3. The challenges of the Slovenian disability insurance programme

Slovenia’s disability insurance offers various benefits, depending on the result of the capacity assessment, including three types of disability benefits, a disability allowance, and a special benefit tied to vocational rehabilitation. Two particularities of the Slovenian disability insurance system are, first, that it covers both general disabilities and occupational injuries and diseases and, second, that employers play a key role at a time when workers will often have been out of work for a very long time. This section covers the main features of the programme, discusses the assessment of disability, including the coverage of occupational and non-work related disabilities, and wraps up by reviewing the co-operation (or rather the lack of it) between sickness and disability insurance.

In Slovenia, disability insurance is contribution-based, covering those with substantial insurance periods gained through employment and self-employment. Insurance cover includes student work, farmers, and most forms of employment and self-employment. Non-eligible persons may join compulsory pension and disability insurance schemes on a voluntary basis.

Disability insurance is financed by contributions to the Pension and Disability Insurance Institute of Slovenia, ZPIZ. Social security contribution rates are 24.35% of the gross wage, of which employers pay 15.5% and employees 8.85%, and are used to cover old-age, disability and survivor insurance.1 Like for health care spending, the strong reliance on social security contributions for financing makes the ZPIZ budget more sensitive to the economic cycle. Unlike for the ZZZS, the government is legally obliged to cover the gap between ZPIZ social security contributions and ZPIZ spending from the general budget (Stropnik, Prevolnik Rupel and Majcen, 2019[1]). This possibility effectively offers ZPIZ and disability insurance a greater flexibility than ZZZS and sickness insurance.

Other than social security contributions, employers have no additional costs to bear when their employees are on disability insurance. Unlike for sickness insurance, where employers pay for the first 30 working days of sickness, the costs of disability insurance for employers are limited to the mandatory social security contributions to ZPIZ. There are no financial consequences for having one, or many, employees on disability benefits. Employers, however, play a role in other ways in the concession of benefits, discussed in detail further below.

Disability insurance covers all occupational and non-work injuries and diseases that cannot improve by continued medical treatment (MISSOC, 2021[2]). Benefit applicants not having completed their medical treatment, a condition not specified in the legal basis for benefit eligibility in most other EU or OECD countries, explain almost 60% of all benefit rejections in any given year.

Unemployed people can apply to the disability insurance programme without going through sickness insurance. Jobseekers registered at the ESS that are identified as facing employment barriers due to health limitations can apply for disability benefits directly (and also have to, as they are not entitled to sickness benefits), just as other inactive people with a sufficient insurance record.

The system is more lenient and generous for occupational injuries and diseases. Claimants with a work-related disability are entitled to disability insurance regardless of their contributory period. The minimum income replacement rate for these cases is set at 58.5% of the benefit base (see below for more details) for work histories shorter than 40 years, increasing with every year of contributions of over 40 years. This replacement rate for occupational injuries and diseases is almost twice the minimum replacement rate of the pension for non-work related disabilities and the minimum old age pension.

For non-occupational diseases and injuries, eligibility to disability insurance depends on the years of contributions to ZPIZ and the age of the claimant. For claimants under age 21, benefit entitlement requires at least three months of contributions. For this group, only full disability risks are covered, i.e. people can only receive a permanent disability pension (more on the type of benefits granted below). Claimants aged 21 to 29 must have employment for at least one-quarter of the time between the age of 21 and the occurrence of invalidity (full years of service). Claimants over age 30 must have employment for at least one-third of the time between age 20 and the occurrence of invalidity (only full years of service are considered). This system generates a discontinuity at age 21, and another at age 30, by which someone slightly younger than 30 is entitled to benefits with 2 years and 3 months of contributions, while someone having turned 30 requires 3 years and 4 months of contributions (see Figure 3.1).

