1. Assessment and recommendations for sickness and disability programmes in Slovenia

The analysis in this report fully supports the ongoing discussion in Slovenia on the inadequate income support provided through the disability insurance system. Several factors contribute to the inadequacy of the disability programme:

  • Disability pensions are very low, often below the Basic Minimum Income. The system leaves a significant share of recipients at serious risk of poverty.

  • Disability benefits are even lower, which jeopardises the income situation and well-being of those with some residual employment capacity. These benefits may strategically be low to foster the employment of those with residual employment capacity. However, recipients of disability benefit are not under the activation regime and, thus, stay on benefits for many years.

  • Because disability insurance is contributions-based, younger claimants and those with low labour market attachment are penalised. This report shows that, when eligible for disability insurance, workers with low insurance periods are overrepresented among recipients of very low pensions (under EUR 300 per month). Younger workers face an additional penalty, as they cannot claim Supplementary Assistance, a form of social assistance available to older workers with disability.

  • The role of partial disability pensions and benefits in explaining benefit (in)adequacy is unclear. Many of those receiving a partial pension or benefit are not employed and thus relying on an even lower payment. Ensuring high rates of employment for recipients of partial payments is crucial.

Sickness insurance, in contrast, is very generous. This report estimates average sickness payments to amount to EUR 1 200 per month, three-fold the average disability pension. Benefits are also generous from an international perspective, particularly as replacement rates are high, and most importantly remain high, for extended absence periods.

Workers with short contributory periods face strong disincentives to transition from sickness to disability insurance. The first disincentive comes from the replacement rate applied to calculate sickness and disability benefits. Sickness benefits are much more generous in terms of their replacement rate than disability pensions (and all other benefits, for that matter), for all contributory periods. This gap is especially large for workers with shorter contributory periods, who are penalised in the disability insurance system, but not in the sickness insurance system. Added to this there is a second disincentive, by which the basis for calculating sickness benefits is more lenient towards short working histories than for disability benefits. Sickness benefits depend on earnings in the past year while disability insurance entitlements depend on the best 24 consecutive insurance years (including contributions and added periods). Especially persons with intermittent and shorter working histories are more penalised under disability insurance.

While most EU and OECD countries face similar differences in the generosity of sickness relative to disability benefits, the key factor in Slovenia is the lack of a time limit for sickness benefit receipt. Most countries view sickness insurance as a transitory work-impeding health risk, and therefore provide a high, but temporary, compensation. In Slovenia, the lacking limit to benefit duration implies that sickness insurance covers the risk of very long-term sickness, which is arguably very similar to the risk covered by disability insurance. Data show that sickness insurance increasingly pays for long-term sickness risks. This especially concerns older workers, indicating that long-term sickness is increasingly turning into an early retirement pathway.

The political discussion is oriented around the issue of disability insurance benefit adequacy, not integrating a holistic view of the social protection system. The low level of pensions has been an issue raised by the Commission of the National Council for Social Welfare, Labour, Health and the Disabled, and assessed by the MoLFSA, over spring 2020. The discussion, however, focuses on the inadequacy of disability pensions rather than on the whole disability insurance, and does not consider how financial social assistance and sickness insurance affect adequacy. Examples of unsuccessful previous reforms addressing single elements of the system, without considering the social protection system holistically, should serve as a reminder that any political discussion on adequacy must consider the social protection system as a whole. For instance, a reform like the disability reform of 2002 (ZPIZ-1 to ZPIZ-2), which reduced the benefit generosity by about 20% without touching the sickness insurance programme, aggravated the inadequacy and inequalities of the social protection for persons with disability. This is especially pertinent now as reforms are at stake once again to guarantee the sustainability of the old-age pension system.

  1. 1. Streamlining disability insurance programmes

The disability insurance system is overly complex, resulting in hidden adequacy issues: for example, disability benefits (mostly used by unemployed claimants) provide inadequate benefit levels for extended periods. The system would benefit from a simpler structure, with a single disability payment calculated from the person’s residual capacity to work or earn, rather than different types of benefits (e.g. temporary benefits and disability benefits). The Slovenian Government should thus consider to:

  • Merge all disability payments into one payment, which decreases with residual working or earnings capacity, and remove the age component in the calculation of benefit entitlements.

  • Introduce the possibility to work while receiving a disability pension, with an earnings disregard (preferably defined in terms of earnings, not hours of work) and a gradual reduction of benefits.

