Original Article J. Occu. Safety & Health 9 : 1-6, 2012 21 Workplace injuries in Malaysian Manufacturing Industries 1 Saad Mohd Said, 2 Zairihan Abdul Halim and 3 Fatimah Said 1 Faculty of Economics and Administration, University of Malaya, 2 MARA Institute of Technology (UiTM), Bandar Baru Seri Iskandar, Perak. 3 Faculty of Economics and Administration, University of Malaya, ABSTRACT This study analyzes the determinants of workplace injuries across 44 four-digit manufacturing industries in Malaysia from 1993 to 2008 through the business cycle and structural approaches. The results of fixed-effects estimations revealed that workplace injuries in Malaysian manufacturing sector were negatively influenced by firm size and positively influenced by business cycle. Consistent with the findings of previous studies in other countries, the empirical evidence of this study supports the pro-cyclical behavior of injury rates in manufacturing industries towards business cycle. The analysis demonstrates that both structural and cyclical variation effects are important determinants of workplace injuries in Malaysia. Keywords: workplace injuries, cyclical variation, structural characteristics, Occupational Safety and Health Act. INTRODUCTION Studies on the incidence of industrial accidents or workplace injuries can be grouped into three approaches, viz. business cycle, labor market and structural approaches. The business cycle approach to workplace injuries provides explanations as to how injury rates may be expected to vary over the course of the economic cycle (Kossoris, 1938; Leigh 1985; Robinson and Shor, 1989). These studies support pro-cyclical relation, showing that the number of injuries tend to increase during economic upswings and vice versa. Nevertheless, this approach does not explicitly consider the interaction of choices made by employers between safety and profits and the choices of employees between safety and wages in determining the risk of injuries. This give rise to the second approach, the market oriented approach to workplace injuries as proposed by Chelius (1974), Oi (1974), and Sider (1985). Their studies relate the injury rates to the market factors, such as wage and government control. In general, their analysis shows that, under firm’s optimization, occupational injury is determined by wage level and employers’ incentives in accident prevention. However, the impact of government intervention through tax and compensation benefit is inconclusive. The third approach focused on structural effect of the industry such as workers characteristics, firm size, and mechanization or capital intensity in the production process (Oi, 1974; Cooke and Gautschi, 1981; Viscusi, 1986; Currington, 1986). Demographic differentials in work injury rates could have been generated by several structural forces. If other things being equal, (such as type of industry, occupation, firm size and safety of the work site), certain workers are innately more liable to be involved in workplace injuries (Oi, 1974). Despite the three approaches, it is often assumed that the causes of accidents vary across sectors (Coleman, 1981). A survey report by Centers for Disease Control and Prevention (1993) on fatal injuries in the United States (U.S.) during 1980-1989 shows that the largest number of fatalities occurred in the construction sector, followed by transportation, manufacturing, and primary economic sectors. A large body of existing empirical analysis on workplace injuries focused on manufacturing and construction sectors. This is due to their natural hazard and both sectors are found to be highly responsive to the business cycle, particularly in mature capitalist economies as well as those in transition towards industrialized economies (Robinson and Shor, 1989; Davies et al., 2009). With the vision of becoming an industrialized economy by the year 2020, Malaysia has started its industrialization effort since 1960s. Industrialization has been an integral part in the Malaysian development strategies and manufacturing sector has shown to be one of the important backbones and a major contributor to the Malaysian economy. The share of manufacturing sector to Gross Domestic Product (GDP) increased significantly from only 12.2 percent in 1970 to 30.1 percent in 2010. Apparently, this sector has been the major sector in creating employment opportunities. In 1970, employment in the manufacturing sector represented only 9.4 percent of total employment (Malaysia, 1976). In line with the industrialization process, the share of employment in the