In addition to the reason for disability, benefit generosity depends on the years of contribution and on gender. For non-work related injuries, replacement rates from disability insurance follow the same pattern than old-age pensions: they increase with years of contributions, and are slightly different for men and women (see Table 3.1, although by 2023 the replacement rates should be equalised across gender). The pension basis over which the replacement rate is applied (PRB) is the monthly average of earnings in any consecutive 24-year period of insurance following 1 January 1970 (whichever is the most favourable for the insured person) (MISSOC, 2021[2]). Calculation of the PRB is based on earnings (net of taxes and other contributions) upon which pension contributions have been paid. To account for the foregone working years due to disability, the reference years used to determine the replacement rate are the sum of the contributory years and the added period (prištete dobe). The added period is a function of the age of disability onset a and calculated as:

Added Period=fa=2360-a+ 1265-60, a<6012(65-a), 60a<65

The calculation of the added period adds a discontinuity at age 60, by slightly reducing the generosity in the calculation of disability pensions.

Pensions are higher if recipients have dependent children, according to Article 37 of the Act. For example, parents with 20 years of contributions and 13 years of added period and with two dependent children will receive a replacement rate of 56.7%, compared to 53.98% for the same situation without children. Having three children increases the benefit by 4 percentage points.

The effective disability and old-age pension replacement rate has fallen steadily in the past decade (Figure 3.2). Disability pension entitlements follow the path set with any pension reform, which is a clear disadvantage of a disability insurance linked with pension insurance as pension eligibility conditions worsen, especially in a situation in which disability benefit payments are relatively low. From 2010 to 2017, net disability pension entitlements fell by about 14%, from 51.8% of net earnings to 45%, largely owing to the gradual extension of the earnings period considered for the calculation of pensions entitlements. Since 2017, payments remained largely unchanged.

Depending on their disability assessment, claimants may be entitled to a disability pension, a disability benefit, or a part-time benefit. A disability pension is granted to eligible claimants who cannot be employed due to very severe disabilities and old age, and meet the minimum contribution requirements. A disability benefit is granted to persons with residual employment capacity who cannot work at their current job but could potentially work elsewhere (right to transfer, pravica do premestitve). A part-time disability benefit is granted to claimants who can no longer work full-time.

Vocational rehabilitation can be granted instead of the right to transfer to another job or a partial disability benefit. As an alternative outcome after a disability assessment, vocational rehabilitation can be granted to younger claimants (under age 55) who have remaining work capacity and the potential to be trained for another job on a full-time (if age 50-54) or part-time basis (if under age 50 years). Vocational rehabilitation is thus granted on a sufficient residual work capacity, Category II of disability, which will be described in more detail below.

All benefits are calculated relative to the disability pension. As shown in Figure 3.3, the calculation of the added period adds a discontinuity at age 60, by slightly reducing the generosity in the calculation of disability benefits. This is common practice in many countries – assuming that people would not have worked until the legal retirement age – but further reducing benefit entitlements unnecessarily. From this basis, entitlements for the various disability benefits are as follows:

  • Full disability benefits pay 60% or 80% of the disability pension, depending on the residual work capacity. These amounts are only paid to claimants who are not employed but for whom the cause of non-employment is involuntary; claimants having terminated their employment contract voluntarily receive only 25% or 40% of the disability pension.

  • Disability claimants with the right to transfer having started another job receive 20% or 35% of the disability pension. In addition to partial benefits, this is another form of financial incentive to work in the Slovenian disability insurance system. Its efficacy is not clear, however, since claimants with more residual employment capacity receive a higher pay (35% of the disability pension) than those assessed as having less residual employment capacity (20%).

  • Partial benefits are calculated as a proportional reduction of the disability pension as working hours increase. Claimants working 20 hours a week will receive 50% of the pension, and those working 35 hours receive 12.5%. The proportional reduction in hours worked results in limited incentives to increase working hours. Unemployed workers assessed as having sufficient capacity to work part-time receive 80% of the disability pension.

  • Claimants in vocational rehabilitation are entitled to a benefit 30% higher than the corresponding disability pension, for the period from the acquisition of the right to the completion of vocational rehabilitation. Those only engaged in part-time vocational rehabilitation receive 40% of the disability pension. After completion of vocational rehabilitation, employed claimants receive benefit levels as previously described. Unemployed claimants receive 50% of the pension until finding employment, for a maximum of two years.

