New proposal to reduce influx of disability and unemployment benefit claimants

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In October 2000, the Dutch Secretary of State for Social Affairs announced a plan aimed at restricting the number of claimants of unemployment benefit and WAO occupational disability benefit. The duration and amount of benefits would in future be based on the employment history of claimants, rather than their age. The parties in the coalition government and social partners are divided in their response. Meanwhile, a committee established by the government is looking elsewhere for a workable solution to problem of the increasing influx of WAO recipients.

In October 2000, the Secretary of State for Social Affairs, Hans Hoogervorst, launched a plan aimed at reducing the number of claimants of benefits under the Occupational Disability Insurance Act (Wet op de Arbeidsongeschiktheidsverzekering, WAO) (NL0008103F) and the Unemployment Insurance Act (Werkloosheidswet, WW). The aim is to give greater importance to claimants' employment history in determining the amount and duration of benefit. Whereas this is currently based on the claimant's age, the actual number of years of employment will be decisive in the future.

At present, employees aged 33 and older receive a maximum benefit of 70% of their last-earned salary under both schemes, with the duration of benefit payments increasing depending on their age. It is now planned that benefit entitlement will increase on the basis of the number of years of previous employment, reaching a maximum after 15 years of employment. Only for claimants with 40 years of employment will a higher entitlement apply, and only for a period of six years. The supervisory authority for social security, the National Institute for Social Security (Landelijk Instituut Sociale Verzekeringen, LISV), will be required to furnish information on recipients' employment history. Since 1995, the LISV has been maintaining records for this purpose. In the technical recommendations submitted by the LISV at the request of the Secretary of State, however, reference is made to the fact that this information is not yet fully available. The institute also says that it lacks the personnel needed to implement the new calculation method.

New threshold

Most political parties in the Lower House of parliament were unperturbed as to whether the government's plan is technically feasible, but focused on assessing its effect on the influx of WAO and WW beneficiaries, along with the justifiability of the measure. One of the parties in the coalition government, the liberal People's Party for Freedom and Democracy (Volkspartij voor Vrijheid en Democratie, VVD) applauded the proposals, since it expects that they will cut the number of beneficiaries over time. This is also true of the opposition Christian Democrats (Christen Democratisch Appèl, CDA), with whom the VVD put forward a joint plan on WAO in spring 2000 (NL0006195F).

However, the proposals did not meet with approval from the other coalition parties. The Labour Party (Partij van de Arbeid, PvdA) was outraged by the Secretary of State's plan, claiming that it represents a break with the fundamental character of the WAO as a risk insurance, whereby those covered derive rights on this basis. The consequences for reintegrating female employees could be significant, it is claimed: if, for example, they were to fall ill within six months of starting to work again and ultimately have to claim WAO benefits, their associated rights would be extremely limited in comparison with the current situation. Concerning unemployment benefit, the PvdA pointed out that a policy of "stimulation" has been pursued over the last few years, with recipients being encouraged to take risks. If they cannot fall back on certainty in terms of the social security system, they will be less prepared to take risks when it comes to taking on a new job. The social democratic Democraten 66 (D66) also reacted negatively to the proposal, claiming "bullying" on the part of the Secretary of State and finding sympathy for this position from all the smaller left-wing parties as well as the PvdA.

The Secretary of State stated that he failed to understand what all the commotion was about. His proposal was not new, but merely represented a technical alteration. He even referred to the potential savings as being minimal; NLG 300 million represents barely 1% of the overall budget associated with WW and WAO benefits.

Social partner reactions

The social partners were divided in their response to the Secretary of State's plan. Employers' representatives have already voiced their opinion that collective agreements cannot be used to fill the gaps left in the wake of the proposed changes. Their fears are certainly not unfounded, as this occurred in 1993 during the first attempts to restrict WAO and WW, when benefits for young claimants were lowered. Benefits for older claimants are now at stake. The response from the Federation of Small and Medium-Sized Businesses (Midden en Klein Bedrijf, MKB) was mixed: on the one hand, those who can no longer work should not suffer based on whether they were employed for a longer or shorter period of time; on the other hand, those who are in fact still able to work could be provided with an incentive to do so through a lower level of benefits. MKB also underlined that collective agreements should not be used to rectify such measures.

On the trade union side, the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) and the Federation of Managerial and Staff Unions (Middelbaar en Hoger Personeel, MHP) are strongly opposed to the proposal, while the the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV), which presented its own plan, is in partial agreement. CNV would like to see activating measures for unemployed and partially disabled people, while it feels that completely disabled individuals should be left in peace, allowing them to be spared from the system of re-examination. It is willing to discuss changes in benefit levels for the former group.

New committee

The Secretary of State's proposal is seen by some as badly timed in view of the fact that government itself has recently set up a committee to investigate the issue of the WAO in its entirety, including the overly high influx and limited outflow, and the whole organisation of the scheme. The organisation of WAO has attracted negative attention in recent months because of accusations of bureaucratic regulations and inefficient implementation: initiatives to help benefit recipients capable of working to find a job as soon as possible often become entangled in maze of rules and regulations. For example, Rea-Actief, a joint initiative set up a year ago by employer and employee representatives to promote the reintegration of WAO recipients, reports that, despite the degree of interest shown by the business sector, it has had to negotiate a long and complex process before finding the right jobs for occupationally disabled employees.

The government committee has yet to publish its findings on the whole WAO issue. It has, however, reported findings on one group within the "high influx" category - those employees who have been deemed medically unfit for work on psychological grounds. This group of employees represents one-third of all WAO recipients, and half of all new claimants under the age of 35 (NL9910167F and NL9904133F). In its draft recommendation to the government, the committee argues that employees with psychological ailments should not be forced to "take refuge" under the WAO. Their problems can be addressed within the first year of sickness absence (ie before WAO entitlement starts) through effective supervision and preventative measures. The committee is sceptical about tightening the WAO entry criteria or attempting continually to redefine the problem until it vanishes. It does, however, have high hopes when it comes to active supervision of reintegration and opening the problem up for discussion in the workplace. At present, the system appears to be counterproductive: although all the parties concerned are focused in their efforts, sick employees remain excluded from the labour market for too long, making it practically impossible for them to re-enter it in the future.

Commentary

The first report published by the government's research committee represents a step in the right direction in terms of properly addressing the WAO issue by investigating the actual state of affairs concerning the influx of new claimants. It seems logical that the committee selected the category of employees suffering from psychological problems for this purpose. After all, given the rapidly rising number of ever-younger employees in this group, the matter is worthy of concern. It is of political significance that the process leading to claiming WAO benefit is being researched by a committee of this standing. Earlier research has already revealed that the path to WAO coverage is laid during the first year of illness. Employee representatives and employers have a responsibility in this area. The committee has concluded that prevention and supervision, which form part and parcel of the legislation on working conditions, must be improved. The minimal and inexpensive contracts on prevention and supervision that many companies, backed by their works councils, have signed with privatised health and safety services, are demonstrating expensive shortcomings in the context of the current WAO influx. The cabinet and the Lower House should reassess working conditions policy instead of being fixated on the rising influx, devising new threshold criteria in an attempt to stem the tide. (Marianne Grünell, HSI)