Sickness, Disability and Work: Breaking the Barriers: A Synthesis of Findings across OECD Countries

169 Pages·2010·3.66 MB·English

by  OECD

Sickness, Disability and Work
breaking the barrierS
Sickness, Disability
Too many workers leave the labour market permanently due to health problems or disability, and
too few people with reduced work capacity manage to remain in employment. This is a social and
and Work
economic tragedy common to virtually all OECD countries. It also raises an apparent paradox that
needs explaining: Why is it that the average health status is improving, yet large numbers of people of
working age are leaving the workforce to rely on long-term sickness and disability benefits?
breaking the barrierS
This report, the last in the OECD series Sickness, Disability and Work: Breaking the Barriers,
synthesises the project’s findings and explores the possible factors behind the paradox described
above. It highlights the roles of institutions and policies and concludes that higher expectations and
better incentives for the main actors – workers, employers, doctors, public agencies and service
providers – are crucial. Based on a review of good and bad practices across OECD countries, this
report suggests a series of major reforms is needed to promote employment of people with health
problems.
The report examines a number of critical policy choices between, for example: tightening inflows and
raising outflows from disability benefit; and promoting job retention and new hiring of people with
health problems. It questions the need for distinguishing unemployment and disability as two distinct
contingencies, emphasises the need for a better evidence base, and underlines the challenges for
policy implementation.
In the same series
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Vol. 2: Australia, Luxembourg, Spain and the United Kingdom (2007) es
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Vol. 3: Denmark, Finland, Ireland and the Netherlands (2008) , D
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Sweden: Will the Recent Reforms Make it? (2009) a
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Canada: Opportunities for Collaboration (2010) ilit
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n
d

www.oecd.org/els/disability W
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© The painting on the front cover comes from “Ateliers Personimages”, a French non-profit association promoting artistic r
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creation for disabled people (www.personimages.org) a
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The full text of this book is available on line via these links: e
www.sourceoecd.org/employment/9789264088849 ba
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www.sourceoecd.org/socialissues/9789264088849 r
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A SYNTHESIS OF FINDINGS ACROSS OECD COUNTRIES
iSbn 978-92-64-08884-9 -:HSTCQE=U]]]Y^:
81 2010 15 1 P
www.oecd.org/publishing

