Some Norwegian reforms and challenges Thorgeir Hernes, Directorate of Labour and Welfare

1. Reykjavik 10 November 2009 Some Norwegian reforms and challengesThorgeir Hernes, Directorate of Labour and Welfare

2. Challenges in Norwegian welfare – Norway may 2009 In the work force: At the outskirts of the work force, receiving benefits: 2 400 000 295 043 disability pension/ 45 685 temporary disability pension (11,0 % av working age population) 126 362 sickness benefit 55 945 occupational rehabilitation 48 079 rehabilitation benefit ---------- 571 114

3. People on sickness leave – nordic countries

4. The number of disability beneficiaries – the double of OECD-average % of work-age population …and we spend the double of OECD-average on sickness benefit and disability Source: National insurance authorities: NIA (Norway), IV (Switzerland) and ZUS (Poland).

5. The societal challenge • Approximately 1/5 of the working age population temporary ot permanently out of work because of disablities/health reasons • Disability and sickness benefits on the increase, and among the highest in OECD-countries • Many stay on for too long on temporary rehabilitation, occupational rehabilitation, and disability benefits, too few join the work force after rehabilitation period is over • Some immigrant groups have far lower participation in the work force, and higher unemployment, than the average population • 2% in longterm poverty (NAV=) New Labor and Welfare system is an important answer…

6. Fewer to share the costs 2003: 2,6 1967: 3,9 2050: 1,6 A steady decrease in the number of people in the work force per pensioner

7. A wave of reorganising the Work and Welfare administrations • A dominating trend in many European countries • Most outspoken in Northern Europe • Great Britain, The Netherlands, Germany, Denmark, Finland • The Norwegian reform – more far reaching

8. Problems with old Norwegian system • Fragmented and uncoordinated for those in need of combined services • Not properly designed to reach important policy objectives – espescially getting more people into paid work • Low cost effectiveness, double work etc. • Locked people up on passive benefits

9. The New Labour and Welfare Administration - main purpose • The best welfare policy is work. Focus on people’s potential and not their the limitations • Objectives: • More people at work and in activity, fewer on benefits • A more user friendly, user oriented system tailored to individual needs • A coordinated, well organized, efficient employment and welfare administration with a continuous focus on how to improve the service delivery

10. NAV offices in every municipality – to provide services in accordance with the user needs The NAV reform/merger of several user oriented services Social Welfare/Social Assistance (433 local units) National Employment Service (210 state offices) National Insurance Organization (530 offices) Sickness benefits Rehabilitation benefits Disability benefits Occupational injury benefits Family and lone parents benefits Old age pensions Health service benefits • Local Social Welfare • Local Social Assistance • A number of other services:- Health related, - educational related,- Child welfare- Housing needs- and more • “The last safety net” for the citizen Labour Market Employment services Unemployment benefits Vocational rehabilitation Rehabilitation benefits

11. New interaction between state and local authority – “a forced partnership” • New offices based on an equal partnership between state and local authorities (legal agreements) - offer one door for all of NAV’s services. • Employees receive same training and will work with the same tasks. • The local NAV-office will offer services on behalf of both central and local authorities, but in a way that makes them seem like one and the same.

12. New Labor and Welfare Administration – Numbers and facts • At central level Labour and National Social Insurance/Welfare) merged July 2006 • At local level three bodies merges over a three year time period (2007, 2008 & 2009) • 14000 state employees and 4000-6000 municipal employees • Nearly the whole Norwegian population are users • Administers a third of the national budget: unemployment benefits, occupational rehabilitation, pensions, childcare, etc The largest reform in the Norwegian public sector

13. What do we want to achieve? • One door in for all • A more authoritative and work-oriented frontline • More time for individual follow-up services • Clear division between case ”production”/paperwork and user/work-oriented processes

14. 2010 • 470 new NAV offices established - approximately 12.000 employees in front offices reorganized • 37 new “production sites” and 5 new pension units operational • Health area transfer from Labour and Welfare Service to Health Services • Nearly finished introducing modernized national pension scheme

15. Organizational reformNot only new wrapping Motto: Everyone is unique and has unique service and support needs • Focus on functioning, abilities and possibilities – not diagnosis • Symmetry between support/services and individual obligations • Services tailored to INDIVIDUAL needs – not target group, type of income support etc.

