Occupational disability: a Dutch disease?

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The number of occupationally disabled employees in the Netherlands remains significantly higher than in any other European country, with figures still on the rise in 1998. However, government proposals advanced in January 1999 containing seemingly minor amendments to the Occupational Disability Insurance Act (WAO) have aroused substantial criticism. Employers and employees are divided over how the issue should be tackled.

In late 1998, it became clear that the number of beneficiaries of the Occupational Disability Insurance Act (Wet Arbeids Ongeschiktheid, WAO) is still on the rise. In the Netherlands 900,000 employees are currently registered as disabled for work. In relative terms, this figure is the highest in the world. These recent figures have caused a great deal of controversy. Differing proposals have been put forward by political parties and representatives of employees and employers, and the responses have been equally divided.

Historical background

The WAO dates from 1967 when it served to replace the 1921 Industrial Accidents Act. Employees who have received benefits on the basis of the Sickness Benefits Act for over a year become eligible for WAO benefits. These benefits are awarded regardless of the cause of disability. On the basis of the 1967 WAO, those people who were unfit for (full-time) employment received 80% of their last earned income. The number of benefit recipients began to rise sharply in the early 1980s, and it became clear that both employers and employees were using the scheme as a means to "facilitate" organisational restructuring. Subsequent governments made several cuts - for example, benefits were reduced to 70% and linked to the age of the recipient. Nevertheless, the number of occupationally disabled employees continued to grow. When, in 1991, the 900,000 mark was exceeded, cabinet proposals aimed at tightening the arrangements were put forward. These proposals nearly prompted the government's downfall, but an agreement was finally reached in 1993. The term "suitable employment" (in the context of work that claimants might be expected to perform) was redefined and expanded, and all WAO beneficiaries under the age of 50 had to be reassessed. Subsequent years saw the introduction of numerous new measures and acts.

Some 335,000 disabled employees between the ages of 35 and 45 were reassessed between 1994 and 1998. In one of the most far-reaching measures, employers - rather than public funds - were obliged to pay 70% of an employee's salary during the first year of sickness absence (NL9804171F). In 1998, it became mandatory for employers to enter into a contract with a health and safety service - that is, a commercial company geared to providing support for sick employees, that offer the employer consultancy services and assessment of its working conditions policy. Market incentives have also since been introduced in the form of differentiations in contributions: the higher the number of its employees to enter the WAO scheme, the greater the company's WAO contribution. Simultaneously, a number of financial incentives have been created for employers which take on or continue to employ (partially) disabled employees. However, by the start of 1999, the effect of these various measures appears to have been relatively minor. WAO benefit cuts are compensated for under the terms of most collective agreements. The great majority of employers have insured themselves against the effects of contribution differentiation and the obligation to continue to pay sick employees for the first year of absence. In practice, mandatory contracts with health and safety services are usually limited to a "basic package".

WAO benefits: overview

Every year in the Netherlands, employees call in sick some 8 million times. In 80% of these cases, sick leave lasts less than seven days; 4.5% of the employees concerned are still sick after three months; 2.25% are still absent from work after six months; and 1.3% fail to recover within a year. Employees enter the WAO scheme after a full year of illness. Taking 1998 as an example, this means an annual increase of 100,000 WAO claimants. At the same time, between 80,000 and 90,000 claims are terminated each year. The number of WAO benefit allocations went up by 41,000 (6.8%) over the course of 1998, while the total workforce increased by 6.5%. (These figures do not quite match up in the official source, partly because of changes in the basis of calculation.)

Approximately one-third of all WAO claimants suffer from mental health problems. However, the proportion of WAO claimants with mental health problems does not exceed figures for other countries. Mental health problems are more common amongst women and younger employees, and amongst those working in administrative and commercial positions. Mental health problems appear to be related to workplace conditions (predominantly work-related stress and high workloads) in 50% to 70% of cases. Comparative international studies have indicated that workloads in the Netherlands are higher and have been growing faster than elsewhere in the European Union in recent years. Research carried out by the National Institute for Social Security (Landelijk Instituut Sociale Verzekeringen, LISV) - a body containing representatives of trade unions, employers and independent members - has shown that these individuals in particular often fail to receive the necessary treatment or counselling.

A quarter of all WAO recipients do not receive a timely assessment. The number of rejected benefit applications rose sharply between 1991 and 1994, but has now dropped to its 1991 level. The same development has characterised the allocation of full benefits.

