Agreement reached on sickness absence and an 'inclusive working life'

In October 2001. the Norwegian government and social partners concluded an agreement with the aim of creating a more 'inclusive working life'. One of the objectives of the agreement is to reduce sickness absence by 20% over the period 2001-5. The current sick pay scheme will not be altered during this period.

On 3 October 2001, the social partners and the outgoing Labour Party (Det norske Arbeiderparti, DnA) government concluded an 'agreement of intent' with the view to creating a more 'inclusive working life'. It is hoped that the agreement will help to reduce the utilisation of sickness benefits and the rate of sickness absence, and to take better advantage of the human resources represented by older employees. The agreement sets out several measures to this end. It also carries on some of the recommendations made by the 'Sandeman committee', which published its report entitled 'An inclusive working life' (NO 2000:27) in the autumn of 2000 (NO0010109F. However, the committee's majority proposal to alter the sick pay scheme, which presently grants employees full wage compensation from the first day of sick leave, was not included. The agreement nevertheless puts to rest the controversial issue of sick pay for time being, by attaching to the agreement an explicit goal of reducing the sickness absence rate.

Content of the agreement

Objectives

The concrete objectives of the agreement for 'a more inclusive working life' are to:

  • reduce the sickness absence rate by at least 20% over the period 2001-5;
  • ensure that a much larger share of employees with 'impaired functionality' are in employment; and
  • increase the average actual retirement age.

The agreement came into force on 3 October 2001 and will run until 31 December 2005. It is, however, to be re-evaluated after the second quarter of 2003, and will be terminated if it becomes evident that the objectives will not be achieved, unless the parties agree otherwise.

Measures

The agreement stipulates a number of measures that should contribute to the accomplishment of the goals mentioned above, many of which will be made more concrete as the work progresses.

The monitoring and management of employees on sick leave will be made quicker and will be improved qualitatively. The measures are to be based on the individual workplace, and will contribute to enhancing the responsibility of both employees and employers. A 'functionality evaluation' will be carried out on employees whose sickness absence goes beyond the self-reporting period (which at present means sick leave beyond the three first days of absence).

Companies may enter into a cooperative agreement with the national insurance authorities. These agreements will outline various types of measures to combat sickness absence and to reduce the rate of retirement on grounds of disability. In concluding such an agreement, companies will commit themselves to working systematically towards the reduction of sickness absence. Furthermore, these agreements require the authorities to provide the companies concerned with financial and administrative means to achieve these objectives. Companies covered by an agreement will thus, for instance, receive better care and supervision from the national insurance administration. Employees in such companies will also be allowed to make use of so-called extended self-reporting, ie they may be off work for up to eight days without a doctor's certificate.

Parliament will have to consider a number of financial measures raised by the Labour government, on which the viability of the agreement rests, among them a reduction of employers' social security contributions for employees over the age of 62, and a proposal to make the national insurance administration responsible for expenses caused by sickness absence in connection with pregnancy (and where it is impossible to relocate pregnant women to another job). The government also want to extend the national insurance administration's practice of purchasing healthcare services in order to get sickness absentees back into employment. Furthermore, companies that employ or recruit employees with limited ability and functionality will receive significant wage support funding. Finally, there will be a strengthening of the efforts directed at employees with disabilities and those on disability pensions.

A significant feature of the new agreement is the obligation on the government not to propose changes to the present sick pay scheme, which means that employees will continue to receive full compensation from day one of absence. Furthermore, employer financial commitments will not be extended to cover a longer period of sick leave than is the case today.

Commentary

Both the social partners and ministers involved have expressed satisfaction with the agreement. The employer side is especially satisfied with the concrete and ambitious goals established for the reduction of sickness absence, and the fact that the agreement may be cancelled if it becomes evident that these goals are beyond reach. The employer side is also pleased to see that the national insurance administration is taking over responsibility for sickness absence related to maternity leave and that employers' social security contributions in respect of older employees are to be reduced. This is a significant cost-saving measure for most employers.

The trade unions are obviously delighted to see the sick pay scheme remain unaltered at the present time, especially in light of the existing parliamentary majority in favour of change to the scheme (NO0109140N). The leader of the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO), Gerd-Liv Valla, argues that the agreement is an important step forward on the way to a better and more inclusive working life, but she nevertheless emphasises that LO will not accept a weakening of the present sick pay scheme. The unions also welcome the financial measures proposed, not least because they are presumed to ease the reluctance witnessed among employers to recruit younger women. Surveys show that illness in connection with pregnancy makes up a significant share of women's sickness absence, and thus leads to increased costs for employers. The unions have also stressed that a reduction of the compensation level in the present sick pay scheme would particularly affect women, since sick leave levels are higher among women than among men.

The agreement is regarded first and foremost as an agreement on sickness absence, although its content is rather more comprehensive than that. There is a general consensus about the problems connected to the increasing sickness absence rate in Norwegian working life. Many commentators believe, however, that the expressed goal of a 20% reduction will be difficult to achieve, especially in a situation where the pressure on the labour market is as great as it is today. Experience indicates that sickness absence increases in such periods, while it decreases in periods with increasing unemployment. In order to reach the goal of a 20% reduction, efforts have to be directed at tackling the problem of long-term absence, and again experience suggests that this will be a demanding undertaking. It requires the capacity to reach employees with heavy and repetitive work and their employers, since the sickness absence rate is particularly high among these groups of workers and in work of this nature.

The agreement on 'an inclusive working life' was very much the result of an initiative taken by the outgoing Labour government, which has been replaced in mid-October 2001, following the general election on 10 September, by a coalition of the Christian Democratic Party (Kristelig Folkeparti), the Conservative Party (Høyre) and the Liberal Party (Venstre). The Labour government had long endeavoured to establish an agreement between the social partners on measures to reduce sickness absence. The outgoing government made sure to keep the parties in the incoming coalition government up to date with developments in this process, and as such the agreement will most probably not be altered by the new government. Although all the political parties involved in the new coalition government want to see alterations to the present sick pay scheme, this consensus might be easily broken unless new arrangements are introduced that are approved by both employers and unions. The sick pay scheme is a controversial issue, and the new agreement has thus contributed to easing any potential conflict with the unions for the new coalition government. (Kristine Nergaard, FAFO Institute for Applied Social Science)

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