This blog is based on an article in Social Policy and Society by Thomas Leoni. Click here to access the article.
Health is an important determinant of employability and labour market inclusion, especially in societies characterised by an ageing workforce. In recent years, we can observe an increasing policy focus on residual work ability. Numerous countries, especially in Continental and Northern Europe, introduced or expanded graded sick-leave schemes, i.e. the possibility to combine (partial) benefit receipt with part-time work or gradual return-to-work.
The active involvement of the workplace is considered an important factor the successful reintegration of employees after an injury or illness. The role played by employers in different institutional contexts is however largely unexplored. In my article, I compare activation via graded-work schemes in four Continental countries – Germany, Austria, Switzerland and the Netherlands. The findings show that the institutional settings and governance of the programmes have a strong impact on the level of employer involvement in the management of sickness absences and return-to-work procedures.
The role of employers in activation policies has been attracting increasing interest in recent years. The employers’ involvement in activating programmes can however not be taken for granted. On the contrary, it has been shown that their activities with regard to return-to-work are often dominated by economic considerations and might vary strongly depending on the worker’s value to the organisation.
The four countries that are investigated in the article have many similarities in economic structure and welfare state development. At the same time, they display different combinations of sickness and disability policies, including features that are central to employer participation in the activation of sick-listed workers. One distinguishing trait concerns the question whether the insurance of health risks and the management of sickness absences are public or private. The other refers to the extent to which employers are confronted with obligations and incentives that may determine their activation efforts (see Figure 1).
Figure 1. Country Classification
Even countries that belong to the same corporatist welfare regime and share many common features in sickness absence regulations, such as Germany and Austria, make different provisions with respect to the role of employers in the activation of sick-listed workers. Pursuing the same objectives as Germany with its disability management legislation, in 2011 Austria institutionalised a sick-leave monitoring and case management programme. Contrary to Germany, in Austria the steps are however voluntary for both workers and employers, without any sanctions or regulatory incentives.
The analysis highlights a convergence across countries with respect to the activation logic that increasingly governs sickness absence policies. The differences in policy governance and in the different stakeholders’ roles are however very consequential for the intensity of employer efforts to activate sick-listed workers. The distinction between public and privatised systems of sickness insurance is of less consequence, than the degree to which institutional settings impose obligations and create incentives. This is highlighted by the Dutch example of ‘managed liberalization’, where the privatisation of social risks has gone hand in hand with the establishment of an encompassing regulatory framework to ensure a sufficient production of welfare. In Switzerland, too, the private system that governs health insurance and sick-leave is embedded in a strict regulatory framework. However, unlike in the Netherlands, it is primarily the workers who have obligations regarding activation and the prevention of long-term disability, whereas employers have mainly financial incentives to reduce sickness absences in the shorter term.
The available data indicate a broad correspondence between the extent to which employers face obligations and incentives and the intensity of efforts to activate sick-listed workers. Employer activity is highest in the Netherlands, followed by Germany and Switzerland. In Austria, employer participation is considerably lower than in the other countries.
The differences in employer participation have an impact on the selection of workers that are targeted for activation. Although this issue would need further investigation, the evidence supports the expectation that less comprehensive employer participation is correlated with stronger selectivity in activation efforts. With the exception of the Netherlands, support measures for return-to-work are considerably less likely in smaller establishments than in large establishments. Data for Germany and especially for Austria indicate a higher participation in graded sick-leave for white-collar workers as well as those with higher education and income.
Depending on the prevailing approach and on developments to date, policy-makers in the countries studied are confronted with different challenges and priorities. In the Netherlands, the remarkably high level of legal and financial responsibilities that employers have towards their sick-listed employees, poses the risk that firms might become selective in their hiring of workers with health conditions. In Austria, on the other hand, the priority is on measures to increase the diffusion of return-to-work measures and the participation of employers in activation efforts. In Germany, despite the fact that disability management is mandatory for all firms, implementation in small and medium-sized enterprises is not yet universal and necessitates further supportive measures.
The ongoing changes and policy discussions taking place in all four countries indicate that the activation of sick-listed workers will continue to play an important role in the further development of the examined European welfare states. The successful implementation of graded sick-leave and other policies to support return-to-work and prevent permanent labour market exit will depend to a good degree on the extent and modality of employer involvement. A combination of obligations with legal and financial incentives may be necessary to secure employer participation and a comprehensive coverage of the workforce.
About the author
Thomas Leoni is Senior Economist at the Austrian Institute of Economic Research.
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