Government proposes sick pay cuts and greater employer contribution

In April 2003, the Swedish government submitted its proposals for the 2003 spring national budget. Given the current economic slowdown, the draft budget seeks to cut or postpone public expenditure in a number of areas, including sick pay. Employers will be responsible for their employees' sick pay for three weeks, rather than the current two, while state sick pay, which applies after the initial period covered by the employer, will be cut from 80% to 78% of the worker's normal pay. The social partners are opposed to the government's sick pay proposals.

On 15 April 2003, the minority Social Democratic Party (Socialdemokratiska Arbetarepartiet, SAP) government, supported by its cooperation partners, the Green Party (Miljöpartiet de Gröna) and the Left Party (Vänsterpartiet), presented its bill for the 2003 spring national budget to parliament. The bill provides for a general tightening of spending and postpones a number of earlier spending promises, not least in the area of social security.

The proposed budget will reduce the level of sick pay financed by the state (after the initial period of sick pay met by the employer) by 2 percentage points. Sick pay will thus be 78% of the worker's normal pay instead of the current 80% (up to a monthly pay ceiling of about SEK 24,000). Furthermore, all employers will have to pay employees' sick pay for the first three weeks of sickness instead of the current two weeks. However, companies with fewer than 25 employees will have their resulting additional costs limited. The plan to increase the maximum daily benefit for employees on sick leave and parental leave has been postponed (SE0301104F and SE0202103N). These various savings will cut the state's costs related to the sick pay system by about SEK 2.5 billion in 2003 and SEK 5 billion in 2004.

The draft budget also provides that the unemployment insurance system will save about SEK 500 million by 2004, for example by tightening up the rules on part-time unemployment. Detailed proposals in this area will be presented later in 2003.

Measures to decrease ill health

The very high level of sickness absence in Sweden (SE0301103N) has major economic consequences for the country, the government reiterates in the 2003 spring budget bill. The costs of the sickness insurance system have increased from SEK 50 billion to SEK 100 billion over the past four years. The number of longer periods of sick leave has also increased considerably. The government's goal is to halve the number of days of sickness absence by 2008 and at the same time decrease the amount spent on sick pay. In autumn 2001, it presented an 11-point programme seeking to address increased ill-health at work (SE0111108F), which is currently being implemented following the Social Democrats' re-election in September 2002 (SE0210102F). The government has recently been proposing further measures, such as a bill regarding formalities in the sick leave procedure. Other proposals presented by the government in January 2003, such as giving public sector employers more responsibility for sick employees, have been completely rejected by the social partners.(SE0301104F).

The government is anxious to emphasise that there are also positive efforts on health in the spring 2003 budget bill. The focus must be more on individuals' ability to work, rather than on their inability, it states. The possibility to combine part-time sick leave with work should be used more often - something the government stressed in its sick pay reform presented January 2003 (SE0301104F). As a small first step in this direction, the budget bill proposes a temporary form of 'special employment support' (anställningsstöd) in order to make it easier for workers on long-term sick leave to return to work, which should come into force on 1 July 2003. The support will be administered by local labour market offices and will provide a time-limited subsidy of the pay of long-term sick workers who find work with a new employer. The support is meant for workers on sick leave who are not able to return to their former workplace, and whose former employer's responsibility for rehabilitation (SE0011161F) has passed over to the labour market authorities.

Less benefit for sick unemployed people

Under the budget proposals, the sickness benefit for unemployed people will be adjusted from 1 July 2003 so as to prevent it from being higher than unemployment benefit. At present, many unemployed people, and especially white-collar workers, receive higher benefits when they are sick, because of trade union insurance and other schemes. Employed workers in all categories now receive a lower amount when they are sick and the government believes that it is appropriate that unemployed workers should not receive a higher income when they are sick than other workers do.

Further, the government has postponed measures relating to occupational health services, and has flagged up for the 2004 budget: a possible increased responsibility for workers on sick leave; the possibility of limiting sick leave to a maximum of three years; and financial incentives for employers to decrease ill-health at work. The abovementioned plan to make public employers take more responsibility for their employees concerning prolonged periods of sickness has been shelved for the time being (SE0301104F).

A system of individual learning accounts planned to start from 1 July 2003 will be postponed to an unspecified point during the government's term of office (2002-6) (SE0204102F).

Social partners dissatisfied

The three largest trade union confederations expressed negative views on the budget bill. Sture Nordh, the chair of the Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO), said that the government had failed to attack the causes of ill-health and the high level of sickness absence. He stated that the programme in this area resulting from tripartite talks held in December 2002 should have been considered more (SE0301104F) and called on the government to reconvene the tripartite talks. Anna Ekström, the head of the Confederation of Professional Associations (Akademikernas Centralorganisation, SACO), stated that it would be much better if the social partners dealt with the sickness insurance system themselves, or commissioned an independent institution to do so.

The private sector employers' organisation, the Confederation of Swedish Enterprise (Svenskt Näringsliv), described as 'fraudulent' the proposal for the employers' obligation to pay sick pay to be extended to three weeks. It also wants to switch the state sickness insurance system to the sphere of the social partners. Wanja Lundby-Wedin, the head of the Swedish Confederation of Trade Unions (Landsorganisationen, LO), said that the first consequence of the greater sick pay responsibility for employers will be a weeding out of workers with long-term sickness problems, while companies will not dare to employ new workers who are at risk of having such problems.

Commentary

The 2003 spring national budget bill bears the stamp of Sweden's current economic difficulties. The government remained optimistic about the growth of the Swedish economy during autumn 2002 while economic experts in the private banks, the National Bank (Riksbanken) and the National Institute of Economic Research (Konjunkturinstitutet) delivered one gloomy prognosis after another. With the new budget bill, the hopeful note sounded after the election in September 2002 has vanished. The government's economic growth forecasts are now much lower than previously.

Even if the Minister of Finance, Bo Ringholm, blames the war in Iraq and the weak international economic situation in part for causing the slowdown in the Swedish economy, it is clear that he and the rest of the government are aware of the need to restrain costs and postpone, or even break, earlier promises of reforms. Through the proposed savings in sickness insurance, the government expects to save SEK 2.5 billion in 2003. However, given that current sickness insurance costs are estimated at SEK 100 billion in 2003 and SEK 140 billion in 2004, this is not very much. It is easy to join the trade unions in their general opinion that it is of great importance that the current work on the problems of ill-health should continue, involving the government together with the social partners, including the private sector employers which withdrew from the process at the end of 2002. The tripartite work on this matter must be resumed, even if some of the solutions may be found between the social partners only. (Annika Berg, Arbetslivsinstitutet)