Reform of invalidity benefits under scrutiny

Controversy surrounds an overhaul of the invalidity insurance scheme Keystone

Parliament has begun a major debate on updating the invalidity-benefit system. The aim is to cut spending and bring the scheme back from the brink of collapse.

The political right is calling for a stop to what it describes as system abuses, while the centre-left wants to put the onus on re-integrating benefit claimants into the job market.

The difficulties began back in the early 1990s, when the invalidity benefit scheme plunged into the red and hasn’t managed to emerge since.

Latest figures show a SFr1.7 billion ($1.3 billion) deficit, with debts totalling SFr7.8 billion, mainly as a result of an increasing number of claimants who suffer from psychological disorders and work-related stress.

The government proposals seek to put an end to the chronic deficits.

The draft law – which is being submitted to the House of Representatives for debate on Monday – aims for a 20-per-cent drop in the number of new applications for benefits. Candidates are likely to face tougher screenings.

The proposed measures also focus on the re-integration of claimants into the job market both by putting more pressure on the individuals concerned and by effectively lowering payments.

More revenue

In a bid to shore up the insurance system, the government is also seeking to raise more revenue.

Slightly increasing mandatory contributions from salaries into the invalidity scheme could provide an additional SFr303 million per year.

The government is also considering a hike in value added tax in the near future, which is expected to result in a windfall of SFr2.7 billion by 2025.

Discussions on tax issues in parliament are scheduled to take place at a later date and are not part of the current debate in parliament.

Controversial

The draft has come under pressure from two of the four main political parties – the centre-left Social Democratic Party and the rightwing Swiss People’s Party.

The Social Democrats and the trade unions describe the reform as flawed and unfair, because it puts the onus for re-integration mainly on benefit claimants and not on employers and companies.

“The planned measures are a slap in the face for many claimants. They go completely against common sense and proven experience,” said Colette Nova of the Federation of the Trade Unions.

Centre-left politicians have announced that they will instead call for the introduction of a quota system to hire disabled people.

Public and private companies with a workforce of more than 100 people would have to employ at least one handicapped person per 100, while the federal administration would employ up to four per cent of its total staff from people eligible for invalidity benefits.

Experts say the centre-left might make approval of the reform dependent on the introduction of the quotas.

The Swiss People’s Party has criticised the amendments as being too weak. It said the perceived abuses of the social security could only be stopped by tougher measures.

swissinfo, Olivier Pauchard

In brief

The state invalidity benefit scheme was set up in 1959. It is mandatory for all residents in Switzerland who are gainfully employed.

The scheme is financed by a 1.4% deduction from salaries. The federal authorities provide additional funding.

The insurance system has been in the red since the beginning of the 1990s. The number of benefit claimants has increased as a result of more people suffering from mental illnesses and work-related stress.

In May 2004 voters rejected plans for a one-per-cent hike in value added tax to fund the invalidity scheme.

Key facts

5.2% of the population was eligible for invalidity benefits in 2004 against 3.2% in 1992.
The scheme posted a SFr1.7 billion deficit in 2005.
Based on an estimated annual deficit of SFr1.5 billion, the scheme could run out of funds by 2011.