4. The role of unemployment benefits, employment services and social assistance for jobseekers with health limitations in Slovenia

The Slovenian sickness and disability insurance system creates a dichotomy in two ways: first, between persons falling ill while employed and unemployed (as the latter are not entitled to sickness benefits); and second, between persons with disability by years of contributions paid into the disability insurance system (excluding those with a limited work record). As a result, unemployment benefits and social assistance are the sole benefit programmes available for many persons with disability and long-term sickness, giving a key role to the Public Employment Services. This section describes the approaches to profile health barriers to employment among jobseekers, and the main characteristics of unemployment and social assistance.

The first step to profiling unemployed workers is registration to the ESS, which is only mandatory for the unemployed with unemployment insurance or disability benefit entitlement. Because the ESS administers unemployment benefits, there is an obligation for these unemployed to register at the ESS within 30 days from the termination of their employment contract. Disability benefit recipients (partial and full) who are without a job are also required to register at the ESS. Instead, jobseekers not eligible for contributory social support are not obliged to register. Some countries, like Germany or Switzerland, oblige discouraged workers to register with the PES, allowing to activate them earlier (OECD, 2016[1]).

Despite the incentives put in place, about one in four unemployed do not register with the ESS, possibly concentrating a large proportion of persons with severe health limitations. The ESS has a number of programmes in place for unemployed persons, in particular for those unemployed facing social exclusion or health barriers to employment, which could incentivise their registration. For example, the ESS collaborates with the Centres of Social Work (Centri za socialno delo), responsible for administering social assistance, to help jobseekers not entitled to social insurance benefits find some form of social support. ESS caseworkers also help jobseekers with disability obtain a legal disability status, in addition to the services available through the Employment Rehabilitation and Employment of Disabled Persons Act (ZZRZI), described here and in later sections. Despite these forms of support, it is estimated that one in four unemployed persons, particularly those with low labour market attachment and socially excluded, do not register with the ESS (OECD, 2016[1]).

ESS clients facing health barriers to employment fall under one of three main groups, depending on whether they have a recognised disability status. Precisely, the three categories include (1) holders of a legal status of disability; (2) unemployed recipients of partial disability benefits or pension from ZPIZ; and (3) jobseekers with disclosed or suspected health issues. Clients from the first two groups have a recognised disability, while clients from the last group do not.

The ESS plays a key role in identifying the clients with potentially limiting barriers to employment and providing them with a recognised disability status. Persons with a legal disability status and recipients of ZPIZ benefits automatically fall into the group of jobseekers with barriers to employment due to health issues. Other jobseekers with disclosed or suspected health issues represent a greater challenge, as they need to be identified and profiled, and in most cases, require raising their own understanding on their health limitations. The ESS plays a key role in this process, by profiling these clients according to their employability (see Box 4.1), and granting them a status of disability under the ZZRZI act. Such recognition of disability is key to preventing these people from continuously falling between the cracks of the safety net for persons with disability. Data suggest that in 80% of the cases, the work of the ESS results in the acquisition of a disability status. The remaining 20% result in employment rehabilitation without granting a disability status (more on employment rehabilitation in Chapter 2).

The ESS takes a systematic approach to identifying health issues as a barrier to employment, specified by the ZZRZI act. First, jobseekers with potential health barriers to employment have regular meetings with their caseworkers in their regional ESS office. In case a disclosed or suspected health issue, there is an attempt to contact the personal GP to get his or her opinion on the extent to which the client’s health issues are a limitation to work. If this is not possible, caseworkers can refer jobseekers to a medical assessment, which provides a first opinion on the potential work barriers. This may result in a referral to additional assessments, as these defined under the ZZRZI. At the beginning of the process, jobseekers receive an assessment of their health, skills and functional capacities under the so-called Service B. Then the regional rehabilitation commission, together with the ESS caseworker, decides on the individual programme for each jobseeker with health limitations. Only in the last step, jobseekers will receive formal support to find suitable employment.

Identification of health barriers is coming long after registration with the ESS. Table 4.1 shows that only 14% of the jobseekers undergo the initial medical assessment in the first five months from their first registration with the ESS. The large majority (56%) undergo the initial medical assessment two years or more after initial registration. This is a result of the difficulty of identifying jobseekers with health barriers to employment. It also shows that, despite the well-structured approach of the ESS, jobseekers with health barriers spend long periods before receiving targeted support, possibly leading to a further deterioration of their labour market position.