  1. 2. Eliminating age discontinuities of disability insurance payments

The disability benefit system in Slovenia is not generous but unnecessarily more lenient and more generous for older persons, and coming with a weaker labour-market orientation for this group, reminiscent of the widespread early retirement culture. This should be rectified because it creates labour market distortions and social inequalities. The Slovenian Government should consider to:

  • Remove the current condition that applicants must be under age 50 (55) to be able to engage in vocational rehabilitation. People above that age may have a comparable level of work capacity but will need vocational rehabilitation even more than younger people to reinstate their employability.

  • Abolish temporary benefits (right to transfer) currently only available for workers under age 55. This benefit provides an unnecessary bridge to early labour market exit.

  • Abolish the age threshold for eligibility to supplementary allowance, and base it on need and residual work capacity only.

  1. 3. Aligning disability and old-age pension programmes

The current system is unnecessarily harsh for recipients of disability insurance payments who return to work with reduced capacity and a reduced wage, because these workers’ lower wages have repercussions later in life, reducing their income during old age. The Slovenian Government should consider to:

  • Automatically transfer people from disability benefits to old-age pensions upon reaching the retirement age, as is common in most OECD countries.

  • Ensure that old-age pension entitlements of disability benefit claimants remain unaffected by a return to work (i.e. those returning to work with partial capacity should have the same old-age pension entitlements as those who chose not to return to work).

  • Consider de-linking disability insurance from old-age pension insurance, as has been done in other countries in the course of comprehensive system reform (e.g. Sweden). De-linking disability from old-age pensions has two major advantages (and no real disadvantage). First, it facilitates the right changes in the disability insurance, including a stronger focus on reemployment and a much needed closer link with sickness insurance. Second, it avoids spill-overs to disability rules and benefits from pension reform, especially reforms targeting an increase in the retirement age.

  1. 4. Capping the maximum duration of sickness benefits

The possibility of long-term or unlimited sickness leaves with a very high income-replacement rate provides unreasonable incentives to stay on sick leave for very long periods. This holds particularly for persons with high benefit entitlements and those with insufficient insurance periods to qualify for disability insurance. A maximum payment period for sickness benefits, aligned with the programmes in other OECD countries, would provide a major push for the functionality of the sickness and disability system. The Slovenian Government should thus consider to:

  • Introduce a maximum payment period for sickness benefit of about one year (the majority of OECD countries have a one-year payment period), possibly differentiating between first and repeat absences e.g. with a maximum payment period of one year or 1.5 years in the past three years.

  • If imposing a maximum payment duration for sickness benefits is not feasible, an alternative is to implement a degressive sickness payment schedule, by which payments would be gradually lowered over time. For example, payments could remain unchanged for one year and then be lowered in three steps to reach the level of disability benefits after two or three years of absence.

  • If no maximum sickness benefit payment period is being introduced, it would be important to set a maximum sickness benefit payment level after one year of absence to eliminate outrageously high sickness payments over a long period of time.

Social protection and employment promotion for persons with disability in Slovenia is a function of a person’s characteristics at the onset of a disability or health barrier:

  • Employment status. Workers falling ill (for sickness spells of 30 days or longer) are under the responsibility of the health insurance, while unemployed workers are not covered. The former face a system of generous benefits, no contact with employers, and limited incentives to go back to work. The latter must use up their unemployment benefit entitlement, or resort to financial social assistance. They also have to navigate the possibilities provided by the Public Employment Service (ESS) and the Centres for Social Work (CSW) to have their illness recognised as a health barrier and find the adequate programme to promote their employment. Eventually, however, unemployed workers falling ill, at least in theory, potentially have options for rehabilitation and activation that their employed counterparts do not have.

  • Insurance duration. Disability insurance is part of the pension system in Slovenia. Entitlement to benefit, therefore, requires a minimum contributory period, which excludes persons with disability with insufficient contributory periods. This group includes young persons whose disability occurred early in their career, or, more likely, adults with intermittent careers caused by a disability that went undetected for too long. The latter case is frequent among those with mental health conditions (OECD, 2015[1]), who then have to rely on the ESS and CSW for support.

