Rehabilitation reform proposed

In August 2000, a government-appointed commissioner presented his final report on the rehabilitation of incapacitated employees in Sweden. The report proposes active and coordinated rehabilitation measures, focused on the individual, as a way of reducing the current high levels of sickness absence.

In June 1999, the Swedish government appointed a commissioner to analyse the issue of the rehabilitation of workers who have become incapacitated - Gerhard Larsson, the former head of Samlhall, a governmental rehabilitation organisation (SE9907177N). On 30 August 2000, Mr Larrson presented his final report, which includes a proposed reform of the rehabilitation system (Rehabilitering i arbete - en reform med individen i centrum, SOU 2000:78). According to Mr Larsson, the existing rehabilitation system, introduced in 1992 (SE9810114F), has proved unsuccessful. He therefore proposes a reform that focuses on the individual worker, involving a single public authority and a stronger insurance scheme. The aim of the reform is to reduce the number of cases of sickness absence and to cut substantially the length of the sickness absences which do occur.

Rehabilitation

Rehabilitation of incapacitated employees is a relatively recent issue in Sweden, having first been introduced into the social insurance system in January 1992. This initiative was built on three cornerstones: an improved work environment; more effective rehabilitation; and an obligation on employers to pay sick pay for the first 14 days of an employee's sickness. However, these measures did not bring the desired results. During the 1990s, more and more workers took sickness absence and for longer periods. In June 2000, about 270,000 individuals were on sick leave for more than 30 days. Around 100,000 of these individuals were in need, according to the commissioner's report, of more complicated treatment than just medical treatment. The level of sickness absence has increased by 80% compared with 1997. The increase is higher among women than among men and higher in the public sector than in the private sector. During 2000, the state benefits paid out for ill health will increase by SEK 10 billion, from SEK 70 billion to SEK 80 billion.

There are various causes for the increase in sickness absence. In 1992, employers were given considerable responsibility for the rehabilitation of their employees, but only 13% of sick workers are currently given any kind of rehabilitation aimed at getting them back to work. The employers' responsibility was very vaguely formulated, according to Mr Larsson. In practice, responsibility was increasingly handed over to public sector authorities and then further divided between different sectors; healthcare is dealt with in the county council sector, while the social services system is in the remit of the local government sector, governmental labour market authorities and regional social insurance offices. Recent changes in the labour market as a result of restructuring and the "downsizing" in many companies have also influenced working life. While environmental musculo-skeletal disorders were formerly the main occupational diseases, psychological, social and company-organisational factors have now increased as causes of ill health. Another important factor is that a previous state subsidy for company healthcare provision (företagshälsovård) has been abolished.

A large number of authorities and other organisations were asked to present their views to the commissioner, who delivered a first report, published in February 2000, aimed at prompting an open discussion (Individen i centrum? En diskussionspromemoria, S1999: 08). Close to 80 responses were subsequently returned to the commissioner. The social partners represented were all positive over a reform, with their arguments, on both employer and employee sides, reflecting the arguments of the commissioner.

Nine motives for a reform

There are nine strong motives for a reform of the rehabilitation system, the commissioner states in the report. First, the 1992 rehabilitation reform did not succeed in decreasing the level of sickness absence nor the number of workers excluded from the labour market. Second, rehabilitation should focus on the individual worker - at present, the focus is on the coordination of different authorities rather than the coordination of the needs of the individual. Third, there is a great demand for rehabilitation that is not currently met, or not met within a reasonable time. More than 100,000 individuals out of 200,000 on long-term sick leave have such unfulfilled needs. Fourth, in future there will be a different and increased need for rehabilitation. Current changes in the labour market as well as demographic change - the average age of the population is increasing - will make it necessary to establish a much stronger insurance system.

The next three motives for reform relate to the costs for society of increasing sickness absence. It is thus profitable for society to have a successful rehabilitation system. Responsibility for the present system is spread between four parts of the public sector, a situation which has not proven to be economically efficient. The issue of profitability for society is also related to the fact that employers have limited economic incentives to rehabilitate incapacitated workers. The perspective of profitability at company level should instead be focused on preventive measures in order to lessen the risks of occupational diseases and accidents at work.

