Sick Leave Absences Draining Billions From European Economy

Illness-related absences are becoming a growing economic burden across Europe, with Norway leading the continent in the number of sick days taken. 

Workers in Norway are taking more sick leave than anywhere else in Europe, and the country’s absentee rate is at its highest level in 15 years. 

The issue has sparked debates over the sustainability of the country’s generous welfare system, which provides extensive health-related benefits, including full salary coverage for up to a year, followed by two-thirds of income after that.

While Norway’s welfare system is designed to support workers during illness, critics argue that it may be contributing to high levels of absenteeism, making it harder for businesses to find and retain employees. 

The International Monetary Fund (IMF) has called for reform, citing the welfare system’s “costly and distortionary” nature. 

According to Odd Arild Grefstad, CEO of Norwegian insurance firm Storebrand, businesses are spending more time recruiting skilled workers and facing increased wear and tear on employees who remain at work, resulting in lower productivity across the board.

The situation is not unique to Norway. 

Across Europe, rising levels of sickness leave have become a serious economic challenge, compounded by aging workforces and greater awareness of mental health issues, particularly among younger workers. 

The aftereffects of the COVID-19 pandemic have also played a role in the increased demand for sick leave.

In the U.K., long-term sickness is costing the economy nearly £33 billion ($42 billion) annually, with the number of economically inactive working-age people increasing by 800,000 since 2020. 

In response, U.K. Prime Minister Keir Starmer has proposed plans to reduce absenteeism and improve workers’ rights, including widening access to sick pay, despite the expected cost to businesses.

Germany and France are facing similar challenges. Employers in Germany spent a record €77 billion ($81 billion) on sick leave in 2023, more than double what was spent in 2010. 

Meanwhile, in France, the national health insurance agency is exploring ways to reduce sick leave costs, including plans to contact individuals who have been off work for more than 18 months and review sick note systems.

The economic impact of sickness is also felt by businesses, which report gaps in labor, hampered output, and rising costs. 

In Norway, the government has highlighted reducing sick leave and preventing workers from dropping out of the workforce as key priorities. However, achieving this is complicated, as the reasons for absenteeism are diverse, including both physical and mental health challenges.

While some argue that the welfare system’s support is essential for workers who genuinely need it, others believe the system needs reform to avoid abuse.

In France, proposals to tighten sick leave compensation, such as discontinuing payments for absences of less than eight days, have been met with resistance from trade unions. 

Similarly, in the U.K., businesses are grappling with the rising cost of sick leave, but some argue that improving workers’ wellbeing through enhanced sick pay may, in the long term, boost productivity.

The European Union faces a delicate balancing act: how to support workers in need while addressing the economic strain of absenteeism. As companies and governments debate the way forward, finding a solution that supports both employee wellbeing and economic stability remains a significant challenge.