Companies sign up to agreement on 'inclusive working life'

In October 2001, the Norwegian government and social partners signed an agreement on an 'inclusive working life', whose aims include a 20% reduction in the sickness absence rate. The accord includes a scheme whereby companies conclude agreements with the social insurance authorities, committing themselves to monitoring closely employees on sick leave and to making adjustments to the workplace for older or disabled employees. By the end of 2002, such agreements covered around a quarter of Norwegian employees. However, despite these efforts the sickness absence rate continued to rise throughout 2002.

In October 2001, the government and the social partners concluded an 'agreement of intent' to achieve a more 'inclusive working life' (inkluderende arbeidsliv), known as the 'IA agreement' (NO0110107F). Prior to the deal, the issues of sickness absence and the present sick pay scheme had been put on the political agenda during summer 2001 (NO0109140N). Both employers and the majority of political parties raised concerns about increasing sickness absence, the rising number of disability benefit recipients, and the ensuing costs for the National Insurance Scheme (Folketrygden). For that reason, the Labour Party (Det norske Arbeiderparti, DnA) government of the time entered into an agreement with the social partners, which included the goal of reducing the sickness absence rate by 20% over the period 2001-5.

Under the IA agreement, the parties committed themselves to make efforts to reduce sickness absence, reduce the number of people leaving the labour market on a disability pension, and include more older people and people with disabilities in working life. In return, the government pledged not to change the present sick pay scheme - specifically neither to reduce payments to employees nor to increase the employers' share of the financial responsibilities. Employees currently receive 100% wage compensation from the first day of sickness absence. The costs for the first 16 days are covered by the employer, after which the National Insurance Scheme takes over. The government’s contribution to the deal also involves changes to financial support schemes and a strengthening of the support services for companies/employees in need of supervision and workplace adjustment. The IA agreement is to be evaluated at the mid-point (autumn 2003) and may be terminated if it becomes evident that the goal of reducing the sickness absence rate is not being achieved.

'IA companies'

An important objective of the efforts to achieve a more inclusive working life is to encourage focused initiatives at the company level. An important tool to achieve this end is a scheme whereby companies enter into agreements with the National Office For Social Insurance (Trygdeetaten). These are standardised agreements, whereby companies commit themselves to monitor closely employees on sick leave and to make adjustments to the workplace for older or disabled employees with 'impaired functionality'. Companies with such agreements in return receive special assistance from their social insurance office.

The first such agreements were concluded in January 2002 after the social partners and the government agreed on a standard outline and procedural guidelines. During the course of 2002, a total of 1,852 agreements were concluded, covering 456,000 employees. This means that one in four wage earners in Norway are now employed in an 'IA company'. Enterprises in the public sector have been the main participants, and approximately 300,000 of the 456,000 employees covered work in either the state or the municipal sector.

New measures

A range of new measures and support schemes has been developed to help companies achieve the goals of reduced sickness absence and increased participation by older workers and others with workplace adjustment needs. These measures were gradually implemented during 2002. Some of them assume that companies have concluded IA agreements, while others are more generally applicable.

Measures directed at IA companies

Companies with IA agreements are given the opportunity to make use of more flexible sickness certification. This is the case both in relation to the use of certificates providing for a combination of work and sickness absence (whereby the employee and employer themselves decide how much work and what type of work is to be carried out by the employee) and extended use of self-certification (ie the sick employee does not need a statement from a doctor for absences of a more short-term nature). The first of these measures is meant to enable the sick employee to keep in touch with the workplace, with a view to easing their subsequent return to work. Companies with IA agreements may make use of work/sickness absence certificates without prior approval by national social insurance authorities. Other companies need such approval before such flexible certificates may be utilised.

IA companies also have the benefit of a better and swifter follow-up service from the national social insurance authorities, including providing the company with its own contact person to give advice about measures and information about support services. These companies may also receive compensation for part of the costs involved in providing company-based occupational health and safety services relevant to the IA. In return, the companies commit themselves to monitor sick employees and make plans for their swift return to work. New in this regard is the fact that the doctors issuing sickness certificates must give a 'function evaluation' of the sick employee concerned - ie give a recommendation as to the type of tasks the person is capable of carrying out. The agreement also requires employees to provide information about the type of tasks they consider themselves fit to carry out.

General measures

Changes have also been made to the more general regulatory framework, in order to encourage employers to recruit or retain employees with workplace adjustment needs. To this end, the employer’s tax in respect of employees over the age of 62 has been reduced by 4%. Companies have also been (partly) exempted from paying sickness benefits to employees on sick leave due to pregnancy-related illnesses (for the first 16 days). In those cases where it is impossible to make adjustments to the workplace, the costs are covered by the National Insurance Scheme. Existing support schemes to encourage companies to appoint or retain employees with special needs or with impaired functionality have been strengthened. The national social insurance authorities have been strengthened by the establishment of a support service to monitor sick employees, and to advise and supervise companies.

Sickness absence rate rises

The sickness absence rate has increased steadily in recent years, and is high by international comparison. In the second quarter of 2002, sickness absence constituted 7.2% of all days worked. This was an increase of 0.3 percentage points compared with the same quarter in 2001. The sickness absence rate among men is 5.9%, whereas the rate among women is 9%. Although the statistics for the third quarter of 2002 are not yet complete, the figures that have so far been provided suggest that the sickness absence rate continued to increase in the second half of 2002.

Commentary

The goal of reducing sickness absence by 20% by 2005 is an ambitious one, and its achievability has been questioned. Developments thus far may seem to have strengthened this pessimistic stance. The growth in the sickness absence rate has so far not been reversed, which in autumn 2002 led to calls among leading politicians for a termination of the IA agreement, and for the present sick pay scheme to be altered in the 2003 state budget (NO0208102N). The Prime Minister, however, intervened and assured continued operation of the agreement.

The agreement is to be evaluated at mid-term, in autumn 2003. Thus further debate and controversy over the sick pay scheme is highly likely at that time. Among the measures previously proposed is a reduction in sick pay, either through the introduction of a waiting period (during which the absent worker does not receive compensation) or by not granting sickness absentees 100% wage compensation. The trade unions have already signalled that they will not accept cuts in the sick pay scheme, regardless of how the sickness absence rate develops. They argue that changes will have detrimental effects, given that women have a much higher sickness absence rate than men. These effects are reinforced by the fact that women receive much lower wages on average, and as such are financially more vulnerable.

Even if the agreement fails to accomplish the goal of a 20% reduction in sickness absence by 2005, the efforts to achieve a more inclusive working life will be of great value in the years to come. As in many other countries, there are concerns in Norway about the costs of public pension and social benefit obligations, as well as the fact that labour may be in short supply in the coming decade (NO0010109F). Measures to increase labour market participation and reduce labour market absence will thus be on the agenda in future. This means that the knowledge and experience gained through the work carried out under the IA agreement will be of importance to policy formation in this area. (Kristine Nergaard, FAFO Institute for Applied Social Science)

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