The ESS deals with high caseloads for its counsellors and long waiting times at rehabilitation providers. On average, there are around 300 cases per counsellor. For those specialised in rehabilitation counselling, the number of cases can go up to 400, but with substantial geographical variation (Table 4.2). These factors compound the difficulty of identifying and profiling jobseekers with health limitations, who usually experience very severe health barriers to work, often from mental health causes, with a great share of socially excluded cases. The high caseload prevents providing the regular support needed to motivate jobseekers with complex barriers. Added to this, waiting times for rehabilitation services can be very long, with a one-year waiting time being the norm rather than the exception.

The collaboration of the ESS and the Centres for Social Work is key to improve the help given to jobseekers with severe health barriers to employment. Centres for Social Work (CSW) are responsible for paying social assistance and providing support to individuals and families in difficult personal or social circumstances. CSW are under responsibility of the municipalities, with each Centre reporting directly to the ministry. There is a formalised co-operation channel between the ESS and CSW since 2012 for social assistance claimants and other registered unemployed with complex barriers to employment (e.g. mental health problems, addiction, and social problems). A joint ESS and CSW commission is responsible for the assessment of provisional non-employability of such clients (see Box 4.1. The Commission’s task is to establish labour market barriers, decide which of the institutions is responsible for the client, and make suggestions for intervention (OECD, 2016[1]).

Measuring the incidence of disability is difficult, just as it is difficult for ESS caseworkers to identify health barriers to employment. There are several approaches possible, some of which are applicable beyond research purposes to actual profiling of health barriers to employment:

  • One approach is to rely on official statuses of disability, which is the approach of the ESS. This could include ZPIZ beneficiaries, holders of a legal disability status, or disabilities recognised under the ZZRZI act. This method possibly results in an underestimation of the actual health barriers to employment, as many jobseekers experiencing them do not have a recognised disability status.

  • Another approach to measure the health barriers to employment is to rely on the ESS caseworkers’ assessment to halt job search obligations due to health reasons. When these breaks are long, they could be the consequence of a disability or significant health barrier to employment.

  • A last approach, at present useful for research purposes, is to rely on survey data available. Using EU-SILC data, for example, one can identify persons with disability using the health and disability questions of the survey. European or national population surveys could complement administrative data to help public employment services calibrate their statistical profiling models.

Data suggest that about one in six registered unemployed have a recognised disability, but there is substantial regional variation. The ESS estimates that 17% of the registered unemployed have a recognised disability. This figure, however, masks substantial variation across regions, ranging from 10% (in Kranj) to 29% (in Murska Sobota). Figure 4.1 exemplifies this regional variation.

Women and jobseekers with lower educational attainment are exempt from job search due to health reasons more often. Figure 4.2 shows the share of jobseekers exempted of job search obligations due to health reasons by sex and educational attainment. Women are consistently more often than men exempted from job search. One explanation might be that job search exemptions include caring for a family member, a role more often taken up by women. This higher incidence of exemptions among women also holds for durations longer than three months, which makes it less likely that care to a family member is the main cause of the gender differences observed. Across both genders, the figure shows a negative relationship between the incidence of job-search exemptions and educational attainment. This is not surprising, and it is in line with a wide literature documenting the correlations between education and health (Cutler, Lleras-Muney and Vogl, 2008[2]).

Linking ESS employability status and job-search exemptions due to health reasons suggests that over one-third of those employable with in-depth support are exempt from job search. This approach shows that the employability classification of the ESS provides an (imperfect) proxy of measuring health barriers to employment.

Data from population surveys suggest that over 30% of unemployed persons in Slovenia have a disability. This figure, which is naturally higher than the figure obtained using recognised disabilities and job-search exemptions, shows that there is probably a significant share of jobseekers with health barriers to employment whose disability is not recognised in any way.

Unemployment insurance (UI) is a right acquired for employees, self-employed and recipients of sickness benefits, who have lost their job involuntarily. Benefits are available for insured persons having contributed for at least nine months during the previous 24 months. For the unemployed under 30, only six months of contributions are required. Involuntary unemployment includes no-fault layoffs from permanent and after fixed-term contracts. Despite this being a strict condition, only applied in about a third of OECD countries, it is de facto not a binding one. Evidence shows that there is significant collusion with employers to overcome this condition (OECD, 2016[1]).

