Employers’ Costs Due to Sick Leave Drastically Increased During the Pandemic

During my career at a large company with a very 'tight' hierarchy, one morning meeting with the financial director in the tea kitchen etched itself into my memory. A promising businesswoman in her thirties looked quite unwell that day. Exhausted, she was making herself tea and trying to discreetly hide the fact that she was sick. She admitted to having a temperature of 39 and being in a coma, but today, she had a presentation before the Management Board, so she couldn't afford to stay home. I watched her in disbelief, and my gaze conveyed 'get home before you infect us all.' I am quite sure that her bosses wouldn't have batted an eye if she had reported being sick and postponed the presentation, but going on sick leave was a personal defeat for her, and she admitted that she never misses work when she is sick.

Such situations have not been rare among managers who believe that the entire system will collapse if they do not come to work for a week, and it has not been uncommon for directors to look at workers' sick leave with considerable disdain.

Then Covid changed that mindset. You were simply forced to isolate yourself from your work environment at the slightest potential suspicion of the coronavirus. On one hand, workers were given the opportunity to recover when they were unwell, regardless of whether they were infected with the virus or not, but on the other hand, epidemiological measures caused considerable chaos in business systems. As new variants emerged, the situation escalated to the point where many manufacturers, retailers, and transporters found themselves in a bind with a shortage of workers and, of course, increased sick leave costs. As Martin Evačić, director of the National Trade Chain (NTL), recently pointed out in a conversation, in retail, which is already deficient in sellers, retailers had to close some sales locations because there was no longer any possibility of 'stretching' and reallocating the workforce.

As was happening in Croatia, business communities around the world appealed to governments to shorten self-isolation measures as omicron began to seriously undermine business continuity, and British employers requested a reduction of isolation from seven to five days.

Croatia, in the latest wave of measures, shortened quarantine to seven days for all close contacts, not just for vaccinated individuals and those who had recovered from COVID-19, allowed the termination of isolation for asymptomatic infected individuals and for patients with mild and moderate clinical symptoms after at least five days if they tested negative on a rapid antigen test (BAT) no earlier than the fifth day. A measure that definitely has a significant impact on reducing the number of self-isolations is the measure of voluntary regular self-testing for students, which abolishes the obligation of self-isolation for students who have been in contact with an infected person at school or outside of school, provided they have no symptoms of the disease and have a negative test result. The measure regarding the non-wearing of masks in schools will only show its effectiveness.

According to current data from the Croatian Health Insurance Institute (HZZO), the total rate of temporary incapacity for work (PNR) from January to December 2021 was 4.00, of which 1.97 was borne by employers and 2.03 by HZZO. In the same period in 2020, the total PNR rate was 3.60, of which 1.70 was borne by employers and 1.90 by HZZO. – It follows from this that in 2021, compared to 2020, the total PNR rate was higher by 11.1 percent, while the PNR rate borne by employers was higher by 15.9 percent, and by 6.8 percent for HZZO.

– From the current data, we can easily read that employers' costs related to workers' sick leave associated with the Covid epidemic have drastically increased. Both those directly borne by them since day one and those indirectly borne – through payment and subsequent reimbursement of sick leave at the expense of HZZO, especially through increased costs due to replacing workers who were absent due to illness or isolation and whose work must be done by someone else. None of this should be an employer's cost since the employer secured themselves by paying health contributions, which is a logical inconsistency that HUP, among other arguments, has long pointed out. Everything indicates the urgent need for a necessary change in the sick leave institute for workers at the employer's expense in Croatia, as has been done by other competitive countries. This is especially needed now after the pandemic, as part of the reform measures that the Government plans to undertake in healthcare, if they are indeed serious about it – comments Milka Kosanović, director of membership relations at the Croatian Employers' Association.

Fortunately, omicron has recently eased, with about two thousand new infections daily, and if this trend continues, employers can breathe a little easier from workforce redistribution and higher sick leave costs.

Read more on this topic in the printed and digital edition of Lider.

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