During the last two decades, disability benefit payments increased significantly in most of the industrialized countries, although the rate of this growth has declined over time. This has occurred despite increased efforts to prevent disabilities and a clear long-term improvement in physical work conditions, including the decline in the prevalence of manual work.
Fourth grade student at the Moscow State Humanitarian Institute for students with musculoskeletal system disorders / M. Crozet, © ILO.
The observed trend in the growth of disability benefits may be due to changes in eligibility criteria, the interpretation and administration of these criteria, the incidence of disabilities, or benefit-claiming behaviour – or a combination of all of these factors.
Furthermore, the structure and administration of disability benefits may create incentives for some individuals to try to establish eligibility for benefits. Not only does this place additional demands on programme resources, it also reduces the supply of labour at a time when many industrialized countries are facing prospective labour shortages.
How do disability benefits work?
Under most social security programmes, disability benefits for persons assessed as permanently disabled as the result of non-work-related causes are very similar to those provided for old age. In one sense, the disability benefit may be regarded as an early retirement pension, granted in prescribed circumstances. In most countries, legislation is framed accordingly. The same basic formula usually applies for total disability as for old age – a cash amount usually expressed as a percentage of average earnings. Increments and dependants’ supplements are generally identical under the total disability and old-age programmes. Partial disability benefits, if payable, are usually reduced according to a fixed scale. The system may also provide rehabilitation and training.
Only a few countries have kept legislation for disability benefits and for old-age benefits separate. wherein some countries, disability is regarded rather as a long-term or permanent illness, to be met by an indefinite extension of sickness benefit until this is superseded by entitlement to the retirement pension at the normal pensionable age. Generally, however, the similarities between disability and old-age benefits are more significant than the differences.
The administration of disability benefits has become more effective and efficient in many countries during recent years. New administrative procedures were established, with the aim of introducing methods to clear backlogs in processing applications, improving communication with the applicants, and measuring performance. As regards training and rehabilitation of disability beneficiaries, recent international evidence shows that a number of countries are promoting reforms aimed at encouraging return-to-work efforts and removing disincentives to work. It also shows that early intervention to reintegrate people into work before they start to receive disability benefits generally appears to be more effective than intervention once someone has become a recipient. Yet, in countries that have made efforts to reintegrate disability beneficiaries into work, the level of outflow of beneficiaries from disability programmes has rarely met expectations.
With increasingly stricter work requirements in unemployment programmes in many countries, and the gradual retrenchment of early retirement systems, the pressure on disability benefits continues to increase. Social security institutions are looking to the International Social Security Association to disseminate good practices in disability programme reform - with a special emphasis on methods of determining proper rehabilitation and work reintegration programmes for the disabled - to better allow them to achieve a diminishing growth in caseload and costs. Policy makers in many countries agree that reintegrating people into work helps them avoid exclusion and brings potentially higher incomes, at the same time as raising the prospect of higher economic output in the long term.