In Slovenia, the benefit duration for receipt of unemployment benefit strongly increases with work experience and age. The maximum benefit duration varies from two months for young workers with 6-8 months of prior employment to 25 months for most workers over age 55. The system creates strong disincentives for older workers to work, especially those over age 57 (entitled to unemployment benefit for 25 months with nine months of employment in the past 24 months). These parameters mean that seasonal employment can be sufficient for older workers to re-establish UI eligibility and thus weaken their incentives to seek permanent employment (OECD, 2016[1]). While longer UI entitlement for older workers is common among OECD countries, Slovenia’s system is especially generous for older workers.

The replacement rate is high for short unemployment spells, and decreases significantly for longer spell durations. The replacement rate is 80%, 60% and 50% for months 1-3, 4-12, and 13 or more, respectively, of benefit receipt. The benefit depends on the average monthly earnings in the past nine months (five months for younger workers), subject to a minimum gross monthly payment of EUR 350 and a maximum of EUR 892.50 (the latter was decreased from EUR 1 050 in May 2012) (OECD, 2016[1]). The replacement rate was also increased during this reform, reducing the incentives to transition from unemployment to employment (Vodopivec et al., 2015[3]).

In Slovenia, relatively few unemployed receive unemployment benefits compared to international standards. Countries like Switzerland or the Netherlands, which have comparable unemployment benefit systems to Slovenia in that they offer a single contributory unemployment insurance programme, have a share of unemployment receipt among the unemployed that is twice as high (Figure 4.4). The low take up rate in Slovenia has a number of explanations, including the condition of involuntary unemployment, the lower unemployment duration, the relative strictness of unemployment benefit eligibility and generosity for workers under age 50, and rather strict requirements to register with the ESS.

Take-up of unemployment benefit take is relatively low for workers under age 50. Benefit eligibility and duration of payments are relatively stricter for workers younger than 50, which represent over 65% of the registered unemployed. Figure 4.4 shows that jobseekers under age 50 rely heavily on social assistance as the main source of income, as the result of a lower eligibility for social insurance. As jobseekers become older, the reliance on social assistance diminishes and entitlement to unemployment benefits increases. Above age 50, disability benefits are also important as a source of income. Overall, more than half of all registered jobseekers relies on social assistance and one-third receive unemployment benefits.

All residents in Slovenia are entitled to social support to guarantee a Basic Minimum Income (osnovni znesek minimalnega dohodka). There are three means-tested social assistance programmes:

  • Financial social assistance (FSA) providing temporary social support to those in need (up to three months initially, extendable to six months, and up to 12 months for older workers);

  • Emergency social assistance (EFSA) granted to residents living in a situation of temporary material deprivation due to exceptional living costs that they cannot meet with their own income;

  • Supplementary Allowance granted (also permanently) to older residents, age 63/65 or older for women/men, persons with a permanent incapacity to work, or those permanently unemployed.

All benefits are organised centrally, but managed at the regional level, by local Centres for Social Work.

Social assistance entitlement in Slovenia has a strong activation component, which is important given that it is the main benefit for most jobseekers. Eligibility to social assistance requires all working age recipients to register with the ESS, participate in ALMPs, and actively search employment. Failure to satisfy these conditions results in a loss of social assistance payments. Those with severe health issues or work incapacity, however, are exempt from these conditions.

The level of benefits depends on number of household members, their age and number of working hours.Table 4.5 summarises the benefit level by status of the recipient. Unemployed workers are entitled to an FSA benefit of up to EUR 402.18 per month, while those aged 18-26 may receive up to EUR 281.53, and those permanently unemployable or permanently incapable of work receive up to EUR 305.66 per month. The FSA benefit entitlement for employed residents with a household income below the minimum can be up to 50% higher. Benefits increase for every additional household member, and vary by the working hours of these household members. The level of Supplementary Allowance, which depends on the same criteria, is worth 47% of the Basic Minimum Income.

Social assistance and social insurance benefits are not combinable, aggravating the coverage disparities between younger and older workers. While younger disability claimants may not combine their pensions and benefits with social assistance, older disability claimants may receive Supplementary Allowance. This creates a discontinuity in social protection coverage between younger and older disability claimants, adding to the already relatively lower disability benefits for younger claimants.