In 2020, the average disability benefit paid 38% of the average disability pension. This suggests a substantial number of voluntarily unemployed claimants, or a lower salary base for recipients of disability benefits than that of pension recipients. Benefits granted for the right to transfer are about 30% the average disability pension (replacement rate is 20-35%), partial payments amount to 60% of the full disability pension, and vocational rehabilitation benefits are 20% higher than the full disability pension (Table 3.2). These relative payments are in line with the replacement rates previously described, and thus do not suggest categorical differences in salary base across claimants from different benefits.

Upon reaching retirement age, disability pension beneficiaries do not switch to the old-age pension programme, as people are granted permanent rights to a disability pension (until their death).2 This is because disability pensions are calculated on the same basis than old-age pensions, and thus effectively the transition to retirement age does not result in a change in benefit for pensioners. This anomaly, however, can make cross-country comparisons for persons older than 65 more difficult.

The process of receiving disability benefits usually starts with a request to the ZPIZ from the insured worker, the GP, or the occupational medicine expert at the request of the GP. In most cases, the personal GP initiates the process of application for disability insurance payments by requesting a disability assessment at the ZPIZ Disability Commission. However, employers or workers themselves can also start the process. Regardless of who initiates the process, personal GPs are responsible for completing the standardised medical form that forms the base for the application to disability insurance.

ZZZS physicians play a minor role in the application to ZPIZ, as they only propose applications for consideration to ZPIZ. For instance, after one year of sickness absence, ZZZS physicians suggest their beneficiaries for disability assessment. Yet, ZZZS experts claim that this is a formality, which often results in a rejection of the application from ZPIZ on the grounds of incomplete medical treatment.

After receipt of the medical information, employers and insured persons are requested to provide working documentation, delovno dokumentacijo, which assesses the burdens of the job performed and the skills of the insured person, and evaluates the possibility for vocational rehabilitation. These work information forms, DD-1, DD-2, DD-3, DD-2 MZ (see Appendix for the forms and their English translation), are instrumental for disability assessment by the ZPIZ Disability Commission. In the case of an unemployed insured person, the Employment Service of Slovenia (ESS) is responsible for submitting the relevant work information forms.

Insured persons and their employers decide whether to exercise their right of vocational rehabilitation. In Slovenia, vocational rehabilitation is granted with the purpose to continue employment with the same employer, by adapting the current job or taking up a different position in the same company. The disability commission proposes the participation to vocational rehabilitation on grounds of the medical and working information. Both the employer and the insured persons must agree to exercise this right, by a formal statement of their wish to rehabilitate professionally. Only then the insured person is referred to a professional institution in the field of occupational medicine or vocational rehabilitation, which gives an opinion on the cursus of vocational rehabilitation.

In theory, the deadline for ZPIZ for issuing a decision is four months, but de facto, the process takes twice as long. The process to apply for disability insurance payments starts when all documentation is completed. From that moment on, ZPIZ specialists have four months to complete their assessment. However, Table 3.3 shows that in reality the process takes about eight months on average (slightly shorter for a partial benefit); this could be a deterrent for some potentially eligible people to apply to the disability insurance programme (Autor, Duggan and Gruber, 2014[3]).

A key aspect of eligibility for disability insurance benefits is that the applicant must have a disability that cannot be improved by medical treatment or rehabilitation. The starting point for the assessment of disability is a medical assessment. ZPIZ physicians assess the medical form provided by applicants, and completed by their GP, following the ICD-10 criteria for limitations of work capacity in relation to a medical condition, not taking into account capacity for the actual job performed. Once it is established that no improvement is possible through medical rehabilitation, the Disability Commission determines the remaining work capacity of the applicant.

Over half of the rejections from disability insurance are due to uncompleted medical treatment. The condition that disability cannot be improved by medical treatment or rehabilitation is binding. Figure 3.3 below decomposes the first-instance disability-assessment decisions between acceptances to the programme, rejections due to insufficient degree of disability, and rejections due to incomplete medical treatment. In 2019, 26% of all applicants were not accepted in the programme in the first instance, a share that is quite stable over time and lower than in most other EU and OECD countries, except the Nordics (OECD, 2010[4]). Out of all rejections, 56% were rejected because the medical treatment was considered incomplete, a share that has slightly increased in recent years.

