Introduction of a new rehabilitation system

evaluation of active labour market programmes...

The second pillar is a new allowance, the so-called rehabilitation allowance.

The rehabilitation allowance can be awarded (instead of disability pension or accident-related disability pension) to persons whose vocational working ability has altered by at least 50 per cent due to an impairment, but they can regain the fitness to return to work. The allowance is for a fixed-term of up to 3 years. It is a contribution-based payment that is related to the previous wage and it is available to persons who have paid contributions for a certain period, are in need of rehabilitation due to a significant impairment, and are fit for rehabilitation. The allowance provides a temporary replacement income (for the duration of the rehabilitation process) to assist in the successful re- turn to the world of work.

The third pillar is the coordinated development of medical, social and em- ployment rehabilitation services. Each person who is considered to be fit for rehabilitation shall receive an individual rehabilitation plan and sign a coop- eration agreement. This way the individual not only gains entitlement to re- habilitation services but also agrees to be bound by the terms and take part in the planned rehabilitation process.

The fourth pillar is the promotion of the employment of people with dis- abilities. The system of employment rehabilitation has been undergoing sig- nificant change since 2005. Important changes were introduced in the em- ployment support of disabled workers. The previous passive aid scheme was replaced by new, active arrangements (wage subsidy, compensation of costs, support for reasonable accommodation in the workplace etc.). The accredi- tation of rehabilitation enterprises has also been realised.

2.4.1. Rehabilitation allowance

The new rules apply for rehabilitation allowance, disability allowance, disa- bility pension and accident-related allowance claims submitted after Decem- ber 31, 2007. Claimants before December 31, 2007 who reach retirement age within ten years of the submission of their claim should be awarded disability pension instead of rehabilitation allowance, however they have the possibil- ity to opt into the new rehabilitation scheme.

Persons are eligible for rehabilitation allowance if:

– they have an impairment between 50–79 per cent, and as a result are un- able to take up employment without rehabilitation, and

– they do not have a job, or their monthly wage is at least 30 per cent lower than the average earnings in the four months before the impairment, and – are fit for rehabilitation, and

– they have a long enough contribution period, and

– they are not receiving any other social security or unemployment-related provision.

The extent of impairment and fitness for rehabilitation is assessed by a body of rehabilitation experts (a committee). The decision regarding the allowance is made by the locally competent regional pension insurance directorate. The allowance is paid by the National Pension Directorate.

The sum of the rehabilitation allowance is equal to 120 per cent of the 3^rd category disability pension calculated on the basis of identical eligibility conditions. The annual increase of the rehabilitation allowance is identical to the increase of the old age pension. The allowance is subject to pension con- tribution and thus counts toward eligibility for pension.

The rehabilitation allowance is awarded for the duration of rehabilitation or a maximum of 3 years. If rehabilitation is not successful then the person can claim disability pension or other social provision.

The beneficiary must cooperate with the relevant organisation of the Public Employment Service. They must agree to the terms and conditions of a writ- ten rehabilitation agreement.

The rehabilitation agreement has the following elements:

– a written declaration by the beneficiary that they:

– agree to cooperate with the PES, and

– will accept any suitable jobs or training offered free of charge, and – individual arrangements for job search, as well as

– the rehabilitation services provided by the Public Employment Service, – the frequency of meetings with the advisers of the PES and the ways of and

keeping in touch.

According to Government estimates 30–40 per cent of the new disability pension claimants can participate in the new scheme, which is approximately 10,000 people each year. It is expected that 40–60 per cent of them will find long-term employment.

2.4.2. Accreditation system

Businesses employing disabled workers must, since July 1, 2007,²² be accred- ited in order to be eligible for employment support. This is basically an as- sessment procedure that is initiated by the firm in order to demonstrate its competence to carry out employment rehabilitation and thus be eligible for employment support. At the end of the assessment procedure businesses can be awarded basic, rehabilitation or advanced-level certificates based on the number of disabled workers and quality of rehabilitation activities. The ba- sic certificate is valid for 5 years, the rehabilitation certificate for 3 years and the advanced-level certificate for 2 years. The latter allows the organisation to use the term “sheltered firm”.

