Measures for the Labour Market Integration of Persons with

Disabilities

Workshop Swedish Delegation 10 Oct 2013, Vienna

Michael Fuchs & Eszter Zolyomi

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Background

Study commissioned by the Austrian Social Ministry

• To provide a cross-national analysis of employment quota systems for disabled workers

• To evaluate three main blocks of policy measures

1. anti discrimination legislation,

2. active labour market programs

3. employment protection

in 4 country case studies (DK, NL, SE and UK)

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Introduction

• Integration of disabled people in labour market is challenge for social and labour market policy

• Health impaired persons face a range of employment barriers

• Non-integration of disabled people in the labour market causes both social disadvantages for persons concerned and costs for the economy

• However, disability expenditure still distorted toward passive transfers

• In OECD-countries at most 5% of the total budget are spent for occupational and rehabilitation programs

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Disabled people: LM overview

• Disabled persons are employed to a lesser extent (minus 30- 40%) and are unemployed more often (up to +100% and more)

• When employed, disabled people more often in jobs which require low qualifications

• Due to lower employment rates and frequent dependency on social transfers, persons with disabilities are more often at risk of poverty

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1. Quota systems

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Quota systems: occurence and use

• Determined by cultural differences, attitudes and experiences

• Quota systems for private and/or public enterprises/ institutions are to be found in the majority of EU-countries

• In Nordic countries (DK, FI, IS, NO, SE) quota systems regarded as not appropriate

• Further EU-countries without quota systems: EE, LV, NL, UK

• In BE and IE quotas only in public sector

• In CY, MT, PT de facto not implemented

• In recent years both introductions (e.g., CY) and abolishments (e.g., UK)

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Quota systems: basic parameters

• Target: stimulate labour demand by committing employers to employ a certain share of employees with disabilities

• Typically, stipulated share ranges between 2% and 7% of the workforce

• Generally, quotas are only valid above a certain threshold, which ranges between 15 and 50 employees

• Fee to special funds, which distribute resources to disabled employees, provider of special activities and employers with disabled employees

• Spectrum of sanctions ranges from almost completely lacking fines, via small sanctions in most countries (additional payroll tax of approx. 0.5%) up to relatively high sanctions (1 to 4% of payroll)

• In principle, the lack of sanctions or lacking instruments for its enforcement represent a problem of quota systems

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Quota vs anti-discrimination

• Although in many countries co-existing, quota systems and anti-discrimination legislation are contrary approaches for the labour market integration of disabled persons

• Quotas implicitly act on the assumption that disabled people are unable to compete for employment on the open labour market. Thus, certain share of working places are to be reserved.

• Quotas coincide only to a limited extent with the principle of equal access for all or the social model of disability

• However, a solely anti-discrimination approach could be insufficiently directed towards clearly defined policy targets

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Quota: perspective of employers• Extent of sanctions/incentives often low; sanctions are partly

considered as addtional non-wage labour costs

• According to company polls the exclusive costs of fees are not central for the decision pro or contra the employment of disabled persons

• Costs due to modification measures, working place adaptations or other special arrangements are by far more significant

• Economically profitable employment of disabled persons as central decisive factor implies work capability and adequate qualification

• Potential supportive measure play a decisive role; as a rule cooperative collaboration with supporting institutions is a pre-condition for successful integration

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Quota: perspective of institutions

• For governments employment quotas are relatively low priced programms, which are easy to finance

• The employment of disabled persons is either supported by the fulfillment of quotas or by programs financed via the fees

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Quota: demographic change

• A differentiated judgement of employment quotas arise in the light of demographic change

• The own workforce is ageing and increases the number of already employed disabled employees, whereby companies rather fulfil an employment quota without own efforts

• In case support is offered for employed disabled persons via the fee, windfall gains are caused, if these persons would not have been dismissed anyway

• This points to the „inherent ambivalence of the quota system “• If employees increasingly reach the disability status due to their

age, employers have to pay less fees. As a consequence less money is available for the creation of new jobs for disabled people while expenditure for permanent wage subsidies increase