Applicants with full disability undergo a medical assessment only, without an assessment of their employment capacity. Applicants who are found not to be able to work for more than four hours per week for medical reasons (complete incapacity for work, or occupational incapacity for work without remaining working capacity) do not have their work capacity assessed. They are directly classified as fully disabled (Category I of disability), with entitlement to a disability pension. This presents a certain inconsistency as the inability to work at least four hours per week is determined by ZPIZ caseworkers on the basis of a medical assessment only, e.g. without accounting for the characteristics of their previous job or occupation.

All remaining applicants undergo an in-depth assessment of their working capacity. For this capacity assessment, the employer and the insured worker have to provide information on the nature, the workload, and the burden of the occupation/job through a standardised form. The assessment is based on workload and burden (physical demand) in both theory and practice, i.e. of the job position and of the work done by the insured person. Depending on the assessed capacity, eligible applicants are classified into one of two additional categories:

  • Category II, if the working capacity is reduced by 50% or more, or the person is no longer capable of working in the current profession (de facto often equated with “the current job”);

  • Category III, when working capacity is reduced by less than 50%, but working for at least half of the working hours is not possible or the person is no longer capable of working at the current place of employment.

The decision to grant the right to vocational rehabilitation on the same work capacity assessment and on the person’s age. Vocational rehabilitation is mandatory for all applicants under age 50 classified under disability Category II (or, under age 55 and able to work part-time). People aged 55 or older classified in Category II, and all applicants classified in Category III, have an optional right to vocational rehabilitation. No additional assessments take place.

Slovenia’s disability assessment reflects a rather unique application of the principles of the ICF. For persons with full disability, assessment is largely medical as it is “assumed” that the person has no remaining capacity that could be used in the labour market. For all other workers, disability is assessed by comparing the person’s current capacity with the demands of the previous occupation or, de facto, the last job; the estimated potential number of hours the applicant could work determines the category of disability. The degree of disability is strongly influenced by two factors: the education and occupation of the applicant and the work environment in the last job. This is a promising approach in theory but not in practice because this comparison is, in most cases, only done years after the applicant has left her or his job. Moreover, the process and its outcome relies heavily on the ability and willingness of the employer and the applicant to provide the necessary information and to co-operate in vocational rehabilitation.

The disability insurance system is complex and admits preferential treatment for workers above age 50. Figure 3.4 summarises the application process to ZPIZ benefits or rights, which depends on the severity of the work limitation but also age. Workers above age 50, who could regain work capacity if undergoing vocational rehabilitation, can qualify for a permanent disability pension. Similarly, workers above age 55 can be eligible for a permanent disability benefit despite remaining work capacity, while those younger than age 55 can only receive a temporary disability benefit (Fialho and Høj, 2020[5]).

The large majority of new applicants in Slovenia are categorised into the “lightest” category of disability. Figure 3.5 shows that, in 2019, almost 70% of all applicants are classified as Category III of disability after their initial disability assessment. Category II represent 8%, Category I represent 16%, and the remaining 7% are referred to vocational rehabilitation. While the share of applicants initially classified as Category III of disability is constant over time, the composition of first-instance decisions has seen an increase in referrals to vocational rehabilitation and Category II of disability, at the expense of Category I. It could be that the composition of applicants has changed, towards persons with more residual employment capacity. This is in line with the trend in the share of persons with severe disability identified in population surveys, as shown in Figure 3.5, except for 2019, where survey data show a sudden increase in the prevalence of severe disability. A mutually non-exclusive alternative explanation is that this is the result of a change in the culture or practice of disability assessments. This would be a step in the right direction, as it implies granting fewer permanent disability pensions, and more disability benefits, which have an activation component.

De facto, there is some room for interpretation on the process of granting rights to vocational rehabilitation. Applicants and employers play a big role in deciding whether to participate in vocational rehabilitation, even in the cases where participation should be mandatory. Disability applicants often prefer to be classified in Category III of disability, with a lower benefit entitlement, and have the right to opt out of rehabilitation benefits. Employers can argue for the unavailability of jobs that the claimant could perform in spite of undergoing vocational rehabilitation. Since there is such as close tie between disability assessment and the job before disability onset, employers’ lack of commitment is sufficient to refuse the right to vocational rehabilitation.

