Measures for the Labour Market Integration of Persons with Disabilities

1. Measures for the Labour Market Integration of Persons with Disabilities Workshop Swedish Delegation 10 Oct 2013, Vienna Michael Fuchs & EszterZolyomi

2. 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 • anti discrimination legislation, • active labour market programs • employment protection in 4 country case studies (DK, NL, SE and UK)

3. Introduction • Integration ofdisabledpeople in labourmarketischallengeforsocialandlabourmarketpolicy • Health impaired persons face a range of employmentbarriers • 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

4. Disabled people: LM overview • Disabledpersonsareemployedto a lesserextent (minus 30- 40%) andareunemployedmoreoften (upto +100% andmore) • Whenemployed, disabledpeoplemoreoften in jobswhichrequirelowqualifications • Due to lower employment ratesandfrequentdependency on social transfers, persons with disabilities are more often at risk of poverty

5. 1.Quota systems

6. Quotasystems: occurenceanduse • 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) quotasystemsregardedas not appropriate • Further EU-countries withoutquotasystems: EE, LV, NL, UK • In BE and IE quotasonly in publicsector • In CY, MT, PT de facto not implemented • In recentyearsbothintroductions (e.g., CY) andabolishments (e.g., UK)

7. Quotasystems: basicparameters • Target: stimulate labour demand by committing employers to employ a certain share of employees with disabilities • Typically, stipulatedsharerangesbetween 2% and 7% oftheworkforce • Generally, quotasareonly valid above a certainthreshold, whichrangesbetween 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

8. Quota vs anti-discrimination • Although in many countries co-existing, quotasystemsand anti-discriminationlegislationarecontraryapproachesforthelabourmarketintegrationofdisabledpersons • Quotas implicitly act on the assumption that disabled people are unable to competeforemployment on the open labour market. Thus, certain share of working places are to be reserved. • Quotascoincideonlyto a limited extentwiththeprincipleofequalaccessfor all orthesocial model ofdisability • However, a solely anti-discrimination approach could be insufficiently directed towards clearly defined policy targets

9. Quota: perspectiveofemployers • Extent of sanctions/incentives often low; sanctions arepartlyconsidered as addtional non-wage labourcosts • Accordingtocompanypollstheexclusivecostsoffeesare not centralforthedecision pro or contra theemploymentofdisabledpersons • 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

10. Quota: perspectiveofinstitutions • For governments employment quotas are relatively low priced programms, which are easy to finance • The employmentofdisabledpersonsiseithersupportedbythefulfillmentofquotasorbyprogramsfinanced via thefees

11. Quota: demographicchange • A differentiatedjudgementofemploymentquotasarise in thelightofdemographicchange • The ownworkforceisageingandincreasesthenumberofalreadyemployeddisabledemployees, wherebycompaniesratherfulfil an employmentquotawithout own efforts • In casesupportisofferedforemployeddisabledpersons via thefee, windfallgainsarecaused, ifthesepersonswould not havebeendismissedanyway • Thispointstothe „inherentambivalenceofthequotasystem “ • Ifemployeesincreasinglyreachthedisabilitystatus due totheirage, employershavetopaylessfees. As a consequencelessmoneyisavailableforthecreationofnewjobsfordisabledpeoplewhileexpenditurefor permanent wage subsidiesincrease

12. Quota: generalevidence I • In most countries thedegreeoffulfillmentrangesbetween 30% and 70% • The employmenteffectivityisanalysedonlyto a littleextent; in nocasethe relative effectscanbecomparedwiththoseofothermeasures • In a cross-countryperspectivehigheremploymentratesofpersonswithdisabilitiesare not systematicallycorrelatedwithquotas • Itcanbeassumedthatquotas (asemploymentsubsidies in general) causewindfallgains, squeeze out- andsubstitutionaleffects

13. Quota: generalevidence II • Accordingtoavailableempiricaldataquotasystemsonlyleadtosmallnetemploymentgainsandattimescanonlybejustifiedforequityreasons • However, in thecaseofdisabledpersonsthisargumentseemstobeofspecialimportance • Alreadyemployedpersonswhobecomedisabledandcanbeincluded, aremorelikelytobeemployedcontinouosly • However, quotasonlyprovidesmallincentivestohiredisabledpeople (thisis also thecasewithmeasuresdirectlytargetedatemployers)

14. Interaction ofgroupsofmeasures • Forthesuccessfullabourmarketintegrationofdisabledpersons, strategieshavetobedeveloped, whichenable a bettercoordinationbetweenthebehaviourofemployers, employees, involvedinstitutionsandpoliticaltargets • For all stakeholdersmoreincentivesandsupporthavetobecreated, tokeepdisabledpersons in employment, toenablenewemploymentandtoincreaseemploymentefforts • 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

15. 2.Country case studies

16. Disability and employment Self-assessed disability prevalence, % Employment rates by disability status, % Note: Population aged 20-64, Data refer to late 2000s Source: OECD Sickness, Disability and Work

17. Turning to public spending Public expenditure on disability and sickness (left) and ALMPs (right) , in % of GDP Source: OECD Social Expenditure Database

18. Denmark Nordic approach to labour market policy for the disabled based on the concept of general social rights The 4 principles of disability policy: • Equal treatment • Compensation • Solidarity • Sectoral responsibility

19. 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 institutions • Local 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

20. 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)

21. From flexicurity to mobication ? Denmark: • 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 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