16. We are working towards…. • Strengthening of work orientation of the benefit system: • New short term benefit and qualification benefit with explicit work focus • Assessment of work ability and new work-focused follow-up procedures mandatory for the whole NAV system • New inclusion strategy (unlimited wage subsidies) • Simplification facilitates allocation of resources: • Merging of temporary benefits • Further simplification of benefits and of active measures • Higher flexibility gives NAV and users room to move: • Allowing measures to be used more freely, irrelevant of benefits and “target groups” • Work processes tailored to the users individual needs

17. Problems and challenges • Too much reform (organizational and content) and energy-consuming change at once? • Fatigue and rising sick leave in NAV • Problems implementing new content • Not more focus on work and follow-up services in new offices • Problems merging different cultures and competences • quality in the delivery of services • Problems with • old IT systems • logistics (telephone, post, archives) • availability • and productivity - even payments to citizens! • Building of new competence/keeping up productivity • Financial resources to implement the reform • On top of everything: financial crisis

18. . Inclusive working life A new way of dealing with sickness absence

19. The tripartite agreement on a More Inclusive Workplace (IW) • Point of departure: 19-20 % of the Norway’s working age population is either • on sick leave • collecting rehabilitation benefits • collecting disability benefits • Signed by the government and the major labour market partners October 2001 – then a new agreement from December 2005 up to now • Three main objectives • Reducing sick leave by 20% for the entire agreement period • Secure employment for those with reduced working capacity • Increasing the average age of retirement

20. General principles • Action should be carried out at the workplace • Active dialog between employer and employee • Clearly emphasizes the responsibility of the employer • Encourages an open dialogue between employers and employees • Early intervention and high quality follow-up • More focus on functional capacity – less on diagnosis

21. IW-enterprises: incentives • A regular contact person at the Centre for inclusive workplace help the enterprises to better follow up • Placed under NAV • One in each county (19 centres) • Serve only enterprises that signs the agreement (IW enterprises) • Occupational health service delivering services to IW enterprises are given a special refund rate • The employees’ right to take sick leave without a doctor’s certificate is extended

22. ”Soft” IW results from some studies • Management and workers experience fewer conflicts, better communication and more co-operations • The workers experience more appreciation • More appropriate to have a dialogue with employees on sick leave • Leader’s are given more responsibility for following up employees that become sick. • IW-Enterprises do a better job including senior employees than other enterprises • The enterprises gives positive feedback on the work of the IW-centres and are very satisfied with their contact person

23. Other results so far • Nearly 9 000 enterprises have signed on - representing more than half of the active labour force (1,1 million workers) • Enterprises with long IW-experience have (somewhat) reduced their sick leave more than in general. • The sick leave figures increased, then dropped in 2004, – and then a slight increase up to now

24. The bottom line

25. OECD 2005 • The agreement should not become a hindrance to change – the government should not accept a veto against government interventions/new incentive systems • The tripartite agreement have probably facilitated enforcement of stricter follow-up procedures

26. New model for intensified follow-up of employees on sick leave (2007) • Employer and employee are required to • agree upon a mutually binding follow-up plan before 6 weeks • arrange a dialogue meeting within 12 weeks • The doctor is required by law to • Make an “activity evaluation” concerning persons possibilities for work after 8 weeks • participate in dialogue meetingsif desired by the employee • NAV’s role is to • check the possibilities and attempts of work related activity, by controlling the sickness certificate and the follow-up plan • arrange a new dialogue meeting with the employer and employee within 6 months, eventually with participation of the doctor • effectuate economic reimbursements and benefits • coordinate access to relevant public services • Studies: • Employers: A majority positive to new requirements/new regime • NAV employees: Dialogue meetings are positive and makes a difference

27. The Qualification Programme .

28. What is the Qualification Programme? Governments most important tool to eradicate poverty Political expectations A speedy implementation Expected of 8850 participants by end of 2009 One of the main priorities of NAV in 2009

29. What do we mean by Qualification Programme? Guarantees an income (most often) above social assistance for 1-2 years Activities: a spectre/variety - based on an individuals unique and special needs: Work related activities and job seeking methods Training in professional skills. Coaching in social skills and building up of motivation. Physical activity and nutrition. Treatment and health issues. The client/user has a right to have an Individual plan (IP).

30. Qualification programme For whom? Significantly impaired working capacity and earning ability. Limited rights benefits from the National Insurance scheme. In particular those who have been dependent on social assistance for long periods Those who fulfill criterias of the law have a right to the Programme Implies more work-oriented expectations and measures to these groups ”Welfare contracts” to specify mutual expectations and obligations Administration and implementation Administered by the local NAV offices Nationwide by the end of 2009

31. The quantities

32. Possible positive results for individuals, society, public economy and finances and for the public service and administration Some examples: 1 person for 5 years longer in paid employment = approximately 500.000 NOK higher life income 3.000 persons for 5 years longer in paid employment = 3 billion NOK ”society output” 30.000 fewer disability pensioners = 20 billion NOK = 3 % of total state budget All wearing the same uniform shoot towards the same goal! Get it! What if we succeed?

33. We give people opportunities Vision • - for work for as many as possible • - for meaningful activity • - for a secure income