Despite an increase in the rate of referral to vocational rehabilitation, the number of disability applicants engaging in it remains low. Figure 3.5 shows a slight increase of referrals to vocational rehabilitation. De facto, however, because there is so much room for interpretation, the take up of vocational rehabilitation remains low. Figure 3.6 shows that the number of new vocational rehabilitation contracts has remained rather constant over time (with two peaks, in 2015 and 2019), while the number of referrals to vocational rehabilitation has increased steadily (again, with an exception for 2015, a particularly proliferous year). The leeway given to employers and employees to decide whether to engage in vocational rehabilitation or not results in even lower actual take up.

The theoretical criteria to assess disability presents inconsistencies, compounded by a conflicting execution of the assessment. One theoretical inconsistency is the fact that qualification for Category I of disability requires applicants to be able to work less than four hours per week, while Category II requires a reduction of at least 50% of the working capacity. In theory, working capacity is assessed against the current profession, while de facto only the previous job is taken into account. For unemployed workers, the assessment refers to the last job before unemployment. This is despite of the latest legislative reform in 2013, which attempted to broaden the definition of work capacity to consider the applicants’ profession. This mismatch between theory and practice makes it difficult to evaluate the assessment of disability and to provide recommendations. Another conflicting aspect, exemplified above, is that while vocational rehabilitation is a right that should be mandatory, there is a lot of room for never taking it up. Relatedly, another limitation of the system is activation for disability applicants and beneficiaries is tailored to remaining employed with the same employer. This is made worse by the fact that employers have a window of opportunity to fire their employees when they are granted disability benefits. Since this is a commonly used practice (see below in Chapter 2), it makes all the activation efforts redundant.

Work capacity assessments do not take into account economic conditions, nor the availability of vacancies in the job used to measure work capacity. A common complaint voiced by social partners is that the assessment of disability is based on unrealistic job possibilities, resulting in overly strict assessments. Taking into account the actual availability of the jobs that a claimant could perform in theory is a way to bridge these elements. Slovenian authorities may want to take as an example the Dutch disability assessment process, where residual earnings capacity is evaluated against all jobs that applicants could still perform given their medical, occupational and individual characteristics, for which there are at least three vacancies at the time of assessment.

The appeal process reverses the decision of the disability commission in about one in every four times. Figure 3.3 showed that about 26% of applicants were rejected in the first decision. The appeal process reverses about one-quarter of these decisions, leaving a final rejection rate of about 20%. ZPIZ is not in the position to share more in-depth data on the outcomes of appeals but anecdotal evidence from social partners seems to suggest that appeals are rarely successful, except in cases where ZPIZ did an obvious mistake.

The acceptance rate for disability pensions is significantly higher than for disability benefits, and with a lower regional variance. The national acceptance rate for applicants to disability pensions is 93%, while it is 77% for disability benefits (Table 3.4). While the acceptance rate for disability pensions fluctuates around 90% (with an exception for Novo Mesto, with almost 97%), the acceptance rate for disability benefits ranges from 71.5% in Celje to 84% in Novo Mesto.

The process of reassessment of disability is the same as the initial assessment of disability. Reassessments take into account the current state of health of applicants, and its impact on their ability to work, just as with the initial assessment of disability. As such, reassessments do not take into account labour market changes and economic conditions, and heavily focus on assessing the residual working capacity against the previous job held by the person many years ago. For people who have entered the system when young and who have to undergo several rounds of reassessments, assessing against the previously held job only (or, in theory, the previous occupation) is a rather narrow approach.

Reassessments are less strict for older workers, adding to the incentives of older workers to take up disability insurance benefits. Reassessments are only periodically conducted (every five years) for claimants acquiring the right to benefits before the age of 45. In all other cases, ZPIZ specialists can request the reassessment of a case upon suspicion of abuse of acquired rights. Disability beneficiaries called in for reassessment are obliged to undergo a reassessment, and cannot influence the process. For claimants whose health status has improved to such an extent that they disqualify from the programme, benefits are paid for up to one month after the decision.

