Sweden’s sickness and disability reforms on track but could be improved, says OECD

Sweden’s ongoing reforms of its sickness and disability policies are a step in the right direction but more needs to be done if they are to live up to their promise, according to a new OECD report.

Sickness, Disability and Work: Breaking the Barriers. Sweden: Will the recent reforms make it? analyses the reforms introduced by the government since 2006 aimed at cutting the high number of people on sickness and disability benefit.

Sweden had more people of working age claiming sickness and disability benefit than any other OECD country in 2005: 14% of the working-age population. There were twice as many people on these benefits than were unemployed and too many workers on long-term sick leave: the share of sickness absences exceeding six months is more than 50% in Sweden, compared to only 10-20% in other OECD countries.

This situation prompted the Swedish Government which took office in 2006 to embark on major reforms. In mid-2008, the hitherto time-unlimited sickness benefit was capped to six months and those no longer eligible became expected to seek to continue working in an amended or different job, including with a different employer if necessary.

The report concludes that the changes in Sweden are far-reaching and address important structural problems. But it warns that implementation will be a big challenge given the breadth of reform and the scale of the problem in Sweden. It urges the government to remain committed to its reform programme despite the global economic downturn and expected rise in unemployment over the next two years. This will enable Sweden to return to growth quickly, with a lower welfare burden and capable labour supply.

Among the recommendations in the report:

1. For medical authorities who currently do not have sufficient incentives to ensure sick persons make a timely return to paid work:
• Introduce co-payment of sickness benefits with the county councils, as an incentive for the health system to keep sick-leave duration to the minimum medically necessary;
• Provide a medical rehabilitation guarantee by the county councils;
• Report and sanction general practitioners who do not comply with Sweden’s new sick-listing guidelines.

2. For employers who currently have few obligations with respect to their sick employees:
• Develop clear standards for assessing employers’ efforts in work reintegration;
• Increase financial incentives for employers to help ensure sick workers return to the workplace as soon as possible;
• Improve co-operation between employers and the Public Employment Service.

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