1 The Inclusive Workplace Agreement: Past effects and possible new directions Christopher PRINZ* * OECD, Employment Analysis and Policy Division Directorate for Employment, Labour and Social Affairs Meeting with the government administration and the social partners, Oslo, Norway, 12 October 2005

2 Outline of the presentation r Norway in an international perspective r The objectives of the IW-Agreement r Available evidence on the objectives r Evaluating the success of the agreement l Extent of the decline in sickness absence l Causes of the decline in sickness absence l The bottom line: three main conclusions r Future directions for a new agreement r Important elements for future reforms

3 Norway in an international perspective 1. Outcomes r High level of sickness absence r High level of disability benefit receipt r But: very high rate of employment and low rate of overall unemployment 2. Policies r Comprehensive integration policy r Generous and easily accessible benefit system

4 The objectives of the IW-Agreement 1. to reduce sickness absence by at least 20% from the level in 2 nd quarter to secure employment for a larger number of people with disabilities 3. to increase the effective retirement age and thus prolong working life … through measures taken at the workplace

5 Available evidence on the objectives Quantitative evidence r LFS data on employment rates of people with a disability r Quarterly matched sickness absence data since 2000 (doctor- vs. self-certified) r Long-term trend in sickness absence of more than 16 days (reimbursed by NIA) r Trends in IW-firms versus other firms r NIA data on disability benefit inflows and stocks from

6 No increase in employment rates of disabled people Employment-population ratio in per cent, Source: Statistics Norway (Labour Force Survey)

7 Sudden drop in sickness absence since second/third quarter 2004 Total sickness absence, Source: Statistics Norway and National Insurance Administration

8 Trend growth in long-term sickness absence has also reversed since 2004 NIA-reimbursed sickness absence days, Source: National authorities and OECD estimate

9 Some but very small difference in trends in IW-enterprises and others Doctor-certified sickness absence, Source: National Insurance Administration

10 Evaluating the success: (1) Extent of the decline in absences r Definition of objective leaves some room for interpretation r Maybe half of the target was achieved r Key issue is outflow from work into long- term benefit i.e. long-term absences r So far, inflow into disability benefit has not responded (to either recent reform or recent decline in absences)

11 No impact so far on disability benefit inflows and stocks Stock of disability benefit recipients per 1000 people, Source: National Insurance Administration

12 Evaluating the success: (2) Causes of the decline in absences r To a larger extent reform to the sick pay scheme adopted in mid-2004 l Same trends in IW and non-IW enterprises l Coincidence of timing of reform and effect l Increase in self-certified absences r To a smaller extent cultural change brought about through IW-measures r How much of the change is cyclical i.e. related to trend in unemployment ?

13 Evaluating the success: (3) The bottom line 1. Standstill agreement is neither a necessary nor a sufficient condition: distinguish agreement and measures 2. Debate about legislative amendments 2004 vs. IW-agreement is fruitless: these measures complement each other 3. Cultural change may be two-sided l Sickness absence no longer private matter l But more health screening upon recruitment

14 Directions for a new agreement r Focus on reintegration of those people already on benefits (2 nd objective) r Clear targets for all its objectives r Focus on consequences of not achieving the targets, i.e. clearer obligations l Reference to issue of benefit levels r Make sure that the agreement is a driver to change (and avoid it being an obstacle to reform) l Disability Pension Reform Commission

15 Elements for future reform: Learning from others r Strengthen financial incentives for employers (e.g. Netherlands, Germany) r Reconsider the role of treating doctors (e.g. Switzerland, Australia) r Strengthen follow-up of temporary benefits (e.g. Poland, Italy) r Strengthen obligations, incl. better checks and controls (e.g. Austria) r Assess the impact of active labour market policy