Slovenia has one of the highest disability benefit recipiency rates in OECD countries, but it has decreased over the past decade. In Slovenia, almost 1 in 10 working age adults receive social support for their disability, one-third of these receiving a disability benefit, and the remainer a disability pension. This situates Slovenia as one of the OECD country with the highest disability support receipt rate, after Estonia, Lithuania and Norway. This high share is in a downward trend over the past decade, but caution is needed when interpreting this trend: most of the decling in ZPIZ receipt rates is captured by an increase in long-term sickness absences. What Slovenia is observing over the past decade is a long-term sickness issue, masking (among others) a large disability dependency issue. Comparing the generosity of the sickness sytem to that of the disability system, the spillovers from disability to sickness are not surprising.

The representative disability pensioner is a man, enters the programme at age 50-54 with 25-34 years of contributions, and qualifies through a non-occupational disease for a Category I benefit. The same is true for the representative disability benefit recipient. Women are more often partial disability pensioners than men, but the median partial disability recipient otherwise enters the programme at the same age and with the same contributory periods than full disability pensioners. Temporary benefits are granted to those younger than 55, and so the representative recipient enters the programme at age 30-39, with four to 15 years of contributions. Across benefits, the most frequent qualifying disability is a non-occupational disease. Disability pensioners are mainly classified in the category of most severe disability (I), while disability benefit and partial disability recipients classify in the least severe disability category (III). Recipients of temporary benefits most often qualify in Category II. Table 3.5 summarises this information.

Vocational rehabilitation recipients have the same characteristics as temporary benefit recipients. From Figure 3.4, recall that for those classified in Category II (i.e. the most frequent case for temporary benefits and vocational rehabilitation), the only theoretical difference between being proposed to participate in vocational rehabilitation and receiving temporary benefits is whether there is a need for vocational rehabilitation to be able to work. There are no observable characteristics differentiating those who participate in vocational rehabilitation from those receiving temporary disability benefits. This could mean ZPIZ assessors base their decisions on additional information, such as the type of job performed, or subjective information coming from employers, such as their capacity to accommodate such employee.

Over 18% of new disability pension beneficiaries qualify through mental health disorders. This figure increases to one-quarter when considering new female pensioners. This is a lower share than in many other EU and OECD countries in which the share on claimants with a mental disorder is between one-third and even one-half (OECD, 2015[6]), a trend that Slovenia is likely to follow in the decade ahead.

Disability pensions are low, often falling below the level of the Basic Minimum Income (osnovni znesek minimalnega dohodka). Data show that 80% of all disability pensions fall in a range between EUR 300 and EUR 800 per month, with a median of EUR 500 to EUR 600 (Figure 3.8). While this amount may be sufficient to secure a dignified living for those receiving a pension above the median, recipients in the low-earnings range, receive dangerously low payments. For comparison, over 22% of pension beneficiaries receive a pension below EUR 400, the threshold set for the Basic Minimum Income. 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.

Short contributory periods are the key characteristic of recipients of low disability pensions. Figure 3.9 shows that recipients of pensions below EUR 400 (low pensions) and EUR 300 (very low pensions) mainly differ from the total pensioners by their insurance periods, which are substantially shorter. Again, this is a key weakness of many pensions-like disability insurance schemes compared to other systems, which only take the most recent earning into account or are unrelated to the person’s level of earnings. Shorter insurance periods correlate with shorter labour market histories, and possibly lower labour market attachment and earnings, which could explain the lower pensions. Pensioners with low pensions are slightly younger than the average pensioner while those receiving very low pensions are somewhat older, indicating that age may not be the underlying factor behind low pensions.

Disability benefits, on which people stay on average for about six years, are clearly insufficient to sustain basic living expenses. Most disability beneficiaries (57%) receive less than EUR 200 per month in benefits (Figure 3.8). The potential rationale for such a low benefit is to provide incentives to look for a job quickly, being granted to those having completed vocational rehabilitation, or able to work part-time or full-time in another occupation. Disability benefits are a standalone income support, as it is not possible to combine them with earnings from work (only partial benefits can). The reality, however, is that claimants stay on disability benefits for about six years (five years for women) (Table 3.6). The level of disability benefits, thus, does not align with the reality of the job market persons with disability face.