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Quota: general evidence I

• In most countries the degree of fulfillment ranges between 30% and 70%

• The employment effectivity is analysed only to a little extent; in no case the relative effects can be compared with those of other measures

• In a cross-country perspective higher employment rates of persons with disabilities are not systematically correlated with quotas

• It can be assumed that quotas (as employment subsidies in general) cause windfall gains, squeeze out- and substitutional effects

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Quota: general evidence II

• According to available empirical data quota systems only lead to small net employment gains and at times can only be justified for equity reasons

• However, in the case of disabled persons this argument seems to be of special importance

• Already employed persons who become disabled and can be included, are more likely to be employed continouosly

• However, quotas only provide small incentives to hire disabled people (this is also the case with measures directly targeted at employers)

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Interaction of groups of measures

• For the successful labour market integration of disabled persons, strategies have to be developed, which enable a better coordination between the behaviour of employers, employees, involved institutions and political targets

• For all stakeholders more incentives and support have to be created, to keep disabled persons in employment, to enable new employment and to increase employment efforts

• Governments must provide a balanced setting of sanctions, incentives and support, which complement each other

• To prevent possible negative outcomes for the labour market and the social security system, a coordinated package of employment and other measures is required

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2. Country case studies

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Disability and employment

Note: Population aged 20-64, Data refer to late 2000s

Source: OECD Sickness, Disability and Work

OECD

NL

UK

SE

DK

0.0 5.0 10.0 15.0 20.0 25.0

OECD

NL

UK

DK

SE

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

Without disabilityWith disability

Self-assessed disability prevalence, % Employment rates by disability status, %

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Turning to public spending

Source: OECD Social Expenditure Database

Public expenditure on disability and sickness (left) and ALMPs (right) , in % of GDP

2000 2005 2006 2007 2008 20090.0

1.0

2.0

3.0

4.0

5.0

6.0

DKNLSEUKOECD

2000 2005 2006 2007 2008 2009 2010 20110.0

1.0

2.0

3.0

4.0

5.0

6.0

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Denmark

Nordic approach to labour market policy for the disabled based on the concept of general social rights

The 4 principles of disability policy:

1. Equal treatment

2. Compensation

3. Solidarity

4. Sectoral responsibility

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Denmark

Anti-discrimination

• Definition of disability: social/environmental-based approach

• Requirements for reasonable accomodation

• Preferential access

ALMPs

• Mostly wage subsidised schemes (largest: Flexjobs)

• Small role of sheltered employment

• Increased focus on supported measures (mentoring, workplace adaptations)

Empl protection

• Relatively weak empl protection (blue vs white collar workers)

• Flexible rules to dismissal (flexibility element), but generous unempl. benefits (security element)

Relevant institutionsLocal municipalities (financing role)• higher reimbursement of active

than passive measures from State

• Local job centres (administering role)• Special unit fo job

and handicap support

Employers

Disabled job seekers/employees

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Interaction with policy measures outside employment

• Disability pension - removing elements of policies to encourage take-up of employment (the so–called dormant sickness compensation is SE, disability reform in NL)

• Rehabilitation - early intervention/prevention (rehabilitation chain in SE, gatekeeper protocol in NL)

• Enhanced inter-agency cooperation – institutional reform of PES and SIA in SE (2005), structural reform of municipalities in DK (2007)

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From flexicurity to mobication ?

• Increasing focus on workforce mobility and need to enhance education (Report commissioned by the Nordic Council, 2011)

• Seen as an attempt to further develop the flexicurity model

• Individual responsibility is important, but commitment to the principle of compensation and solidarity remains strong

Denmark:

Netherlands, UK:• Increased focus on mainstream measures (i.e. Work Programme, and

reducing number and scope of special schemes for disabled i.e. Remploy in the UK)

• Principle of compensation (disability benefit cuts, UK) and solidarity (more emphasis on individual responsibility both NL, UK) weakened