Does a cut in sick pay lead to more employees being “fit for work”?


A decrease in sick pay is effective in reducing the number of days spent on long-term sick leave in the short run in Hungary. However less is known about whether it leads to a deterioration of affected employees’ health in the long run.  

Márton Csillag, senior researcher at Budapest Institute, analysed the short-term effect of the halving of the maximum sick pay that took place in 2011 in Hungary. His results indicate that among high-earning male employees, a 10% reduction in sick pay leads to an 8% decrease in the number of days spent on long-term sick leave. The consequence of this policy change was a 40% drop in the amount spent on sick pay for the affected group. The behavourial reactions were concentrated among older employees and those in worse health, so it is not possible to rule out that the ’presenteeism’ resulting from the sick pay cut may lead to a further deterioration in these individuals’ health. When designing such policy changes, decisionmakers ought to consider such long-term consequences, which may ultimately lead to an increase in public spending.

M. Csillag presented the findings of this research project, which was financed by the Hungarian Scientific Research Fund at several international conferences.