Partial disability payments follow a distribution similar to disability pensions, but with lesser variation. The distribution of partial disability payments follows an inverted-U shape, like that of disability pensions. Naturally, its maximum is around half that of disability pensions, but it has a lower standard deviation, indicating that payments are more concentrated around a given amount (EUR 200-EUR 400 per month). The long tail of higher pension payments observed among full pensioners is not present among partial disability beneficiaries. One potential explanation could be that women in Slovenia, who are most often the beneficiaries of partial disability, have more concentrated labour earnings, across all levels of income (SURS, 2020[7]). This would result in more concentrated disability payments.

There is no evidence on the outflow from ZPIZ beneficiaries and the destination of people leaving the system, which in itself speaks to the capacity of ZPIZ to evaluate its programmes and policies. Table 3.6 suggests that the exit rate from disability insurance and disability pension is very low. Another way to approximate a figure on the exit rate from disability insurance is to rely on ESS records, which can provide information on the trajectories of partial ZPIZ beneficiaries. It is important to note that the outflows to employment observed among partial ZPIZ beneficiaries is not a good proxy for the entire universe of disability pension and benefit recipients. First, because partial ZPIZ beneficiaries are less severely disabled (although they could be comparable to disability beneficiaries, see Table 3.5). Second, the outflow to employment may be larger for partial ZPIZ beneficiaries, as they are activated by the ESS. Recipients of a disability pension or benefit, on the contrary, are not activated at all. With these caveats in mind, Table 3.7 summarises the outflow to employment from partial disability beneficiaries registered at ESS.

Outflow rates to employment are larger for claimants with better labour market possibilities and more adaptability. On average over the period 2017-20, the outflow from unemployment to employment for partial disability beneficiaries was 9%. Outflow increases with educational attainment, in line with better labour market opportunities for higher-skilled workers. Outflow to employment decreases with age, as younger claimants are more adaptable to change jobs that suit their residual employment capacity. The systems of disability and unemployment insurance, both relatively more generous for older workers, may also be partly discourage the transition to work of older workers.

Slovenia’s sickness and disability system has one other anomaly, as there are only minor differences between occupational and general injuries and diseases. Slovenia regulates general and occupational injuries and diseases in the same sickness and disability insurance systems, albeit with some differences in the access to and level of benefit payments. For instance, there is no minimum work period required in case of work-caused accidents or diseases, and benefit payments are higher. In most other EU and OECD countries, special workers’ compensation schemes are in place for work accidents and occupational diseases, often with rules very different from those applying to the general sickness and disability system and with a strong focus on returning work-injured workers to work as quickly as possible.

The uniform approach in Slovenia has two undesirable consequences, the first being that the costs of work accidents are largely socialised. Workers’ compensation schemes in most EU and OECD countries use sector-specific premiums in line with the accident risk in a particular sector or, in just a few countries, even a particular company. The per-person premium in a sector with a high accident risk can sometimes be 20 or even 30 times higher than in another sector with a low risk. The main idea being that higher employer costs promote investments in working conditions and the prevention of work-caused sickness and disability. This is not currently the case in Slovenia, where all employers pay the same contributions to sickness and disability insurance. The 30-day sick-pay obligation for each sickness case provides a certain incentive for Slovenian employers to prevent accidents and occupational diseases.

A second problem of the uniform approach is that occupational diseases are virtually non-existent. The legislation in Slovenia does not acknowledge that work can cause illness, leaving a share of workers less well protected than they should be. The outdated list of occupational diseases does not reflect the current strain of the workplace and, every year, only a handful of people are assessed as having experienced an occupational disease. Accordingly, mental health conditions for example will never qualify as occupationally caused even though many of those people will have a harder time navigating the system.

Despite the natural linkages and overlaps between sickness and disability insurance programmes, information sharing across responsible institutions is uncommon. Sickness insurance is the gateway to disability insurance for employed persons: workers on sickness insurance whose health issue cannot be improved through medical treatment should, in theory, transition to disability insurance. This feature clearly requires a certain co-ordination between the ZZZS and the ZPIZ, which should co-ordinate on their assessment decisions, or at least, share information on claimants. At present, this is not the case. 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. This also requires additional information validation processes, conducted by both the ZZZS and the ZPIZ, which would be redundant should both institutions share information.

