Government proposes sick pay reform

In January 2003, the Swedish government issued a package of proposals aimed at achieving 'improved health in working life'. The measure include the introduction of part-time sickness absence (ie combining work with sick leave) as the norm, and greater responsibility for sick pay for public sector employers. In December 2002, a tripartite group discussing the same topic issued its report, though private sector employers had withdrawn from the talks.

On 21 January 2003, Hans Karlsson, the Minister for Working Life, presented a series of proposals in line with the 11-point programme for 'improved health in working life' issued by the government in November 2001 (SE0111108F) against a background of high levels of sickness absence (SE0301103N). There has long been a need for many new measures in this area, the Minister stated, and the government will start work immediately to push at least some of the proposals through parliament (Riksdag) in spring 2003 and ensure that new rules come into force on 1 July 2003. This commitment to swift action was probably aimed at placating the social partners, which had been involved in tripartite talks on this issue and issued proposals in December 2002. Some of the social partners expressed discontent, as they had not been able to discuss the tripartite proposal before the government's proposal was issued.

Government proposals

The government's proposals issued on 21 January 2003 take as their starting point measures to make the sickness absence process more effective and to give employers a greater incentive to cut sickness absence. Notably, a system of part-time sickness absence will be established as the norm (ie sick employees will work to the greatest extent possible), and the current system based on full-time sickness absence will be an exception. The system of doctors' certification of sickness will be clarified and improved. Entitlement to early retirement pensions on grounds of ill health will be reconsidered every three years (for workers under 60). The current rules on a waiting day (karensdag) before receipt of sick pay will be maintained. The Labour Market Board (Arbetsmarknadsstyrelsen) and the National Social Insurance Board (Riksförsäkringsverket) will examine the possibilities for local social insurance offices to take over the practical responsibility of helping more workers on sickness absence to find new jobs.

As for the employers' responsibilities, the government will start with changes in the public sector (ie central government, the municipalities and city councils). Public employers will, it is proposed, take over responsibility from the national insurance authorities for 15% to 50% of employees' sick pay, after the first 14 days of sick pay which is already met by all employers. As compensation, the employers' payroll 'employment tax' will be decreased by 0.75 percentage points to 2.5%. Employers which create a good working environment and have a low sick absence rate will gain from such a change in the sick pay system, Minister Karlsson stated at the press conference at which the proposals were presented.

The tripartite talks

On 17 December 2002, the chair of the tripartite talks over improved health at work, Kenth Pettersson, the director general of the Work Environment Authority (Arbetsmiljöverket), made public a final report containing a programme of measures to be taken in order to decrease Sweden's high 'incapacity rate'. The incapacity rate measures the payments made by the social insurance system (including early retirement pensions) to compensate for loss of income due to ill health for people aged 16-64, and is expressed in the average number of reimbursed days per insured person. It stood at almost 44 days per person in 2002.

The tripartite talks on the government's 11-point plan started on in November 2001. At the beginning of December 2002, the Confederation of Swedish Enterprise (Svenskt Näringsliv), representing private sector employers' associations, announced that it would leave the tripartite talks immediately. It stated as one of its major reasons a perception that the government's primary interest was in shifting to other parties the high costs to the state arising from sickness absence.

Despite the withdrawal of the Confederation of Swedish Enterprise, Mr Pettersson chose to present in December 2002 a programme supported by the trade unions and the public sector employers' associations, entitled 'A working life for all'. The main points in the programme, in some cases reflected in the subsequent government's proposal, were that: part-time sickness absence must be the norm; employers should be obliged to pay 25% of sick pay where full-time sickness absence is necessary; and the current rule on a one-day waiting period before benefit entitlement starts should be made stronger.

The total monetary costs of sickness absence and ill health to society are estimated at about SEK 120 billion for 2002, out of which 'ordinary' sickness insurance accounts for about SEK 50 billion and early retirement pensions for SEK 50 billion. The reasons for the very high costs are many, Mr Pettersson states in the tripartite programme. To a growing extent it seems as if employees, employers and doctors have accepted the sickness absence system as a way of resolving acute problems in workplaces and in family and private life. According to the programme, these attitudes must change, through for example discussions in the workplace, with the support of information material and other educational efforts. Furthermore, small companies must receive some state compensation where their costs for sick employees are too high.

Private sector employers' objections

As mentioned above, private sector employers, represented by the Confederation of Swedish Enterprise, left the tripartite talks in early December 2002. The tripartite group's proposal that employers should pay 25% of longer-term sick pay, on top of the current first 14 days, is a result of wrong thinking, stated the confederation's spokesperson, Jan-Peter Duker, in a press statement in late December 2002.

The Confederation of Swedish Enterprise has made four concrete counter-proposals to reduce the sick absence rate:

• maintaining the current system whereby the employer pays the first 14 days of sick pay. However, employers would have a right, on a voluntary basis, to pay sick pay for a longer period, in return for compensation in the form of decreased sickness insurance contributions;

• reducing the general level of sick pay for all employees to 75% of normal pay - it currently stands at 80% of pay, up to a ceiling of SEK 24,000 per month;

• introducing a right for employers to assign an employee to a certain doctor, plus the right to demand a sickness certificate from the first day of sickness absence; and

• introducing a right for employees to request leave on absence in order to find another job. According to the employers, many workers are reluctant to change to another job and stay on in their position in spite of not feeling well. This is one major reason for long periods of sickness absence, the private employers stated.

At an earlier stage, there was a discussion about making employers responsible for the first 60 days of sick pay (instead of the current 14 days). This idea, deeply criticised by all the employers, now seems to have disappeared (SE0202103N).

Commentary

Swedish sickness absence and incapacity rates are high, while sickness insurance costs about SEK 50 billion a year and ill-health early retirement pensions another SEK 50 billion. When the current work on the ill-health issue started in late 2001, all parties concerned seemed convinced that some sort of cooperation was needed to resolve the problems. However, following their withdrawal from the tripartite talks, the private sector employers are no longer in the picture. It may be that the government's new proposals on increasing public sector employers' responsibility for sick pay will serve as a test case, with the government seeing how the scheme works out and then approaching the private sector employers again. Anyhow, the government wants to see something done rapidly. The procedure has already taken longer than scheduled.

The work environment in many companies is far from perfect. There is much physical and psychological stress, inadequate work organisation and poor leadership. Workers often go sick because of muscolo-sceletal problems, 'burn-out' symptoms, and other reasons. On the other hand, even Mr Pettersson, the director general of the Work Environment Authority and chair of the tripartite talks on ill health at work, admit that it is perhaps too easy to obtain a sickness certificate, that doctors are too mild in their assessments, and that there may even be some misuse of sickness insurance.

When the new Social Democratic Party (Socialdemokratiska Arbetarepartiet, SAP) government started work in October 2002 (SE0210102F) it stated that addressing ill health in the workplace was one of its two main goals. The new Minister for Working Life, Hans Karlsson announced confidently that the number of sick workers would be halved by 2008. It remains to be seen first how successful the government's new proposals will prove, after consultation among concerned parties and the final procedure in parliament. Above all, there is another general issue to consider: what will happen to slightly sick or disabled workers looking for jobs? With greater pressure on employers, in the form of greater responsibility for the sick pay, is there a risk that such workers will not be recruited? (Annika Berg, Arbetslivsinstitutet)