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During the pandemic, former UK Prime Minister Boris Johnson suggested that Britons should be more like Germans when it comes to illness: “We have a habit of going back to work or going to work when we’re not feeling well,” he complained. Outraged pundits were quick to point out why: the UK’s sick pay policy was stingy by international standards, while Germany’s was one of the most generous in the world.
A few years later, the two countries find themselves at an interesting crossroads: Britain’s new Labor government intends to increase the generosity of the country’s sick pay policy, while Germany is beginning to worry that its policy is actually half too generous.
If you’re relying on statutory sick pay in the UK, you currently don’t get paid for the first three days you’re unwell (although Labor plans to introduce sick pay from day one). You then get a flat £116.75 a week — just 16 per cent of the average weekly wage for full-time workers. In Germany, you receive 100 percent of your salary from the first day of illness up to six weeks.
Is this a luxury that Germany can no longer afford? Its sickness absence rates — already high by international standards — appear to have suddenly increasedbased on data from health insurance companies. International data from the OECD and the World Health Organization, although a little uneven, suggest that German workers are now sick for more than 20 days a year. (By contrast, Brits took roughly 6 days in 2022, the latest UK data available).
There are a number of explanations for the increase in Germany, including more respiratory illnesses and mental health problems after the pandemic (a factor shared by other countries) and the highly overburdened the childcare sector meaning that nurseries can close due to staff illness at short notice, with indirect effects on parents’ ability to work.
Some employers you suspect that the change during the pandemic that makes it easier to get a sick note from a doctor (now you can get it by phone) also led to more avoidance. But Nicolas Ziebarth of the ZEW-Leibniz Center for European Economic Research, an expert on sick leave policy, told me he believes the biggest factor is an efficient new system that automatically transmits hospital notes from doctors to health insurers, instead of relying on paper notes. If this is true, it suggests that absences were actually underreported before.
In any case, you can see why German employers are unhappy with such high rates of sick leave, especially at a time when some fear that the country’s entire economic model is under threat.
One obvious answer would be to reduce the generosity of benefits. In Sweden, for example, employees receive 80 percent of their salary for the first two weeks of sick leave. The data suggest that this would be effective. Ziebarth says there is a strong correlation between the generosity of a country’s sick pay system and the number of absences per worker.
But there are two dangers. The first is that by imposing a financial cost on sick leave, you are likely to discourage some avoidance, but you may also encourage people to go to work when they are unwell. This carries its own costs, from slowing the speed of their recovery to spreading infectious diseases to other workers. In the first year of the pandemic, half of all OECD countries launched or expanded their sick pay schemes, for example by making them profitable from day one – an implicit admission that their policies were not adequate to encourage people to stay at home when sick. This is one big reason why the UK government is now planning to pay sick pay from day one.
An “optimal” policy from an economic point of view, then, would set generosity at a level that minimizes avoidance but also minimizes the number of people who go to work when sick. But there isn’t enough data on who is truly sick and who isn’t to know.
There is also the problem of fairness: once you reduce sick leave below 100 percent, you penalize people who are unlucky enough to get sick, especially those who are chronically ill. In the UK I wonder if this is one of the explanations for the increase in the number of people which do not work and claim health benefits instead: If you’re struggling with a long-term condition and it’s very difficult financially to keep your job because you’re losing most of your pay every time you’re too sick to work, that could be an incentive to quit your job altogether.
What is the true balance between the British and German systems? Unfortunately, there are no simple answers that can be agreed upon, only compromises that need to be weighed.
