Nivel teórico de Parque Total VI

219. Granting a partial disability benefit is another way of encouraging people to (partially) remain in or return to employment. Such benefits are often granted to people with minor disabilities or when the incapacity to work is only reduced partially. In Norway, a partial benefit is granted in all cases where less than 100% of the work capacity is lost. In Poland, this benefit is granted to people who can work, but are not able to keep their former occupation. In Switzerland, a partial entitlement requires that the earnings capacity is reduced by more than 40% but less than 70%. Based on these definitions, the Norwegian rules for a full benefit entitlement appear to be by far the strictest. However, a comparison of the use of full and partial benefits reveals a different picture (Table 3.7). In Norway, 20% of all benefits are partial compared to 27% in Switzerland, while, in Poland, the corresponding share is 54% (not shown in the table).24 The difference between Norwegian and Swiss inflows to full benefits is even substantially higher and reached 13 percentage points in 2004; a further widening compared to 1995 when both countries had similar shares.

Table 3.7. Partial disability benefits are used more often in Switzerland than in Norway

In percentage by age and degree of disability, 1995 and 2004

Norway 18-34 35-49 50-66 Total 20-34 35-49 50-66 Total 20-34 35-49 50-66 Total

Less than 25% 0.0 0.1 0.0 0.0 0.8 2.4 0.7 1.2 0.0 0.0 0.0 0.0 25% to 49% 0.2 0.5 0.2 0.2 0.2 0.2 0.1 0.1 0.4 1.0 0.3 0.5 50% to 74% 8.4 18.9 16.1 16.3 19.5 31.0 25.7 26.3 14.0 28.0 24.9 24.4 75% to 99% 1.8 2.7 4.3 3.8 3.2 4.6 7.2 5.9 2.2 3.0 3.9 3.5 100% 89.6 77.8 79.4 79.6 76.3 61.8 66.3 66.4 83.4 68.0 70.9 71.6 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Switzerlanda _{20-34 35-49 50-64 Total 20-34 35-49 50-64 Total 20-34 35-49 50-64 Total}

40% to 49% 2.5 4.3 4.0 3.9 4.7 6.0 4.9 5.2 4.7 9.5 9.0 8.6 50% to 59% 10.1 16.6 18.0 16.6 21.7 31.4 29.3 28.7 17.3 25.6 26.3 24.9 60% to 69% 4.9 5.8 7.0 6.4 .. .. .. .. 5.7 9.2 9.5 8.9 70% to 100% 82.4 73.4 71.1 73.2 73.5 62.5 64.4 65.3 72.4 55.7 55.3 57.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Stocks Inflows 2004 1995 2004

a) In 1995, the degree of disability corresponded to 40-49%, 50-66% and 67-100%.

Source: The Norwegian National Insurance Authority (NIA) and the Swiss Disability Insurance (IV).

220. In 2004, Switzerland introduced a three-quarter disability benefit for those with 60-69% work incapacity. This was done to increase the likelihood that re-assessed full-benefit recipients could be brought back into work. This introduction was made in addition to the already existing one-quarter (40-49%), one half (50-59%) and full benefit (70% or more earnings incapacity). In Norway, the grid of partial benefits is even narrower and can be graded by 5% intervals from 50% to 95% of the full benefit. Still, it seems to be used much too little. Instead, the vast majority receives either a half benefit (around one-quarter of the inflow) or a full benefit (72% of the inflow).

24. No detailed data are available for Poland. However, because of the different definitions of “partial disability”, comparability is restricted.

221. In 2005, another attempt to make the disability benefit scheme in Norway more re-employment friendly was made by offering beneficiaries in five counties the possibility to work for three years without jeopardizing entitlements, the so-called disability benefit as a wage subsidy scheme.25 _{As the name}

indicates, the employer receives the recipient’s disability benefit as a wage subsidy (up to a ceiling of 90% of the salary) for up to three years. The objective of this pilot project was to engage 600 participants before the end of 2005, but in October the same year only 54 persons were working and another 50 persons waiting for a job. The scheme was evaluated in order to understand the reasons behind the very low take-up (ECON, 2006). Outcomes from this evaluation indicated: (i) a lack of interest among disability benefit recipients (mainly because of weak economic incentives and support for formal employment); (ii) a lack of interest among employers; and (iii) regulatory restrictions (e.g. the scheme was only available to those who received a disability benefit before 2004).

C. Summary and conclusion

222. There seems to be little success in convincing people to move voluntarily from benefits to employment. Therefore, re-assessing the health status of disability benefit recipients is very important. However, re-assessing large shares of the stock (as in Switzerland and Poland) or restricting the inflow to permanent benefits through temporary benefits (as in Norway and Poland) are only meaningful if people resume work, at least partly. Moreover, if eligibility for partial or temporary benefits is relatively less strict, these benefits may contradict their purpose and instead increase inflow rates and, hence, reduce total labour supply. There are indications that this could be the case for younger recipients of temporary disability benefits in Norway.

223. Also partial benefits appear to be problematic in Norway. Despite the stricter medical requirement for full benefits, the share of recipients on partial benefits is much lower than in Switzerland. Therefore, temporary and partial benefits in Norway should return to their stated purposes by using a more coherent benefit assessment method. Moreover, enhanced assistance to find employment should be given to those people who lose their benefits. This is especially important in Poland where such support is relatively less used and where termination of benefits is more frequent. There will also be an increasing need to provide adequate support to those on temporary benefits in all three countries in order to avoid an automatic conversion into permanent benefits.

224. Increasing outflow rates is a complicated matter and certain fundamentals need to be in place in order to obtain successful outcomes. One such factor is financial incentives to work, which are discussed in Chapter 4. As long as disability benefit recipients lack economic incentives to take up employment (e.g. because of too-high replacement rates or too-high marginal effective tax rates) or employers lack incentives to hire and retain people with disabilities, outflow rates will most certainly remain low.

25. A very similar system was launched in Sweden in 2000. The scheme was far from a success and 12 months after its introduction only 0.5% of all disability benefit recipients signed up, of which one-third returned to benefits after three months, i.e. when it was no longer possible to receive both the disability benefit and a salary from the job (OECD, 2003b).