This may raise benefit adequacy issues for those excluded from the social insurance system, i.e. sickness and disability insurance. Means-tested social assistance plays a key role in the social protection of persons with disability in Slovenia, as around one in three unemployed disability claimants receive financial social assistance. This share increased to 39% in 2020, potentially remaining high for the years to come. Yet, contrarily to sickness and disability insurance, social assistance provides only temporary support, for up to five months. The risks covered are also different: sickness and disability insurance provide individual-level entitlements, while social assistance is means-tested at the household level. This implies that some people with disability are not entitled to social assistance nor to disability benefits.

In terms of return-to-work policies, the direction of the discrimination caused by the fragmentation of the system is not so clear. Unemployed persons with disability fall under the responsibility of the ESS, which has a good system for recognising health barriers to employment, and a standardised vocational rehabilitation programme. In addition, jobseekers with disability may also participate in ALMPs, which this report shows to be quite a successful approach. Persons on sickness insurance, on the contrary, cannot participate in vocational rehabilitation schemes, as they must complete medical treatment first. Disability insurance claimants with residual employment capacity can participate in vocational rehabilitation, but the low take-up rate indicates that it is not particularly successful. Both unemployed and employed persons with disability, recipients of disability insurance or not, face a common issue: long waiting times for special supports, which accentuate the issue of late intervention.

Persons with mental health issues are most susceptible of falling between the cracks of the various programmes. First, current sickness and disability assessments are not inclusive of the particularities of mental health issues. The condition of completed medical treatment, necessary to transfer to disability insurance, is difficult to establish in the case of mental health conditions. Added to this is the stigma that mental health disorders still carry, which anecdotally results in employers being less willing to retain such employees. As mentioned above, another discrimination may lie in the nature of the disease: mental health barriers to employment often go undetected. For this group of people, the last resort is often the CSW and their social inclusion programmes. The success of these programmes inevitably depends on the resources of local offices and the motivation of individual caseworkers.

There are only minor differences in Slovenia between occupational and general injuries and diseases. Slovenia regulates general and occupational injuries and diseases in the same sickness and disability insurance systems, contrary to most other EU and OECD countries, where special workers’ compensation schemes are in place for work accidents and occupational diseases. The uniform approach in Slovenia has two undesirable consequences. First, the costs of work accidents are largely socialised. Higher employer costs for sickness payments could promote good working conditions and prevent work-caused sickness and disability in Slovenia. Secondly, occupational diseases are rarely recognised and mental health conditions in particular never qualify as occupationally caused. Updating the outdated listing of occupational diseases could remedy the poor recognition of many work-related diseases.

  1. 1. Treating sick jobseekers more like sick workers

Unemployed people falling ill face a completely different situation in Slovenia than employed people falling ill, in terms of both benefit entitlements and reemployment supports. This raises fairness issues and hinders early intervention. As much as possible, sick jobseekers should but treated just like sick workers. The Slovenian Government should thus consider to:

  • Ensure early identification of health barriers to employment, e.g. by mandatory health assessment (by the joint assessment body) for all unemployed people who are ill for more than 1-2 months.

  • Ensure unemployed people who are sick have access to the same treatment, medical rehabilitation and vocational rehabilitation measures as sick workers.

  • Ensure ZZZS and ESS have the right responsibilities and incentives to ensure early identification of medical and vocational needs of jobseekers and resulting provision of integrated medical and vocational supports. This could e.g. be achieved by shifting half of the benefit costs for unemployed people who are sick to the ZZZS for a certain period (e.g. after the first three months of sickness and until one year of sickness, in line with the above suggested regulation for sick workers).

  1. 2. Targeting persons with disability that are excluded from social protection

Means-tested social assistance plays a key role in the social protection of persons with disability in Slovenia, but some people with disability are not entitled to social assistance nor to disability benefits. The Slovenian Government should thus consider to:

  • Consider introducing special financial compensation for persons with disability – typically younger people, often with congenital disabilities, who never got a foothold in the labour market – who do not qualify for disability payments (because of an insufficient contribution record) and are not entitled to social assistance either (because household income does not warrant eligibility).

  1. 3. Addressing work injuries and occupational diseases

The costs of work injuries are largely socialised and occupational diseases rarely recognised. Such setup is rather unique across OECD countries and not conducive to good working conditions and the prevention of work injuries and occupational diseases.

  • Seek ways to make employers financially accountable for work-caused sickness and disability, e.g. by introducing a system of differential contribution payments (usually called “experience-rating”) that rewards employers with low rates of work-caused sickness and disability.

