Growth in sickness absence slows

After several years of increasing sickness absence in Norway, new figures show that the trend is stabilising in 1998. The period during which employers pay sickness benefits has been extended from 14 to 16 days, taking effect from 1 April 1998, but there was no majority in Parliament for a government proposal to further extend the period. Nor is there a political majority for changes to the present arrangements allowing employees full pay compensation during sickness absence.

The recent increase in the rate of sickness absence among Norwegian employees has so far not led to any changes to the basic sickness benefit scheme, which provides employees with full pay compensation from the first day during periods of absence from work through sickness. The first 16 days of sickness benefit are paid for by the employer - this has been increased from 14 days, with effect from 1 April 1998, to strong criticism from employers' organisations. Sickness absence beyond the first 16 days is financed by the National Insurance Scheme. In May 1998, the Government proposed a further extension of this period, but this was not accepted by Parliament.

Below, we provide an outline of: trends and developments in the rate of sickness absence in Norway, including figures confirming that the increase in absence has stabilised; the measures taken by the social partners to reduce sickness absence; and the debate surrounding the present sickness benefits scheme

Trends in sickness absence

In the period from 1994 to 1997 the rate of sickness absence in Norway - both short term and long term - increased significantly. New figures, however, indicate that this increase is slowing down. The overall level of sickness leave among white-collar employees in companies affiliated to the Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) for the first quarter of 1998 declined in comparison with the same period in 1997. For blue-collar workers, the rate is still growing, but the growth is lower than it has been during previous years. The overall level of short-term sickness leave, which involves absence of less than three days in duration, has gone down for all groups of employees in NHO-affiliated companies. State sector figures for the first quarter of 1998 also show stability in the overall level of sickness leave, and a decrease in short-term sickness leave. Long-term sickness leave, beyond 14 days, however, increased from the first quarter of 1997 to the first quarter of 1998.

The table below shows sickness absence statistics for the period from 1994 to 1997 for blue-collar workers and white-collar workers employed in NHO companies, as well as the state sector. It also provides figures from the National Insurance Administration for sickness lasting longer than 14 days. Sickness absence has increased among all groups, and women have higher rates of sickness absence than men.

Sickness absence in Norway, 1994-7
1994 1995 1996 1997
NHO companies - blue-collar workers* 6.7 7.1 7.3 7.9
NHO companies - white-collar workers* 2.8 3.1 3.2 3.5
State sector* 4.7 5.1 5.2 5.5
National Insurance Administration ** 8.2 8.8 9.7 10.5

* Days absent as % of possible working days.

** Only includes absence of more than 14 calendar days. The figures show the number of sickness days per employee.

Cooperation to reduce sickness absence

The Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and NHO agreed in 1990 to initiate a joint programme to reduce the level of absence through sickness. The reasons for this initiative were the facts that the rate of sickness leave had increased during the 1980s, and that the government was considering changes to the arrangements providing employees with full pay compensation during illness. As a part of this joint sickness benefits project, information material was produced to be used at company level. Similar projects have been initiated in other sectors of the economy.

Commentary

Questions relating to whether the present sickness benefit scheme is too costly for employers and the National Insurance Scheme have frequently been raised in Norway. However, despite the fact that the scheme has come under pressure several times, the provision of full pay compensation during illness has been retained. When the rate of sickness absence increased dramatically at the end of the 1980s, the Labour Government of the time indicated that the arrangements might be changed if the level of sickness leave did not improve through voluntary initiatives. Comprehensive campaigns contributed to a reduction in sickness leave. In the period from 1990 to 1994, sickness absence in NHO companies was reduced by approximately 23%. In the state sector, it was reduced by 19% in the same period.

It is, however, important to note that variations in the rate of sickness absence cannot solely be explained by these campaigns. The reduction in sickness leave during the early 1990s ran parallel with a period of growing unemployment, while the increase in sickness leave in recent years has run parallel with a period of low unemployment. It has been pointed out that in a tight labour market situation, even people with health problems will be employed, and this will contribute to an increased average sickness absence rate ("Fravær i arbeid", Axel West Pedersen, Fafo-rapport 218 (1997)). In a report on developments in the rate of sickness absence, LO argues that it will continue to grow because, among other factors, the proportion of older employees will in the future be greater. LO argues that changes in the way other insurance arrangements work will also have an effect on the rate of sickness absence. Increases in the queues to receive treatment in the national health service also have an impact.

Several political parties have raised the question of whether to make the arrangements less generous by introducing waiting periods before benefits can be claimed, or by reducing the amount of compensation received during sickness leave. So far it has not been possible to obtain a political majority in Parliament in support of such reforms, and there are diverging views among the three parties within the ruling coalition Government. In the joint statement which forms the basis for their coalition, the three parties agreed to retain the present arrangements with full pay compensation from day one (NO9710129N).

The largest employers' organisation in Norway, NHO, wants to see changes to the present sickness benefit scheme, and the way it is financed. The extension of the period during which the employers pay sickness benefits, from 14 to 16 days, was strongly criticised by NHO, partly because it believes that small and medium-sized companies will bear the brunt of the reforms. NHO wants to see employees paying more of the costs, and proposes a scheme in which employees pay 30% of the benefits during the first three days, which means they will receive only 70% of pay compensation from the employer. For leave beyond those three days, NHO proposes 90% compensation. In spring 1998, the Government expressed a wish to initiate a campaign in order to put the focus on sickness absence. NHO indicated that it did not want to take part in such a campaign, unless concrete goals were properly worked out.

From a trade union point of view, LO warned against changing the present sickness benefit scheme in a report made public on 1 July 1998 (Landsorganisasjonen i Norge: Utvikling og årsakssammenhenger i sykefraværsutviklingen). It states that such changes will have unfortunate effects on income distribution. The introduction of a waiting period or the reduction in pay compensation will have more significant consequences for older employees, women and the lowest-paid employees, because these are groups with a relatively high rate of absence through sickness. LO also fears that the introduction of a scheme in which employees must bear part of the costs themselves may lead to a situation in which some groups keep full pay compensation during illness, while others do not. This implies reverting back to the period before full pay compensation during sickness was introduced. LO also believes that reduced pay during sickness will lead to a situation where employees working in a poor working environment are subjected to extra pressures, because they will need more time off work than others. In its report, LO argues that the cooperation on the sickness absence issue that has already taken place at both central and local level will come to an end if the present scheme is changed. (Kristine Nergaard, FAFO Institute for Applied Social Science)

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