Sickness, Disability
and Work: Breaking
the Barriers
A SYNTHESIS OF FINDINGS ACROSS
OECD COUNTRIES
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
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The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea,
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic,
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views of the Organisation or of the governments of its member countries.
ISBN 978-92-64-08884-9 (print)
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Also available in French: Maladie, invalidité et travail : Surmonter les obstacles – Synthèse des résultats dans les pays de l'OCDE
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FOREWORD
Foreword
S
ickness and disability policies are rapidly moving to centre stage in the economic policy agenda of
many OECD countries. Even before the onset of the recent recession too many people of working age
who were able to work relied on sickness and disability benefits as their main source of income, and
the employment rate of those reporting disabling conditions was low. The economic crisis has added
to this pressure by raising the possibility that many of the long-term unemployed may end up on
sickness and disability benefits, similar to what happened in previous downturns. In this context,
there is an urgent need to address this “medicalisation” of labour market problems by tackling the
widespread use of disability benefits across the OECD and promoting labour market participation of
people with disability. Many people with health problems can work and indeed want to work in ways
compatible with their health condition, so any policy based on the assumption that they cannot work
is fundamentally flawed. Helping people to work is potentially a “win-win” policy: It helps people
avoid exclusion and have higher incomes while raising the prospect of more effective labour supply
and higher economic output in the long term.
This report summarises the thematic review on Sickness, Disability and Work undertaken by
the OECD over the past few years. It analyses key labour market outcomes of people with disability
across the OECD and draws policy lessons from the thirteen reviewed countries (Australia, Canada,
Denmark, Finland, Ireland, Luxembourg, the Netherlands, Norway, Poland, Spain, Sweden,
Switzerland and the United Kingdom) in transforming their sickness and disability schemes to active
support systems that promote work. The report consists of six chapters and an Executive Summary
with the main conclusions and policy recommendations. Chapter1reviews the main trends and the
short and long-term economic context in which disability policy operates. Chapter2sets the scale of
the problems by laying out the main social and economic outcomes for people with disability and
society at large across the OECD. Chapter3looks at the direction and extent of recent sickness and
disability policy reforms, the degree of policy convergence across countries, and the impact of policies
on the disability beneficiary rate. The three subsequent chapters discuss key policy areas in need of
change: The disability benefit system, which is too passive in most cases, and the work incentives it
provides (Chapter4); the involvement and financial incentives of employers, especially in the critical
sickness absence phase (Chapter5); and the responsibilities for public authorities and service
providers in helping people access timely employment supports (Chapter6).
The report also provides an update, further development and deepening of the findings of
the2003 OECD report on disability policy for the working-age population, Transforming Disability
into Ability, many of whose conclusions are still valid. As this new report shows, in many countries
disability policy has advanced considerably during the past decade. However, changes in outcomes
have not kept pace with changes in policy development. Disability appears to be a moving target for
policy makers, requiring i)more rigorous implementation of rules and r ecent changes and
ii)additional and more comprehensive reform. Moreover, things have become even more complicated
in recent years because of the growing weight of a wide range of mental health problems in the
inflows to sickness and disability systems. The latter phenomenon is not yet well understood and the
SICKNESS, DISABILITY AND WORK: BREAKING THE BARRIERS © OECD 2010 3
FOREWORD
OECD has just launched a new country review exercise to analyse it and evaluate which policies
might help to counteract it.
Work on the Sickness, Disability and Work review was a collaborative effort, carried out
jointly by the Employment Analysis and Policy Division and the Social Policy Division of the OECD.
The report was prepared by ChristopherPrinz (team leader), Shruti Singh, Heonjoo Kim and Ana
Llena-Nozal, with contributions from Allen Gomes and Veerle Slootmaekers. Tax/benefit models
were provided by Dominique Paturot, statistical work by Dana Blumin and MaximeLadaique, and
administrative support by Sophie O’Gorman. John Martin, Monika Queisser and Stefano Scarpetta
provided valuable comments. The report also includes comments received from the reviewed
countries and is otherwise based on the comparative review reports published during2006-10and
additional information provided by member countries.
4 SICKNESS, DISABILITY AND WORK: BREAKING THE BARRIERS © OECD 2010
TABLE OF CONTENTS
Table of Contents
Executive Summary and Policy Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Chapter 1. The Economic Context forDisability Policy. . . . . . . . . . . . . . . . . . . . . . . . . 21
1.1. The importance of workers with disability to the economy and society. . . . . 23
1.2. Workers with disability face greater barriers in the labour market . . . . . . . . . 27
1.3. Trends in disability benefit rates, the business cycle and population ageing. 34
1.4. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Annex 1.A1. Defining and Measuring Disability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Annex 1.A2. Additional Supporting Evidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Chapter 2. Key Trends and Outcomes in Sickness and Disability . . . . . . . . . . . . . . . . . . 49
2.1. Insufficient labour market integration of people with disability. . . . . . . . . . . . 50
2.2. Poor financial resources of people with disability. . . . . . . . . . . . . . . . . . . . . . . . 53
2.3. High costs of sickness and disability benefit schemes . . . . . . . . . . . . . . . . . . . . 57
2.4. Benefit system dynamics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
2.5. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Annex 2.A1. Additional Supporting Evidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Chapter 3. The Direction of Recent Disability Policy Reforms . . . . . . . . . . . . . . . . . . . . . . 77
3.1. Key reform trends across the OECD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
3.2. Policies converge despite continuing differences . . . . . . . . . . . . . . . . . . . . . . . . 84
3.3. The effect of policy changes on disability benefit rolls. . . . . . . . . . . . . . . . . . . . 91
3.4. The political economy of reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
3.5. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Annex 3.A1. OECD Disability Policy Typology: ClassificationoftheIndicator Scores. . . 99
Annex 3.A2. OECD Disability Policy Typology: Country Scores Around2007. . . . . . . 101
Chapter 4. Transforming Disability Benefits into an Employment Instrument . . . . . . . 103
4.1. From disability assessment to work-capacity assessment. . . . . . . . . . . . . . . . . 104
4.2. Moving to an activation stance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