Cabinet proposals

In a cabinet proposal put forward in January 1999, Hans Hoogervorst, the state secretary at the Ministry of Social Affairs and Employment suggested cutting back the expected increase in the number of WAO recipients (currently at 897,000) by holding more frequent, stringent assessments (NL9901121N). Such measures are aimed primarily at stabilising growth, as opposed to cutting back the number of recipients outright. The number of disabled employees would then grow to an estimated total of 930,000 by the year 2002. This figure is projected to reach 946,000 if the measures proposed by Mr Hoogervorst are not adopted. In other words, the cabinet seems open to the idea of an increase of claimants in absolute terms, but finds a relative increase in proportion to the total workforce unacceptable. The cabinet proposal is based on a stricter enforcement of current policy: intensified checks and greater control over the reassessment and reintegration process. One example would be the introduction of mandatory second opinions, with one doctor checking another's findings. Under the proposals, he uniformity of assessments should be guaranteed to a greater extent. Existing measures aimed at stimulating partially disabled employees to find work would be applied more stringently. Clear, unequivocal assessment guidelines should be formulated for mental health-related occupational disability.

In part, the plans are based on a "quick scan" commissioned by the government. This survey revealed that the number of suitable jobs found for WAO claimants could be raised by 20% by holding checks on assessments. The more intensive the check, the higher the estimated remaining capacity to work. Intensive checks reduce the number of full disability benefits awarded by 30%. Double checks (by both industrial and insurance medical officers) lead to a complete rejection of 21% of claims submitted (that is, 79% are allowed). Single checks lead to a rejection of only 12% of claims (with 88% allowed). When a claim is allowed, it may be granted in full or in part. Double checks lead to full benefits in only 46% of cases, whilst single checks lead to full benefits in 75% of cases. However, the proportion of double checks dropped from 76% to 63% between 1994 and 1998.

Political response

The basic sentiment in the Lower House of the Dutch parliament is that the government's proposed measures are not far-reaching enough. One of the parties in the coalition government, Democraten 66 (D-66), would like to see an active policy of reintegration to stimulate a reduction of the number of WAO claimants. The party is in favour of more extensive assessments, while the cabinet advocates speeding up the assessment process. The main opposition party, the Christian Democrats (Christen Democratisch Appel, CDA) would like to see employers and employees obliged to draw up a reintegration plan, although this is already mandatory under the current law. At the end of 1998, the CDA even suggested cancelling WAO cutbacks and supported an increase in benefits to 70% of employees' last earned salary. However, the party set the following conditions: the social partners must be made fully responsible for the implementation of social security; and there must be a sharp drop in the number of WAO recipients.

As for the other coalition parties, the Labour Party (Partij van de Arbeid, PvdA) is considering a measure that would make it impossible for employers to dismiss partially disabled employees, and would force employers to take on more disabled employees, while the Liberal Party (Volkspartij voor Vrijheid en Democratie, VVD) is claiming that new cuts to the level and duration of WAO benefits may be necessary. Another opposition party, GroenLinks, is seeking to roll back the privatisation of the Sickness Benefits Act (NL9804171F) to the extent that employers would be required to pay only for the first three months of sick leave. The party would also like to see WAO contribution funds used for reintegration purposes during the first year of absence. In addition, there should be a mandatory quota of occupationally disabled employees in each company. According to GroenLinks, the percentage of occupationally disabled workers in companies and organisations currently stands at 1.3%, as opposed to 1.9% in the late 1980s.

Reactions from employers and employees

The largest employers' association, VNO-NCW, is seeking to reduce the level and duration of benefits. The largest trade union confederation, the Federation of Dutch Trade Unions (Federatie Nederlandse Vakbeweging, FNV) is strongly opposed to any such measures, and rejects the cabinet's proposals. The FNV underscores the importance of lowering the influx of new WAO recipients by improving working conditions and promoting a return to the labour market by means of reintegration measures. The FNV supports the PvdA's proposal to require employers to take on a specific percentage of disabled workers. In early February 1999, the FNV followed GroenLinks in calling for a reversal of a substantial part of the Sickness Benefits Act, on the grounds that privatisation measures have backfired. FNV claims that it is the government, as opposed to private health and safety services, that should handle the assessment of sick employees. Assessments would then be the responsibility of so-called "centres for work and income" (Centra voor werk en Inkomen, CWI).