The lack of uniformity in ZZZS and ZPIZ assessments is especially problematic in Slovenia, as sickness and disability insurance cover similar risks. As shown in the first section of this report, sickness insurance is frequently used for long-term sickness, a role that should arguably be taken over by disability insurance. With such a blurry definition of the risks covered by the two types of insurance, the lack of uniformity in assessments is particular problematic. Two main elements create a dichotomy in the assessment of sickness and disability:

  • Disability assessment has an occupational component, while sickness assessment is exclusively medically based;

  • Sickness insurance requires claimants to be undergoing a medical treatment, while eligibility for disability benefits hinges on a complete medical treatment.

As a result of the first difference, a worker may not be eligible for disability insurance if the health ailment is not work limiting, but could be entitled to sickness insurance for years. The second difference opens substantial room for interpretation, particularly for mental health conditions. Both elements imply that many people in Slovenia may stay on sickness benefits, possibly even for years, without applying for, or being entitled to, disability insurance rights. Without co-ordination of the assessment across the two institutes, but also within, the social protection system for persons with disability is too lenient for some, but has significant coverage gaps for others.

Another reason for frequent long-term sickness absences is that people may not transition to the disability programme even with permanent disabilities. This is mainly due to the relative generosity of the sickness programme compared to disability insurance, 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 insurance to disability insurance, and the decision relies too much on the own claimant’s responsibility, who does not have financial incentives to request such a transition.

A single medical expert body for the assessment of sickness and disability could help to uniform the assessment and reduce the administrative burden. The 2010 Working Group, formed by ZZZS and ZPIZ experts, first presented the idea of a new body, the New Medical Expert Organisation. The same idea reappears in the 2016 White Paper on Pensions. The goal of streamlining the assessment of both institutions is to increase professionalism, unify criteria, and ensure the independence of the assessors. If properly implemented, a single body could enable co-ordination across the two institutes but also uniform assessment within institutes, across local offices and assessors. It would also enable modernising the IT systems for recording data of applicants to both programmes, shortening waiting times after application.

Coordination between the ZZZS and the ZPIZ must get support from the top. Currently, any efforts to co-ordinate across the two institutes comes from the bottom. Assessors, GPs and assessment committees are aware of the lack of co-ordination and its consequences, and make efforts to reach out across institutes. This is clearly insufficient, and even the creation of a joint assessment committee may not solve all issues. The Ministry of Health and the MoLFSA also have to improve their co-ordination, at all levels. One example of failed co-ordination is in defining the budget allocated to the sickness and disability institutes.


[3] Autor, D., M. Duggan and J. Gruber (2014), “Moral Hazard and Claims Deterrence in Private Disability Insurance”, American Economic Journal: Applied Economics, Vol. 6/4, pp. 110-141, https://doi.org/10.1257/app.6.4.110.

[1] Comission, B. (ed.) (2019), ESPN Thematic Report on Financing social protection - Slovenia, European Social Policy Network (ESPN).

[5] Fialho, P. and J. Høj (2020), “Labour market institutions for an ageing labour force in Slovenia”, OECD Economics Department Working Papers, No. 1648, OECD Publishing, Paris, https://dx.doi.org/10.1787/9eca1535-en.

[8] MacDonald, D., C. Prinz and H. Immervoll (2020), “Can disability benefits promote (re)employment? : Considerations for effective disability benefit design”, OECD Social, Employment and Migration Working Papers, No. 253, OECD Publishing, Paris, https://dx.doi.org/10.1787/227e7990-en.

[2] MISSOC (2021), MISSOC Comparative tables, https://www.missoc.org/missoc-database/comparative-tables/results/ (accessed on 4 November 2021).

[6] 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.

[4] OECD (2010), Sickness, Disability and Work: Breaking the Barriers: A Synthesis of Findings across OECD Countries, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264088856-en.

[7] SURS (2020), stat.si, https://www.stat.si/StatWeb/en/News/Index/9073.


← 1. Slovenia therefore belongs to the group of countries with a pension-type disability insurance, contrary to countries with either a dedicated unemployment-type disability insurance or a flat-rate disability benefit (MacDonald, Prinz and Immervoll, 2020[8]). The setup implies that any deficit of the disability insurance is invisible under the broader pension programme.

← 2. Upon reaching the retirement age, people could choose to switch to an old-age pension if conditions for entitlement to the latter would be satisfied, but with no impact on the level of payment that they receive.

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