  • Update the outdated listing of occupational diseases and consider including work-caused mental health conditions.

Slovenia has a serious problem of long-term sickness, brought about by the characteristics of the system. This report clearly shows that long-term sicknesses are becoming a major problem in Slovenia, with sickness spells of two years and longer doubling in the last five years. Long-term sickness claimants do not have very different characteristics than short-term sickness claimants, with the exception of age: they are, on average, substantially older. While age certainly correlates with poorer health outcomes, this can also be partly due to the characteristics of the system, in a context where the retirement age keeps rising. ZZZS experts share the view that, with the latest pension reform, they observe a higher incidence in long-term sickness among older workers. Data suggest that this may be statistically significant.

The duality between sickness and disability insurance fuels long-term sickness and acts as a deterrent to transitioning to disability insurance for many claimants. Differences in sickness and disability assessment add to the disincentive to shift to disability, opening substantial room for interpretation in the grounds for transitioning from sickness to disability insurance. Lacking co-ordination between the ZZZS and the ZPIZ further accentuates these dualities. The two institutions do not share sufficient information to ensure a timely transition from sickness to disability, and the decision relies too much on the responsibility of the claimant, who does not have any financial incentives to request such a transition.

Frequent long-term sickness is highly problematic, as it delays the activation of persons with health issues and disabilities. The Slovenian sickness programme considers that, because persons on sickness leave are ongoing a medical treatment, they should not be activated. As a result, during sickness absence, workers cannot participate in activation programmes or vocational rehabilitation, and employers cannot contact their employees to offer collaborative ways to return to work. Any activation for workers with health issues and disability only occurs after transitioning to disability insurance. Because workers stay on sickness benefits for such extended periods, often many years, it is generally too late to promote their employment successfully when they transition to disability insurance. The low take-up of vocational rehabilitation also reflects the limited interest in employment at this stage.

Evidence provided in this report shows that early activation is key, confirming what the broad literature suggests. By providing novel evidence on the exit routes from sickness insurance, this report shows that the length of sickness insurance claim correlates negatively with the probability of maintaining and finding new employment. Using ESS data, this report also shows that ALMPs are most effective on ZPIZ recipients included in the programme in the first months of their unemployment spell. The same result holds for inclusions in medical assessments: the earlier these take place, the more successful they are in helping jobseekers find employment. These results are not new – neither for ALMPs (Card, Kluve and Weber, 2010[2]), nor for vocational rehabilitation (Waddell, 2008[3]) – and confirm that Slovenian persons with disability and jobseekers with health barriers could also benefit from early intervention.

The involvement of employers also comes too late, which is in sharp contrast with the objectives of vocational rehabilitation of ZPIZ. The role of employers to promote vocational rehabilitation of their employees is very considerable in the Slovenian disability insurance system. Employers have to show the possibility of hiring back the employee on disability insurance after going through vocational rehabilitation: if they cannot do that, then there is no ground for participating in the programme. Yet, this great role only comes after many months, or more likely many years, of sickness absence and waiting for disability insurance. At this point, most employers (like their employees) are disengaged from ensuring the return to work of their employees. They can decide to not co-operate, at no cost. iIt is not surprising to observe substantial dismissals after entry into disability insurance. The late intervention thus turns into no intervention for most.

Programmes that activate workers immediately after falling ill, like vocational rehabilitation under URI-Soca, or the ongoing European Social Fund (ESF) funded trial with the MoLFSA, promise to harvest the benefits of early intervention. The aim of the ongoing trial is to promote early intervention, to involve and empower various stakeholders, and to demonstrate the effectiveness of earlier vocational rehabilitation for a range of clients. In this regard, it will be important to ensure trial participants have not been in the sickness loop for too long.

  1. 1. Harmonising the assessment of sickness, disability and health barriers to employment

Different assessments by different institutions are inefficient and confusing for the person involved, and often an unnecessary duplication. The distinction between ESS-provided vocational rehabilitation (for a new job or occupation) and ZPIZ-provided vocational rehabilitation (for a return to work with the same employer) is meaningful but running parallel and, in the worst case, contradictory assessments is not. The Slovenian Government should thus consider to:

  • Introduce a joint assessment covering three aspects: assessment of longer-term sickness with a duration of three months or more (currently under ZZZS responsibility); assessment of disability, including the various degrees foreseen by the law (currently under ZPIZ responsibility); and assessment of health barriers to employment (currently under ESS responsibility).

