Absence and Overtime Work: Empirical Evidence from Norway

Jan Morten Dyrstad and Solveig Osborg Ose,

Norwegian University

Does sickness absenteeism lead to more overtime hours, or does more overtime work lead to more sickness absenteeism, or both? This is the main question addressed in this paper, where we aim to uncover economic factors behind absence, with special focus on the relation between overtime work and absence decisions.

Last year absence was the highest ever registered in Norway, with an annual average of about 10.5 days per worker. Such high absence rates lead to daily debates of the Norwegian sick pay scheme, and of the use of overtime work. Today workers may only work 200 hours of overtime a year with some exceptions. The employer side suggests that the high level of absence call for more flexible arrangements of the overtime scheme. On the other hand, union representatives argue that this may even may lead to more absence as the pressure on workers are high enough as it is today. According to these somewhat contradictory assertions, there are reasons to believe that overtime and absence may be affected simultaneously.

The theoretical model in this paper therefore takes the demand and supply side of the labour market simultaneously into account. The supply side of the model is based on a model of individual labour supply, whereas the demand for overtime hours is modelled by assuming that firms minimise long and short run costs in two steps.