The Christian Federation of Trade Unions (Christelijk Nationaal Vakverbond, CNV) has stressed the need for more efficient reintegration back into the labour market, and has proposed easing legislation on part-time work to stem the influx of new WAO claimants. It believes that part-time work could prove to be a solution for many WAO cases caused by excessive workloads and mental strain. The chair of the Dutch Federation of Small and Medium-Sized Enterprises (Midden en Klein Bedrijf, MKB) was deluged by criticism after he made a call for an end to disability benefits for those suffering from mental disorders. He later toned down his proposals, saying that such employees should be awarded "provisional" benefits, which would mean more frequent reassessments of the group in question.

In early February 1999, the MKB also demanded that its members' WAO contributions be reduced, claiming that the blame for the WAO problem lies with large-scale companies. An analysis by the Dutch Joint Administration Office (GAK Nederland) has revealed that companies such as KPN, KLM, Dutch Railways (NS), the electronics engineering industry and the banking sector are the main cause of the rise in WAO recipients. The number of employees entering the WAO system in other sectors, including bakeries and the hotel and catering, printing and steel industries, was far lower in 1998. However, due to the system of contribution differentiation, a disproportionate rise amongst employees in large companies will mean increased WAO contributions in these sectors too.

Containing the influx: working conditions policy

The government, the political parties and especially the trade unions underscore the importance of good working conditions as a form of prevention. On 15 January 1999, the cabinet released a proposal entitled New health and safety agreements: policy strategy for the next four years (1999-2002). The proposal refers to the coalition agreement, in which a more active working conditions policy was announced (NL9809198F). The cabinet views cooperation with the social partners as a vital element in this process. The state secretary responsible expressed his satisfaction at the fact that the social partners had reached an agreement on this issue in the annual "autumn round" of national-level consultations held on 3 December 1998. The cabinet views health and safety agreements as a further step on the road towards an independent role for employers and employees, as set out in the proposal for a new Working Conditions Act (NL9812112F).

Health and safety agreements are not a new instrument as such. Agreements between employers, employees and the government have been reached in various sectors in the past. What is unique here is the role-defining quality of the proposed agreements. The proposal also entails establishing a link between collective agreements, which could include working conditions policy, and a number of other issues such as workloads, working hours, wage formation and the relationship between poor working conditions and labour market bottlenecks (NL9808195N).

Stimulating a return to the labour market: reintegration

The cabinet proposal contains a number of critical comments directed at the executive agencies involved (health and safety services, allegedly lax doctors and executive bodies) claiming an insufficient response during the first year of illness. One such allegation is that the executive agencies fail to respond to the reintegration plans drawn up during sickness. In a report submitted to the cabinet in early February 1999, the LISV advised holding checks at an earlier stage to determine the risk that sick employees might end up within the WAO system, to allow for more effective intervention. The decision to approve the drafting of a recovery plan can then be made on the basis of the employee's chances of recovery. The current obligation to submit a recovery plan after 13 weeks of illness is effectively a "paper tiger": according to the LISV, most health and safety services merely submit a standard form, which is not followed up in most cases.

The executive medical assessment agencies dismiss the cabinet's criticism, pointing out that they are called in only after a year has passed, and subsequently approve no more than 50% of benefit applications. One of LISV's findings is remarkable in view of the tight labour market: as many as 80% of employers do not consider disabled employees for new positions. However, employers with disabled employees tend to consider taking on other disabled candidates for new positions.

Commentary

Despite all the upheaval and subsequent measures that characterised the early 1990s, the Netherlands seem to be back where they started in terms of the WAO. The number of WAO benefit recipients is on the rise once again, and the high figures compare unfavourably with those of other countries. Measures aimed at stemming the influx of new beneficiaries and stimulating re-entry into the labour market appear to have a limited effect, whilst demographic shifts seem certain to exacerbate the situation: the ageing population will involve increasing use of the WAO. The call from employers to cut the duration and level of benefit payments seems unlikely to be heard in the near future, in view of the lack of political support. The unions' call for improved working conditions and more effective reintegration has fallen on more willing ears, but it remains to be seen whether the cabinet will actually introduce a sanctioned system of quotas. In the meantime, the cabinet appears to realise that there are no easy answers to the questions at hand. The decision to steer towards stabilisation is seen as an admission of weakness by many, but seems, in fact, the most realistic option. (Robbert van het Kaar, HSI)