the public at large.8

Private-sector transparency is indispensable to business,

and can be brought about through the use of standards

as well as auditing and accounting practices that ensure

access to information in a timely manner.9

Second pillar: Infrastructure

Extensive and efficient infrastructure is critical for

ensuring the effective functioning of the economy, as it

is an important factor determining the location of economic

activity and the kinds of activities or sectors that

can develop in a particular economy.

 Well-developed infrastructure

reduces the effect of distance between regions,

integrating the national market and connecting it at low

cost to markets in other countries and regions.

In addition,

the quality and extensiveness of infrastructure networks

significantly impact economic growth and affect income

inequalities and poverty in a variety of ways.10 A welldeveloped

transport and communications infrastructure

network is a prerequisite for the access of less-developed

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