1. 1 ESCAPING THE DISABILITY BENEFIT TRAP Disability policy trends and lessons from OECD countries Monika Queisser* * OECD, Social Policy Division Directorate for Employment, Labour and Social Affairs National Disability Council Copenhagen, Denmark, 7 September 2005.

2. 2 Outline of the presentation r Disability policy is becoming a key issue for economic, social and employment analysis r Empirical evidence across the OECD: Understanding the problems r A comparative policy analysis: In most OECD countries, more needs to be done r The OECD’s work on disability issues

3. 3 The growing importance of disability policy r Maybe the key unsolved social policy problem r High public spending, but only limited and unsuccessful attempts to change this r Increasingly becoming the “benefit of last resort” in many OECD countries r Key issue in the context of pension reform r Key issue in the context of ageing and low employment rates of older workers r Major waste of human resources – people become healthier but less work-able ?

4. 4 HIGH PUBLIC CASH SPENDING Public incapacity- and unemployment-related spending in % of GDP, 2001 Source: OECD (2004), Social Expenditure Database, Paris.

5. 5 HIGH DISABILITY BENEFIT RECIPIENCY Disability benefit recipients in per cent of the working-age population, 1999 Source: OECD (2003), Transforming Disability into Ability, Paris.

6. 6 RAPID BUT DECLINING GROWTH Growth in disability benefit recipiency 1980-90 and 1990-99 (percentages) Source: OECD (2003), Transforming Disability into Ability, Paris.

7. 7 LOW OUTFLOW FROM BENEFITS Annual rates of outflow from disability benefits (percentages) Source: OECD (2003), Transforming Disability into Ability, Paris.

8. 8 MANY APPLICANTS ARE REJECTED Rejected benefit applicants and successful appeals (percentages) Source: OECD (2003), Transforming Disability into Ability, Paris.

9. 9 PUZZLING AGE VARIANCE ACROSS COUNTRIES Age-specific disability benefit recipiency rates (per 1000 of population), 1999 Source: OECD (2003), Transforming Disability into Ability, Paris.

10. 10 Different countries seem to have different problems r Countries with disability benefit as the benefit of last resort (e.g. UK, US) r Countries with disability benefit as another early retirement pathway (e.g. Austria, Germany, Portugal) r Countries with disability benefit as the benefit of last resort and as early retirement pathway (e.g. Netherlands, Norway)

11. 11 DISABILITY POLICY TYPOLOGY 2000 Source: OECD (2003), Transforming Disability into Ability, Paris

12. 12 Why disability policy reform is needed in OECD countries r Other social protection systems are gradually maturing r Demands at work, especially psychological demands, continue to increase r Continued ageing of the population of working-age r Too little focus on avoiding IB/SB inflow r Large age-bias in rehabilitation and vocational training

13. 13 How to escape? Transform the disability benefit scheme into a flexible labour market programme r Assess needs and, if necessary, intervene earlier: Avoid IB benefit inflow through job search, training, rehabilitation and prevention r Disentangle eligibility for support from work ability and work status: Make cash benefits a flexible (in-work) tool that covers extra costs and the labour market disadvantage KEY ELEMENTS IN THIS:

14. 14 r Break the link from temporary sickness to permanent disability r Implement a mutual obligations approach r Provide individualised, tailor-made pre- and post-placement support, thereby emphasising abilities and opportunities r Integrate employers into the process, and design proper financial incentives for them r Monitor outcomes carefully KEY ELEMENTS IN THIS (continued):

15. 15 The situation in Denmark in international comparison r Strong reduction of disability inflows since 1990s despite comparatively high benefit levels r High but declining costs of disability benefits but high unemployment expenditures r Strong emphasis on integration policy r Importance of flexjobs r Good financial incentives in administrative structure r Decentralisation and client-friendly one-stop-shops r Suppression of partial disability benefits  Denmark could provide interesting lessons for other OECD countries

16. 16 OECD work on disability policy in member countries r Publication of Transforming Disability into Ability in 2003 (covering 20 countries) r Start of country reviews of disability policy r First round: Norway, Poland, Switzerland r Second round: Australia, UK, Spain r Possibly: Finland, Luxembourg, France, NL, US and Denmark ? r Update of comparative country data