  • Use the same functional definition of ability and disability for the three types of assessments currently operated in parallel, and include an assessment of the need for and requirement of vocational rehabilitation. The latter must include job and work-related aspects and, if applicable, address whether a job or occupation change is necessary to regain employability.

  • Involve both medical and occupational experts in the assessment and ensure independence of the assessors and recognition of the assessment outcome or decision by all organisations. The involvement of interdisciplinary assessment teams will also facilitate the identification of work injuries and occupational diseases, where necessary.

  • Possibly in a later step, consider options for the inclusion, under the same joint assessment body, any assessments needed for the currently developed long-term care insurance.

  1. 2. Promoting the early provision of vocational rehabilitation and vocational training

Early vocational intervention after about three months of absence provides much better returns, as data from the ESS on jobseekers participating in employment rehabilitation or active labour market programmes show (similar data on the effectiveness of vocational rehabilitation by the ZPIZ are lacking). The structure of the Slovenian sickness and disability system currently hinders rather than promotes the early provision of vocational support measures. The Slovenian Government should thus consider to:

  • Remove the condition that medical treatment and medical rehabilitation must be completed before considering any entitlement to, and start of, vocational rehabilitation. In many cases, people will require medical and vocational rehabilitation in parallel and sequential support will delay their recovery and, thus, any return to work. Moreover, trapping people between sickness and disability – which is frequent in Slovenia now – is ineffective, if not destructive.

  • Develop integrated forms of medical and vocational rehabilitation, paying particular attention to the needs of persons on sick leave due to mental health conditions.

  • Assess vocational rehabilitation needs early and regularly, and make sure to reach people with sickness absences of about three months, including people with shorter but repeated absences.

  • Consider vocational interventions for a new job or a new occupation early on if the return of a sick employee to the same job or the same employer is unlikely.

  • Increase the capacity of the vocational rehabilitation market by increasing the number of vocational rehabilitation centres and experts to reduce waiting times and allow for a much larger number of early interventions for people of all ages, irrespective of whether they are unemployed, formally employed, or receiving a partial disability benefit.

  • Strengthen the return-to-work capacity and expertise of the rehabilitation market, possibly as a special arm of rehabilitation centres, which tend to focus on medical rehabilitation mostly.

  1. 3. Strengthening the involvement and incentives of employers as well as workers

Employers play a key role in Slovenia when determining a person’s rights to vocational rehabilitation. The approach is promising in principle but ineffective in practice, because employer involvement comes years too late and with no implications for employers choosing not to collaborate. The Slovenian Government should thus consider to:

  • Allow, facilitate and stimulate early contact between employers and their employees on sick leave, to generate a better understanding of whether, when and in what way employees can come back to work, and how employers can help in their return to work. This is best done by defining a fixed schedule of regular employer-employee meetings, as done in many other OECD countries.

  • Strengthen employer responsibilities and incentives for a quick and sustainable return to work, e.g. by extending the employer-paid sickness period from one month to three months and extending it even further than this for employers who are not providing the information necessary to assess their sick employee’s vocational rehabilitation needs and options, and who are not co-operating in the vocational rehabilitation process.

  • Strengthen workers’ responsibilities for a prompt return to work, by making regular contact with the employer mandatory. Also, consider making the engagement in rehabilitation and return-to-work interventions mandatory, enforced by reductions in sick pay for employees not collaborating. Voluntary rehabilitation is unlikely to guarantee and support the needed shift in the approach.

  • Provide expertise and support to employers to help them reincorporate sick workers at work, e.g. by having dedicated employer contacts in ZZZS, ZPIZ and ESS, while also controlling the process and proper involvement of employers. An independent authority, possibly under the responsibility of the joint assessment body, should be responsible for employer controls.

  • Involve employers in the assessment of vocational rehabilitation needs and options at an early stage during a sickness spell (i.e. after around three months of absence), similar to the way in which this is currently done – though at a much too late stage – in the ZPIZ rehabilitation process.

  1. 4. Changing the role and tasks of treating as well as occupational doctors

As in many other OECD countries, Slovenian doctors providing sickness certification use a purely medical approach, with no focus on their patient’s work ability and workplace demands. Slovenia also has a large number of occupational physicians, which other countries would like to have but whose potential is underutilised and unused to a surprising extent. The Slovenian Government should thus consider to:

  • Provide clear scientifically-based and disease-specific guidelines to doctors assessing sickness absences, including guidelines on the standard length of absence for typical diseases.

