Does privatisation improve sickness absence policy within companies?

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Although the transfer of responsibility for sickness policy to the individual employer under the terms of the Sickness Benefits Act (ZW) led to a reduction in sickness absence in the Netherlands in 1995 and 1996, it has not improved sickness absence policy within companies. According to an August 1997 report from the FNV union confederation, works councils could potentially make a substantial contribution to improving the situation, though at present their role is quite minor. A more significant role would be possible if the Government were to take decisive action to limit some of the unintended results of privatisation which are often harmful to employees.

In August 1997, the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) published a report entitled Absence of policy, which outlined the results of a research project on the quality of sickness absence policy within companies. The study took place as a critical supplement to the Dutch Government's evaluation of the privatisation of the Sickness Benefits Act (ZW). According to the FNV, the Government must make better use of the knowledge and expertise of works council s which often have very clear insight into company policy. About 350 works councils participated in the research project.

In 1994 and 1996, far-reaching changes were made to the ZW with regard to absence. These changes led to a new allocation of responsibilities and risks between the Government, employers and employees. The financing and administration of the ZW was largely transferred from the public to the private sector. In 1998, market forces will also be introduced into the field of disability benefit. These changes aim both to reduce the volume of benefits and to improve policy with regard to sickness absence and working conditions.

Privatisation of the ZW

One consequence of privatisation is that the risk of sickness absence is transferred from the industrial sector as a whole to the individual employer. The period in which the employer is responsible for payment of the sickness benefit has been extended. This period was two days before 1994, when it was extended to two or six weeks, depending on the size of the company. As of 1 March 1996, the Law on the Extension of Continued Payment of Wages in Case of Sickness (Wet Uitbreiding Loondoorbetaling bij Ziekte, WULBZ) extended this to one year. This means that most employees in the Netherlands no longer receive a sickness benefit on the basis of the ZW. Instead, the employer is obliged to pay 70% of an employee's wage during the first year of sickness. The ZW will remain in force as a safety net for several groups of employees, such as temporary workers. If sickness lasts for more than one year, then disability laws will apply.

Privatisation has not only led to a greater financial risk for employers, but also to a shift in administrative responsibilities which have been transferred from the industrial insurance association s (joint semi-public organisations of the social partners) to the individual employer. On the basis of the reformed Working Conditions Act (Arbeidsomstandighedenwet), employers are obliged to consult an occupational health and safety service from 1 March 1994. The role of this service relates not only to monitoring and counselling sick employees, but also to working conditions, sickness prevention and reintegrating employees after a leave of sickness. Although these services are private organisations, the Government sets quality requirements by means of certification.

These changes have far-reaching consequences for employees, who are dependent on the employer, not only for continued wage payments but also for the assessment of sickness by the occupational health and safety service. The intermediary position of the industrial insurance association has been reduced to that of a second opinion in disputes.

Absence of policy

What are the results of privatisation? The earliest figures on 1994 and 1995 indicate a reduction in the rate of absence, which was the first goal of the policy. But how did the second goal fare, the improvement of sickness absence policy? In 1995, the Dutch Parliament pointed to some unwanted consequences of privatisation, like recruitment practices based on minimising the number of employees at risk of sickness. The Government promised to make an assessment of these side-effects of privatisation. Part of the subsequent report is already complete, and has contributed to supporting policies which encourage employers to hire people with health problems (for example, by means of wage-cost subsidies and trial placements).

In 1994, the FNV and the General Association of Employers (Algemene Werkgevers-Vereniging) drew up criteria for assessing the quality of sickness absence policies within companies. On the basis of these criteria, the FNV concluded in its Absence of policy report that policy was inadequate in tw- thirds of the companies investigated. Furthermore, only 5% of companies have a policy that addresses not only the monitoring and counselling of sick employees but also their actual working conditions and reintegration. In general, works councils do not adequately take advantage of the existing rights for workers' participation. In the Netherlands, works councils have the right of consent on absence policy, but only half of the councils chose to exercise this right. Moreover, the way in which employers record information on employee sickness does not comply with current privacy laws. Nevertheless, most works councils judge the protection of employee privacy to be sufficient.

The FNV concluded that well-developed workers' participation has a positive effect on the quality of sickness absence policy. At present, most works councils are not equipped to play a major role in improving this policy, and almost half are insufficiently involved in monitoring and helping to draft this policy. The FNV is in favour of a step-by-step improvement of sickness absence policy within companies. When privatisation occurs, too many changes are forced by financial incentives. Such step-by-step improvements do not appeal to most employers because they do not lead to lower absence and disability rates in the short term.

Commentary

Improving the quality of sickness absence policy within companies is an issue for the long term. The success of the policy is also dependent on the level of cooperation between works councils and occupational health and safety services. The ironic title Absence of policy is also a strong indication that this does not function adequately. Nevertheless, these bodies can play an important role in mitigating the unintended and unwanted consequences of privatisation (which jeopardise employee interests). On the other hand, as a result of privatisation, the Government has few substantive instruments by which to coordinate these bodies. Current measures are insufficient to allow these organisations and the works councils adequately to develop quality and represent employees' interests. The quality and stability of this policy can greatly benefit from the support of a strong government. (Eijmert Mudde, HSI)

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