The eighth motive given for a new reform is that rehabilitation of incapacitated workers is necessary in order to ensure that future labour needs are met. Today, the average retirement age for many groups of workers is around 58 years. Sweden must thus cut sickness absence and make it possible for more people to continue working after the age of 60. Otherwise, the burden on the working population will become too heavy and the labour supply situation will become very strained. The ninth and last motive for a reform, the commissioner concludes, is that almost all the 80 or so authorities and organisations consulted, including the social partners, have been very positive about such a reform.

Proposed reform

According to his terms of reference laid down by the government in June 1999 (direktiv 1999:44), the commissioner's task was to analyse the entire rehabilitation process and draw up a "platform" of priorities, clarifying which types of employee should be subject to rehabilitation. Bearing this in mind, the commissioner's report presents a number of cornerstones upon which a new rehabilitation reform should be built. The key concepts are: focusing on the individual; involving a single public authority; a closely connected rehabilitation insurance scheme; increased preventive measures; more resources and more knowledge of new methods of rehabilitation; and equal rehabilitation possibilities throughout the country.

The proposal for a new form of rehabilitation insurance is one of the most crucial made by the commissioner. The insurance scheme should contain a right to rehabilitation support, provide more powerful means for active measures and have an independent (or as independent as possible) position in relation to the national budget. One main public actor, the "insurer", should have economic and administrative responsibility for the insurance. The insurer should have five main tasks:

  • calculating and paying out insurance benefits;
  • being responsible for conducting a rehabilitation investigation after four week's sickness absence leave, or earlier if the worker concerned asks for it. The present responsibility for the employer to carry out such an investigation will be removed. The insurer's responsibility may however, in practice, be assigned to another party, for instance the employer, the industrial health service or the local health service. The employer will still have a responsibility for providing necessary information and for cooperating with the insurer;
  • actively seeking to ensure that individuals on sick leave can return to their job or other equivalent work, and that individuals without jobs gain the ability to work;
  • following up the effects of rehabilitation; and
  • conducting preventive measures, such as inspecting workplaces with a high level of sickness absence.

The report calls for the establishment of a new governmental authority, the Rehabilitation Board (Rehabiliteringsstyrelsen). Local state social insurance offices should be given the responsibility - under the Board - for building up a regional and local organisation and for providing greater resources for back-to-work measures.

The costs of the new insurance system should be financed by contributions from employers and the self-employed, and - for a temporary period of three years - by state funding. After three years, an independently-financed fund should be created. The level of employers' contributions should be decided every year by parliament. According to the commissioner, the reform, when fully implemented, will save Swedish taxpayers around SEK 9 billion a year. This is calculated on the assumption that the number of workers on sick leave will decrease by 55,000 to 160,000 over the first three-year period. The reform should come into effect on 1 July 2001.

Reactions

The Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO) and the Swedish Trade Union Confederation (Landsorganisationen, LO) have responded quite positively to the main thrust of the commissioner's proposal. Sture Nordh, the leader of TCO, is especially pleased with the proposal to give the responsibility for rehabilitation to a single authority. Göran Tunhammar, the leader of the Swedish Employers' Association (Svenska Arbetsgivareföreningen, SAF) said that it was right to point out that individuals, and not just employers, are responsible for their rehabilitation. SAF is somewhat dubious about the costs of a new insurance scheme, and is concerned that it might be too expensive for employers. SAF also notes that the commissioner has not incorporated into his proposal the recent recommendation from another commission that the period of absence from work during which employers are responsible for paying sick pay (before the insurance system takes over) should be prolonged to 60 days from the present 14 days (SE0008160N).

Commentary

The cost of sick pay is very high in Sweden, as is the level of sickness absence. The current rehabilitation system for sick workers has not been successful during its eight years of existence, with only 13% of workers considered as being suitable for a rehabilitation programme being given this possibility. It is thus not difficult to understand why the social partners are generally satisfied with the proposal for a rehabilitation reform, and the easing of the burden on the healthcare system that it implies. The fact that a great part of the employers' responsibility for the rehabilitation of the workers would be abolished by the proposed reform will be greeted with some relief by employers. However, employers should realise that preventive measures can and must be carried out at the workplace. There is too much evidence of sickness absence related to stress. A less intense speed of work would probably lead to less sickness absence and thus a reduced need for rehabilitation. (Annika Berg, Arbetslivsinstitutet)

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