  • Modify the contents of the sickness certificate to include information on the degree of work capacity and the type of work a person can do, and provide training to doctors on work and workplace matters (this should also become part of the initial medical curriculum).

  • Involve occupational physicians at an early stage in assessing people’s functional capacity and identifying what work an employee can still do. This requires a fundamental change in the legislation to release occupational physicians from some of their current testing tasks (many of which are outdated) and to free time for return-to-work tasks. It also requires changes in the curriculum of occupational doctors who should be work and workplace specialists.

  • Ensure involvement of occupational doctors, especially in the first three months of a sickness absence during which employers and employees are responsible for return-to-work matters.

  • Increase the number of occupational physicians across the country and discuss the best way to organise the profession. They can be independent or part of the public system and they should, in any case, be as independent as possible from the employer.

The fragmentation of the social protection system for persons with disability has led to a lack of co-operation across responsible institutions. At present, each institution is fully responsible for a fragment of the social protection system, as defined by legislation, without having a vision of the system as a whole. This report highlights some of the consequences of fragmentation, which include:

  • There is a lack of co-ordination in the assessment processes between the ZZZS and ZPIZ, resulting in a lack of uniformity of medical assessments, duplication of administrative work and unnecessary validation processes. Rather than working on a single register that automatically collects the relevant information, both institutions need to collect data on the applicant, which in many instances is duplicated as the information requirements for both programmes are similar. This slows down the process and generates unnecessary administrative costs, and the lack of co-ordination further contributes to the high prevalence of long-term sickness absences and the late intervention with vocational rehabilitation measures.

  • Lack of co-ordination between ZZZS and ZPIZ accentuates the long-term sickness problem. People with very long sickness spells rarely transition to the disability programme. Again, this is due to the generosity and lack of time limit to sickness insurance benefits, further accentuated by the lack of co-ordination between the ZZZS and the ZPIZ. The institutions do not share sufficient information to ensure a timely transition from sickness to disability insurance. The difference in the sickness and disability definitions also plays a critical role, resulting in many rejections by disability insurance due to incomplete medical treatment. In turn, people are stuck in the medical process without access to any vocational intervention.

  • Lack of co-ordination between ESS and ZPIZ leads to duplication of disability recognition and rehabilitation services. Because many persons with disaiblity with insufficient contributions are excluded from ZPIZ, this leads to duplication of the work between the ZPIZ and the ESS, where both institutions spend substantial resources (and rely on the same contracted services) to recognise disability statuses. A common view on the assessment of, ultimately, similar risks, would ensure eliminating coverage gaps and unfairness. Both the ESS and the ZPIZ offer vocational rehabilitation which, albeit some small differences, have many things in common. Yet, there are two parallel sets of legislation regulating the two rehabilitation pathways, without any co-operation between the ESS and the ZPIZ. As a result, some ZPIZ recipients could, in theory, be eligible for both vocational and employment rehabilitation, for example. A holistic view on vocational rehabilitation, which would include also the ZZZS, promises to reduce duplications, increase efficiency, and promote early intervention.

  • The impossibility to monitor and evaluate the impact of programmes and services offered by ZZZS and ZPIZ. The lack of co-operation across institutions is most evident in the lack of data sharing. ZZZS and ZPIZ efforts should concentrate on collecting data on the exit routes from their programmes, by setting up regular data exchange agreements with the institutions owning the data on employment and other social benefits (SURS and ZPIZ). This is key to evaluating the labour market implications of the sickness and disability programmes. Taking a step back, there is no information on ZPIZ applicants before and during the period of sick leave. Even though the ZZZS shares the dossier of the sickness beneficiary with the ZPIZ for the disability assessment, information is not shared digitally and not recorded in the ZPIZ register. This is time-consuming for both institutions, can cause errors from the manipulation of data, and prevents collecting key data. In addition, data sharing is also lacking between NIJZ and ZPIZ, including e.g. information on the duration of a sickness spell before applying to the disability programme. Such data would convey relevant information on the incentives to transition to disability insurance.

