Impact of changes in staff numbers on sickness absenteeism

Changes in the number of staff, both reductions and increases, result in an increased level of sickness absenteeism. This effect can also be found for the employees who are not directly affected by the changes. These are the main findings of a study conducted by the Norwegian Labour and Welfare Administration (NAV) based on data from the second quarter of 2000 to the fourth quarter of 2004 taken from a selection of Norwegian data registers.

Background

The Norwegian Labour and Welfare Administration (Arbeids- og velferdsforvaltningen, NAV) was formed on 1 July 2006 as a result of the merger of the National Insurance Administration (Rikstrygdeverket) with Aetat – the Norwegian Public Employment Service (NO0610069I). As part of its tasks, NAV administers schemes such as unemployment benefits, rehabilitation allowances, pensions and child benefits; it also provides cash benefits in cases of sickness absenteeism.

In Norway, daily cash benefits for employees in the case of sickness amount to 100% of pensionable income, and are paid from the first day of sick leave up to a maximum of 260 days – the equivalent of 52 five-day working weeks including paid holidays. Daily cash benefits in the case of sickness are paid by the employer for the first 16 calendar days, and thereafter by the National Insurance Scheme (Folketrygden). Income exceeding about NOK 400,000 (about €43,813 as at 10 December 2008) is not taken into account.

For the last two decades, sickness absenteeism has been high on the agenda in Norwegian working life, resulting for example in the agreement for a more inclusive working life (Inkluderende arbeidsliv, IA-agreement) (NO0601101N, NO0702019I) between the social partners and the government.

About the study

A study conducted by NAV based on data from the second quarter of 2000 to the fourth quarter of 2004 taken from a selection of Norwegian data registers looks at the effects of staff changes, both reductions and increases, on the level of sickness absenteeism. The following sources of information were used in the study:

  • the national central register on sickness absenteeism;
  • the welfare services register on cash benefits;
  • the Statistics Norway (Statistisk sentralbyrå, SSB) register on establishments and enterprises;
  • the statistical bank of SSB;
  • data on enterprises that have signed up for the IA-agreement;
  • other registers used to control information.

Criteria for selection of enterprises

Companies that met the following criteria were included in the analyses:

  • registered as an establishment or enterprise during the entire period of study – from the second quarter of 2000 to the fourth quarter of 2004;
  • had 25 employees or more during all quarters of the study;
  • had 100 employees or more during at least one quarter of the study period;
  • given these three criteria, had at least five employees who were employed during the entire study period.

Enterprise selection and further division

A total of 3,093 companies found in the registers met all of the above criteria and were included in the study. These companies were divided into three groups:

  • 500 companies with the most substantial downsizing – this group had an average reduction in employees of 50% during the study period;
  • 500 companies with the largest increase in staff numbers – this group had an average increase in employees of more than 50% during the study period;
  • the remaining 2,093 companies being defined as ‘stable or moderate’ concerning changes in staff numbers.

Key findings

In the first group of companies with substantial downsizing, absenteeism increased among the employees with stable employment. In the second group of companies with increasing staff numbers, the sickness absenteeism rate was also found to rise among those in stable employment: the stronger the growth in staff numbers was, the stronger the level of absenteeism rose. In the third group of companies with small or moderate staff changes, no significant relation between the changes and absenteeism was found.

Downsizing had the strongest effect on absenteeism rates among younger men and older women. Expansion had the strongest effect on the absenteeism of older women.

Increasing sickness absence after conclusion of layoffs

The research revealed a pattern for sickness absenteeism for workers with stable employment in the companies that downsized: during the actual period of downsizing, the level of absenteeism was stable, but later when the layoffs were concluded the level of absenteeism increased. Moreover, absenteeism increased to a level where it was, on average, slightly less than one day above the level in comparable companies.

This increase in sickness absence was considered significant; for example, if absenteeism was maintained at this level, where the increase is directly related to the reduction of employees, it would account for 1.5 percentage points of the total sickness absenteeism rate for the entire year for the group of employees with no changes in their employment situation.

Control for other factors

The findings have been controlled for a number of factors that are usually expected to influence sickness absenteeism, such as age, trends in absenteeism, job insecurity and differences in working life sectors. The results were also checked against a possible influence from the regulations on sickness absenteeism benefits; however no connection was found.

Commentary

It is not surprising that staff reductions affect the health and well-being of employees. However, this study documents that company growth can also be a challenge in this regard. Growth can be a result of company success and increased demands. It could also be the turbulence caused by changes that follow when an organisation expands, or it may be an increase in workload resulting in an attempt to keep up with increased expectations. Generally, it could be expected that organisational change will always represent a challenge when it comes to securing the well-being of employees.

References

National Insurance Administration (Rikstrygdeverket), Nedbemanning og sykefravær, Report No. 6, Oslo, 2005.

Bjørn Willadssen, Linkx

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