The Cost of Short-term Disability in Municipal Workplaces: Costs of Sickness Absence Incurred by Municipal Employers Prior to the Covid-19 Pandemic

Sickness absence is a complex and costly problem that affects all parties in the workplace. The aim of our research has been to explore, develop, test and critically evaluate different approaches to gain a deeper understanding of the economic significance of sickness absence on the one hand, and to identify possible causal links on the other. The study is based on a dataset provided by Keva (data on around 215,000 employees for the period 2019–2021), which includes information on public sector employers, occupations, gender, wages and sickness absence. We applied several measures, such as frequency of absenteeism, total number of days of absence and length of absenteeism, while keeping the objective and focus of the analyses on costs. Short sickness absences account for the majority of all sickness absences, both in terms of quantity and cost, but they can also predict longer absences and thus act as health indicators. In this respect, it is noteworthy that there is a positive association between organisational effects on short sickness absence and longer or recurrent sickness absence requiring early intervention. One short period of sickness absence related to organisational factors predicts 1.4 periods of sickness absence requiring early intervention. In the future, combining survey data with quantitative analysis could be useful for assessing the usefulness of different interventions.