Contrary to social insurance, social assistance’s rights accrue at the household level, creating potential coverage gaps. Social assistance plays a key role in Slovenia, and replaces social insurance for a large number of unemployed and under-employed workers. Eligibility for social assistance is, which like in most countries is means-tested at the household level, requires the household income (including income from social insurance) to fall below basic minimum income, and property and assets to be under EUR 19 304. Homeowners with very low income may not be eligible. Young persons with disability, with insufficient years of contributions for entitlement to ZPIZ benefits, may not receive any form of support if they still live in a household that does not meet the conditions for FSA eligibility. This results in a lack of income support but also removes any incentive to register at the ESS, furthering their social exclusion. High reliance on social assistance to prevent social exclusion goes hand-in-hand with large coverage gaps.

ZPIZ benefits represent a non-negligible source of income for many unemployed workers, particularly those over age 50 with sufficient contributory periods. Figure 4.4 above shows that 13% of jobseekers receive a partial disability benefit or pension, a share peaking at 25% for the age group 50 to 59 and falling to 18% for those over age 60. There is strong positive correlation between contributory years and receipt of ZPIZ benefits. Two elements seem to be in play: (1) older workers tend to experience more disabilities, and (2) the system encourages older workers with more contributions to take up ZPIZ benefits. While (1) is universally true,1 the fact that ZPIZ take up does not linearly increase with age suggests that (2) plays a major role. The system requires a minimum level of contributions for eligibility, which is binding particularly at younger ages. It also creates a discontinuity at age 50, by which those over 50 face a more generous benefit system.

This duality of social protection for persons with disability in Slovenia can partly explain why ESS jobseekers with health limitations have employability lower than for ZPIZ recipients. Only persons with disability with relatively long employment histories (or years of contributions) are eligible for ZPIZ benefits. Persons with disability with shorter contribution periods, possibly due to more severe health limitations and greater detachment from the labour market, are among the pool of jobseekers not eligible for ZPIZ benefits. Table 4.1 illustrates this idea, by showing that the rate of temporarily non-employable is higher among social assistance recipients than among ZPIZ beneficiaries. This is a common feature in countries with a pension-like disability insurance. In countries with other systems, those with severe disability are the most likely to receive benefits from disability insurance while in Slovenia, many of them will be under the responsibility of the ESS or the local welfare offices.

The only formal interaction between ZPIZ and ESS is the need for unemployed partial disability beneficiaries to register with the ESS. Other than this, the co-operation between the two institutions is rather inexistent:

  • There are barely any data exchanges. For instance, neither has the ESS any information regarding ZPIZ pensions of registered jobseekers, nor is ZPIZ aware of the participation of their clients in any ESS activation programme;

  • The situation is similar for other ESS activation programmes: ZPIZ recipients can participate, but the intervention of the ESS is usually coming very late, as ZPIZ recipients have to look for a job in the open labour market.

Since 2012, unemployed workers are not eligible for sickness insurance, eliminating any hitherto existing need for the ZZZS and the ESS to co-operate. Austerity Legislation (ZUJF, 2021[4]) changed the Labour Market Regulation Act (ZUTD) in a way that it abolished the right of the unemployment benefit recipients who were on the sick leave (for more than 30 working days) to receive sickness benefits at the expense of the ZZZS. Consequently, it was no possible any longer to maintain and extend unemployment benefit entitlement while on sick leave (which was possible before the Austerity law). This legislative change in 2012 applied to newly unemployed persons only, further reducing the need to co-operate across institutions.

References

[2] Cutler, D., A. Lleras-Muney and T. Vogl (2008), Socioeconomic Status and Health: Dimensions and Mechanisms, National Bureau of Economic Research, Cambridge, MA, https://doi.org/10.3386/w14333.

[1] OECD (2016), Connecting People with Jobs: The Labour Market, Activation Policies and Disadvantaged Workers in Slovenia, Connecting People with Jobs, OECD Publishing, Paris, https://doi.org/10.1787/9789264265349-en.

[3] Vodopivec, M. et al. (2015), “The Effect of Unemployment Benefit Generosity on Unemployment Duration: Quasi-Experimental Evidence from Slovenia”, IZA discussion paper, Vol. 9548, http://hdl.handle.net/10419/126636www.econstor.eu (accessed on 1 April 2021).

[4] ZUJF (2021), “Zakon za uravnoteženje javnih financ [Public Finance Balance Act]”, Official Gazette of the Republic of Slovenia, No. 40/2012, http://pisrs.si/Pis.web/pregledPredpisa?id=ZAKO6388.

Note

← 1. EU-SILC data for 2019 suggest that in Slovenia, the share of persons with disability among these aged 50-69 is over 40%, while it is 11% among those aged 30-49.

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