Norway is facing a significant challenge with workers taking more sick days than anywhere else in Europe, with absenteeism reaching its highest level in 15 years. Companies are grappling with chronic labor shortages, and the high level of sick leave is causing productivity to drop. Critics point to the country’s generous welfare system, which provides workers with full salary for up to a year before reducing the pay to two-thirds of their former income. The International Monetary Fund (IMF) has described this system as “costly and distortionary,” urging reforms.
“Companies tell us that more time is spent on recruitment, getting hold of the people with the right skills, while there is more wear and tear on the employees who remain,” said Odd Arild Grefstad, CEO of Norwegian pensions and insurance firm Storebrand ASA. “All of that means that productivity drops.”
Beyond Benefits: The Complex Causes of Absenteeism
However, the issue of sick leave goes beyond just welfare benefits. Ageing workforces, increasing awareness of mental health and stress—particularly among younger generations—and the ongoing impact of the Covid-19 pandemic are contributing to the rise in absenteeism across Europe. In addition to the human toll, the economic costs are escalating, with governments already struggling with weak growth or debt issues.
In the UK, nearly 800,000 people have become economically inactive since early 2020, with long-term sickness costing productivity around £33 billion ($42 billion). This figure could double by the end of the decade, according to Zurich Insurance. Prime Minister Keir Starmer unveiled a plan to address this issue and reverse the trend by getting more people into work.
Similar trends have emerged in Germany, where employers spent a record €77 billion ($81 billion) on sick leave in 2023, more than double the amount in 2010. The country is estimated to lose about €200 billion annually due to absenteeism. France is also facing increased costs related to sick leave, which are placing a strain on the national budget.
The Need for Balancing Support and Work Participation
While support for sick individuals is essential, governments across Europe are exploring ways to prevent people from drifting further away from the workforce. As Christopher Prinz, senior labor market analyst at the OECD, pointed out, “One of the most frightening statistics in this field is that if someone has been on sick leave for at least six months, the likelihood that he or she would leave the labor force altogether is higher than the likelihood of returning.”
Governments and businesses face the challenge of addressing absenteeism in a way that doesn’t stigmatize those genuinely in need while encouraging a return to work when possible. OECD research also shows that presenteeism, or coming to work while ill, is often more harmful to productivity than absenteeism.
In Norway, Andreas Tingulstad, an architect who suffered a stroke and brain injury, relies on welfare benefits to supplement his salary as he doesn’t work full-time. He understands the imperfections of the welfare system but believes it serves a vital role for those who need it. “I don’t expect NAV to fix my life, but they are existential,” he said, referring to the Norwegian Labour and Welfare Administration.
He acknowledged that some people may misuse the system, but emphasized that it shouldn’t be scrapped because of a minority. “Usually a disability or sickness is no one’s fault. It just happens,” he added. “But you can work to improve it.”
Reforms in Norway and Elsewhere
Norway’s government recognizes the need for change and has prioritized reducing sick leave and preventing workers from dropping out of the workforce entirely. Despite the country’s substantial sovereign wealth fund, which provides financial stability, the government has highlighted workforce participation as a key objective.
Similarly, France is considering reforms to address the rising costs of sick leave, including a proposal to stop compensating absences of less than eight days, which could save €470 million annually. However, this plan has faced criticism from labor unions, including Unsa, which argues against stigmatizing the sick.
In the UK, Prime Minister Starmer’s plan includes proposals to improve workers’ rights, including broader sick pay access. Although the plan could cost businesses up to £4.5 billion a year, the government argues that it will boost worker wellbeing and productivity.
Ongoing Debate in Norway
In Norway, discussions between the employers’ organization NHO and labor unions about revising the country’s “inclusive working life” agreement are currently stalled. The issue of benefits remains a key point of contention.
“Society cannot afford sickness absence to continue as it is now,” said Anne Louise Aartun Bye, head of labor market department at NHO. “We have a shared responsibility to reverse this trend.”
As European countries grapple with the complex issue of sick leave, finding a balanced approach that supports workers while maintaining economic stability continues to be a challenge.
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