22 Legislation: 176/2005 (IX.

2.) Government Regulation, 14/2005 (IX. 2.) MoEL Regu- lation, 26/2005 (XII. 27.) MoEL regulation.

evaluation of active labour market programmes...

Accreditation is open to all employers as defined by the Labour Code re- gardless of the number of employees, however with the following two condi- tions regarding the type of certificate and the number of employees:

1. The basic certificate cannot be issued for firms where the number of dis- abled workers is at least 20 or more and where this represents at least 40 per cent of the total workforce.

2. The advanced-level (and provisional) certificate can only be issued to businesses with not less than 50 workers, at least 50 per cent of which are disabled.

Certain employers have been motivated to get the advanced-level certifi- cate since 2006 (to qualify for certain subsidy schemes). However accredita- tion became a requirement for all employers applying for a subsidy as of July 1, 2007.

Table 17: New elements of rehabilitation of people with a disability Accreditation of employers and subsidy schemes Rehabilitation allowance

Optional from January 1, 2006;

compulsory after July 1, 2007 From January 1, 2008 for new claimants, as of January 1, 2009 for repeat claims

New element Expected impact New element Expected impact

– Only employers with basic, rehabilitation or advanced- level certificates accredited by the ESO are eligible to receive employment support. – Before only firms with at least 20 workers were eligible for sub- sidy, now even micro enter- prises or small non-profit or- ganisations can receive sup- port. – The previous system of standard subsidies has been replaced by a differentiated system which includes wage subsidy, compensation and contribution to different costs associated with the employ- ment and rehabilitation of disabled workers.

– As a result of more stringent conditions businesses with demonstrated competence in the employment of disabled workers are more likely to qual- ify for support than “main- stream” employers who might face relative disadvantage.

– The number of employers might increase, however the support/worker might be lower in the case of smaller busi- nesses than for large organisa- tions. – Aid intensity more di- rectly depends on the expenses of the employer, however full compensation of employment- related costs can only be awarded to employers with advanced-level certificates.

– Persons with an impairment between 50–79 per cent are eligible for rehabilitation allow- ance equalling 120 per cent of the disability pension for a maximum of 3 years provided they cooperate with the PES.

– The new National Institute for Rehabilitation and Social As- sessment assesses remaining abilities instead of loss of work ability. – The PES offers and individual rehabilitation plan (a written agreement) for persons in the rehabilitation scheme which can include training and support for business start-up, and involve independent non- profit organisations.

– As a result of rehabilitation and employment support schemes, 5–6 thousand people with disabilities might take up employment, however they lose other benefits during the reha- bilitation process. – Thanks to the inclusion of work, care, social and other experts in the assessment committee, it can give a more comprehensive assessment, however it is more expensive. – It increases the chances of disabled people of returning to long-term employ- ment, but it is not clear when failure to find a job will be considered a breach of the agreement by the disabled person. – 250 new staff will be hired by the PES.

Impact on budget The nominal value of total wage subsidy stays at 50 billion Fo-

rint/year, however the amount awarded to individual employers is differentiated on the basis of their certificate. Fraud is ex- pected to decline.

60 million Forints – mainly from EU funding – will be spent on setting up the rehabilitation system. This is expected to return in 6 years from savings on disability pensions. After that the new system is expected to save 15,000 million Forints/year on present value for the state budget.

Source: Yvette Szabó: Leszázalékolt számítás, HVG, May 26, 2007. p. 88.

2.4.3. National Institute for Rehabilitation and Social Assessment On the basis of the National Institute for Medical Assessment, the National Institute for Rehabilitation and Social Assessment was set up as of July 2007.

Its tasks include the assessment of the extent of impairment, vocational work- ing ability, fitness for rehabilitation, and possible directions and length of re- habilitation. It carries out the assessment of disability pension claims. It pro- vides comprehensive rehabilitation services.