4.3. Making work pay: reforming tax and benefit system . . . . . . . . . . . . . . . . . . . . . 117
4.4. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
SICKNESS, DISABILITY AND WORK: BREAKING THE BARRIERS © OECD 2010 5
TABLE OF CONTENTS
Chapter 5. Activating Employers and Medical Professionals. . . . . . . . . . . . . . . . . . . . . . . 125
5.1. Strengthen incentives for employers to keep workers with health problems. . . 126
5.2. Supporting measures to ensure employers can fulfil their responsibilities . . 134
5.3. Stronger employment focus by medical professionals. . . . . . . . . . . . . . . . . . . . 139
5.4. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Chapter 6. Getting the Right Services to the Right People at the Right Time . . . . . . . . . 145
6.1. Improving cross-agency co-ordination and co-operation . . . . . . . . . . . . . . . . . 147
6.2. Engaging with clients systematically and in a tailored way. . . . . . . . . . . . . . . . 153
6.3. Addressing incentives for private service providers. . . . . . . . . . . . . . . . . . . . . . 161
6.4. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Tables
1.1. Work-related stress increases with higher work intensity and lower work
satisfaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1.2. The impact of the business cycle on employment of people with disability
is small compared with the effect of disability itself. . . . . . . . . . . . . . . . . . . . . . . 31
2.1. Incapacity-related spending is much higher than unemployment-related
spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
2.2. Probability of receiving a disability benefit after a sickness absence spell
varies with personal characteristics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.1. Three distinct disability policy models across the OECD . . . . . . . . . . . . . . . . . . . 88
3.2. What explains changes in disability benefit recipiency rates? . . . . . . . . . . . . . . 92
3.A1.1. OECD disability policy typology: classification of the indicator scores. . . . . . . . 99
3.A2.1. OECD disability policy typology: country scores around2007 . . . . . . . . . . . . . . . 101
4.1. Partial disability benefit regulations vary considerably across OECD countries . . . 109
4.2. More and more countries are providing disability benefits foratemporary
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
5.1. Obligations for the employer are generally weak in regard to vocational
rehabilitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
5.2. Pathways into disability benefit are manifold but sickness is a major precursor
everywhere. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
6.1. Eligibility criteria for employment supports are very restrictive . . . . . . . . . . . . . . . . 155
Figures
1.1. Disability prevalence at working age is high in most OECD countries . . . . . . . . . . . 22
1.2. Social and economic integration of persons with disability islaggingbehind . . . . 23
1.3. Higher participation rates for people with disability can help prevent future
labourforce declines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.4. People with disability have significantly lower levels of education. . . . . . . . . . . . . . 27
1.5. The education gap between people with and without disability hasincreased
over cohorts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.6. Trends in labour market and working condition indicators areinconclusive. . . . . 29
6 SICKNESS, DISABILITY AND WORK: BREAKING THE BARRIERS © OECD 2010
TABLE OF CONTENTS
1.7. Following the peak of a recession, disability benefit recipiency rates tend
to increase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
1.8. The economic cycle is only one and often not the main factor explaining
fluctuations in the disability beneficiary rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
1.9. Disability prevalence increases sharply with age which is critical inview of
population ageing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
1.10. Demography explains only some of the change in disability beneficiary trends . . 38
1.A2.1. Leaving employment leads to higher mental distress… . . . . . . . . . . . . . . . . . . . . . . . 46
1.A2.2. …while finding a job results in improved mental health . . . . . . . . . . . . . . . . . . . . . . 47
2.1. Employment rates of people with disability are low and have been falling
in many countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.2. Employment rates of people with mental health conditions areparticularly low. . 52
2.3. When employed, people with disability work part-time more often than others . 52
2.4. People with disability are twice as likely to be unemployed, eveningood times. . 53
2.5. Incomes of people with disability are relatively low, unless they are highly
educated and have a job . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.6. People with disability are at greater risk of living in or near poverty . . . . . . . . . . . . 56
2.7. Many non-employed persons with disability are not eligible for or do not
receive public benefits in Mediterranean countries and North America . . . . . . 57
2.8. Limited disability-related resources go to employment and rehabilitation
programmes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
2.9. Disability benefit recipiency rates are high and still increasing inmany
countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
2.10. Disability benefit rolls have evolved differently across the OECD, reflecting
policy choices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
2.11. More and more inflows into disability benefit because of mental health
conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
2.12. Sickness absence rates are correlated with disability beneficiary rates . . . . . . . . . . 63
2.13. Previous sickness benefit spells increase the probability of a disability
benefit claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
2.14. Declines in sickness absence usually precede a decline in disability
benefit claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
2.15. Some countries have recently managed to reduce inflows into disability
benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
2.16. People almost never leave a longer-term disability benefit foremployment . . . . . 67
2.A1.1. Falling trend in spending on disability benefits in the late1990s buta slight
rise lately . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07
2.A1.2. Levels and trends in disability benefit recipiency rates are dominated
by 50-64year-olds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
2.A1.3. In some countries, women are now receiving disability benefits more
often than men . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
2.A1.4. There are large variations in the age pattern of disability benefit inflows
acrosscountries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
3.1. Large variation in disability policy orientation across the OECD . . . . . . . . . . . . . . . . 86
3.2. Disability policy is changing fast in many OECD countries . . . . . . . . . . . . . . . . . . . 87
3.3. Disability policy is converging in the same direction . . . . . . . . . . . . . . . . . . . . . . 90
SICKNESS, DISABILITY AND WORK: BREAKING THE BARRIERS © OECD 2010 7
TABLE OF CONTENTS
4.1. In many OECD countries, more than one in two applicants foradisability
benefit are rejected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
4.2. Net replacement rates are often high, especially for previous low-wage earners . 119
4.3. Disability benefits are above social assistance but comparable with
unemployment benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
4.4. Taking up work does not always pay, but country differences are large . . . . . . 122
8 SICKNESS, DISABILITY AND WORK: BREAKING THE BARRIERS © OECD 2010