Sweden Finland Austria

Comments on table 2.1
The employer’s obligation to pay wages for the first 6 weeks of illness in Germany was
reduced from 100 per cent to 80 per cent of the former wage in 1997, but most labour
contracts still stipulate payment of usual wages for that period. This obligation depends on

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3) Before March 1st, 1991, the compensation from the insurance was 90 per cent, and it was
usual for the employer to pay 10 per cent of the former wage, the total compensation then
usually being 100 per cent (up to an upper limit of 7.5 times 'basbeloppet', the 'basic rate' in
Swedish Social Security System). From March 1st, 1991, the benefit from the insurance was
changed to 65 per cent of the wage for the first 3 days of illness and 80 per cent for the
remaining days in the first two-week period. Again it was usual that the employer paid 10 per
cent of the wage. The total compensation was then 75 per cent (first 3 days) and 90 per cent
(for the remaining days of the first two-week period). From the third week the total compensa-
tion was 90 per cent (80 per cent from the insurance and 10 per cent from the employer to day
90, thereafter 90 per cent from the insurance). From the beginning of 1992 the employer is
obliged to pay 75 per cent of the wages for the first 3 days and 90 per cent for the remaining
days in the first two-week period. The insurance takes over from the third week, and the
compensation is 90 per cent, and there is no supplement from the employer. The increased
burden for the employer was compensated by a decrease of the social security contribution
paid by the Swedish employers. In 1993 the system was changed again. This time a waiting
period was introduced (1 day) and the compensation lowered for longer spells of illness. This
again opens for supplements from the employer. In 1994 these were, however, restricted to the
period from the start of the 3rd week to the 90th day of illness. From 1996 the gross
compensation percentage was lowered to 75 per cent in the entire scheme. This may be
supplemented with 10 per cent from day 15 to day 90. In 1997 the employer paid benefits were
for the first 4 weeks of illness, but that was changed back again to 2 weeks in 1998.
how long the employee has worked for the employer. The insurance compensation was
lowered from 80 per cent to 70 per cent of the gross wage.
In Austria there also is a minimum work period before the employer is obliged to pay
wages. For a blue collar worker the maximum duration of this obligation is 10 weeks (12
weeks for a white collar worker). After that he will receive 50-60 per cent of his former
income for up to 1 year, first 50 per cent then increasing to 60 per cent.
In Great Britain, payment of Statutory Sick Pay is dependent on the employee having
worked for the employer for a minimum length of time and having an income above the
Lower Earnings Limit. If that condition is not met, the payment is made according to a
lower rate (short-term Incapacity Benefit, lower rate) if the contribution record for that
scheme is met. Many British workers receive supplementary benefits from the OSP (Occu-
pational Sick Pay) scheme when they are ill. OSP is a labour market agreement.
In Canada a work requirement (700 hours in the last 52 weeks) has to be met before
benefits can be received. There are supplementary benefits during illness for employees in
some large corporations.
Sweden has changed its legislation concerning compensation for illness several times in
recent years . In 1993 a waiting period of 1 day was introduced. Sweden, Finland, Great
3)
Britain, the Netherlands and Canada all have a waiting period, shortest in Sweden (1 day),
longest in Canada (2 weeks).

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The maximum duration of the compensation in Denmark is 52 weeks within 1 1/2 years
while it is 78 weeks in Germany within 3 years. Including these conditions makes the
Danish system more favourable than the German one, where duration is concerned. There
are no such conditions in the other countries.
In Germany there is a maximum level of income to which the contribution percentage is
applied. Employees with income above that level may leave the system for public insur-
ance against illness. In Sweden there is also an upper limit on income from which the
contribution is paid by the employee, but not for the contribution paid by the employer.
(The employee contribution was introduced in 1993).
The criterion for characterizing the benefit as ’flat rate’, ’income related, low cap’ or
’income related’ is the same as was used in chapter I. Finland has a ’step formula’ without
maximum, characterized as ’income related’.
The level of compensation
The effect on disposable income of the ’standard’ event ’being ill for one week’ is illus-
trated by APW-calculations, in this case for the single APW.
Table 2.2.
Effects on disposable income of being ill for 1 week in 8 countries, 1997.
DK
S
FIN
A
D
NL
GB
CAN
Social security alone
Compensation
percentage
53
60
0
50
70
42
7
0
1)
Change in 
disposable income, %
- 0.7
-0.8
-1.5
-0.8
0
- 0.8
-1.6
-1.5
’Usual’ situation (combined with social security)
Compensation
percentage
100
60
100
100
100
100
80
0
2)
3,4)
Change in 
disposable income, %
0
-0.8
0
0
0
0
-0.4
-1.5
1)
The compensation percentage is before taxation, but with a maximum of 90 per cent of the former
net income (applied here).
2)
In the usual situation the waiting period of 2 days is also compensated.
3)
The compensation percentage is after taxation (net income).
4)
The range of variation is considerable for this compensation percentage.
For all countries, two calculations have been made, one covering the social security system
alone, the other covering the ’usual’ situation where the employer may pay wages (partly

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or in full) or may supplement the benefit from the social security system. The percentage
change in disposable income is based upon the change in the annual disposable income of
the APW caused by being ill for one week.
The best coverage is received in Germany for both shorter and longer spells of illness. The
unchanged disposable income in the insurance case is due to lower taxation of the remain-
ing wage income, even after including the 
progressions vorbehalt'. Austria also usually has
full compensation for shorter spells, but the coverage is considerably lower for longer
spells. In Sweden there will always be a reduction of disposable income. The effect of the
waiting day introduced in 1993 is significant, especially for short spells of illness. The
changes in 1993 in Sweden also lowered the compensation for longer spells of illness. The
relatively substantial reductions in disposable income for Finland, Great Britain, Canada
and the Netherlands are primarily due to the waiting period. For Austria and Denmark it
is due to a relatively low compensation. In the ’usual’ situation all these countries, except
Canada, have a high degree of coverage.
For longer spells of illness the ’social security system’ plays the dominant role for most
groups. Waiting periods (S, FIN, GB, NL and CAN) will be of less importance than for
shorter spells. This will ’improve’ the position of Sweden, Finland, Great Britain, the
Netherlands and Canada compared to Germany, Austria and Denmark. After Germany,
Sweden and Finland have the highest coverage in the ’social security alone’ case for longer
spells of illness in 1997.