To improve the co-operation in the sickness and disability assessment, the Slovenian Government is considering the creation of a single medical expert body for the assessment. The 2010 Working Group, formed by ZZZS and ZPIZ experts, first presented the idea of a new body, the New Medical Expert Organisation. The 2016 White Paper on Pensions reiterated the idea largely unchanged. The goal of streamlining the assessment of both institutions is to increase professionalism, unify criteria, and ensure the independence of the assessors. A single body would also enable modernising the IT systems for recording data of applicants to both programmes, shortening waiting times after their application.

  1. 1. Creating a new joint body for assessment and rehabilitation (STOR)

Experts and policy makers in Slovenia have long agreed on the need for a more streamlined health assessment used and accepted by both sickness and disability insurance, which has led to a call for a joint assessment body. Such a reform, however, should go further than previously agreed in the 2016 White Paper on Pension Reform, in two ways. First, it should also involve the assessment of health barriers to employment under the responsibility of the ESS (the so-called ZZRZI process). Second, a new joint body should not only be responsible for all disability and health assessments but also include the assessment for entitlement to vocational rehabilitation. The Slovenian Government should thus consider to:

  • The introduction of such a new body will require careful considerations on the setup and sharing of costs, responsibilities and decision power between the main involved stakeholders. As it would produce results for three authorities, the ZZZS, the ZPIZ and the ESS, it should be under the joint responsibility of all three institutions responsible for implementing policies. While funded in fair shares by those three authorities, it should operate with a sufficient degree of autonomy to ensure independent assessment decisions are accepted by all actors.

  • A necessary piloting phase should test the approach and clarify the role of each of the involved authorities. There is also a need for considerations on how to transition from the current fragmented system to a system with a more unified approach to assessment and rehabilitation.

  1. 2. Improving the evidence base by sharing data and evaluating interventions

Currently, the evidence base on the effectiveness of vocational rehabilitation and other labour market interventions is very limited because the three main stakeholders, the ESS, the ZZZS and the ZPIZ, are still working in isolation to a considerable degree. Evaluating the impact of vocational interventions and measuring post-intervention employment outcomes is critical for good, evidence-based policy making. The Slovenian Government should thus consider to:

  • Administrative registers owned by different institutions collect most outcomes needed to evaluate the impact of interventions. Improving the evidence base, however, requires data-sharing agreements between ESS, ZZZS and ZPIZ, and linking data across various registers.

A new policy setup should focus on early intervention and distinguish more clearly between helping people back into their previous jobs and helping them return to the labour market, and clearly associate to these tasks the work of different stakeholders in different moments. Incentives for each stakeholder should align accordingly to ensure employment transitions and prevent labour market exits.

A new sickness and disability system could, broadly speaking, look as follows. In an initial sickness period of about three months, sick workers receive treatment and medical rehabilitation as necessary while any return-to-work considerations (and, maybe, all benefit payments) are in the hands of the employer and the employee. After three months of sickness, a concerted effort starts to help workers return to their previous job while treatment and medical rehabilitation continue as necessary. In this period, vocational rehabilitation with a focus on the previous job and in close collaboration with the employer is critical and dismissal is not possible. Benefits are under the responsibility of the Health Insurance Authority (ZZZS) while vocational rehabilitation is in the hands of the Pensions and Disability Insurance Authority (ZPIZ). After about one year, return-to-work efforts expand to the entire labour market and the contract with the previous employer can be ended. Accordingly, responsibility for vocational rehabilitation shifts to the ESS and, as sickness benefits end, as proposed, responsibility for benefit payments shifts to the ZPIZ and the ESS (as well as the Centres of Social Welfare). Unemployed people who are sick are treated much like employees who are sick. As they are sick, ZZZS gets involved in medical rehabilitation and maybe also benefit payment. Vocational rehabilitation remains in the hands of the ESS, as these people do not have a job, or employer, but can involve the ZPIZ if appropriate.


[2] Card, D., J. Kluve and A. Weber (2010), “Active Labour Market Policy Evaluations: A Meta‐Analysis”, The Economic Journal, Vol. 120/548, pp. F452-F477, https://doi.org/10.1111/j.1468-0297.2010.02387.x.

[1] OECD (2015), Fit Mind, Fit Job: From Evidence to Practice in Mental Health and Work, Mental Health and Work, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264228283-en.

[3] Waddell, G. (2008), Vocational rehabilitation – what works, for whom, and when?(Report for the Vocational Rehabilitation Task Group) - University of Huddersfield Repository, TSO, London, http://eprints.hud.ac.uk/id/eprint/5575/ (accessed on 15 March 2021).

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