The unemployed on sickness allowance: segmenting 3-year labour market pathways with sequence analysis

BACKGROUND: Understanding how the combination of unemployment and work disability affects future labour market pathways is important. We followed labour market pathways among those who were unemployed at the start of a sickness allowance spell. METHODS: Register data covered disability pensions (DP), rehabilitation spells, sickness allowance spells, unemployment spells and employment spells, retrieved for unemployed Finnish 18-58 years old persons who had a new sickness allowance spell in 2016. Sequence analysis and clustering were used to identify latent homogenous subgroups. Using multinomial regressions, demographic, socioeconomic, and disability-related covariates were examined. RESULTS: Preliminary analyses revealed six clusters with unique pathways and identities. 1) Unemployment; 2) Employment; 3) Rehabilitation spells, recurring disability and unemployment; 4) Unknown sources of income; 5) Permanent disability pension; and 6) Temporary disability pensions. Compared to the cluster with emphasis on return-to-work, other clusters were associated with less pre-LTSA employment days, having a pre-LTSA chronic illness, and a mental disorder. CONCLUSIONS: Unemployed persons starting an LTSA have very different labour market pathways. For many, there are low chances for employment or regained work ability in the following years. Persons with poor health, long history outside employment, older age, low educational level and a mental disorder could benefit from targeted support. KEY MESSAGES: • Despite heterogeneous pathways found, for most of the unemployed, sickness allowance spells are followed by recurring unemployment, recurring sickness allowance, or disability retirement. • Since the unemployed with work disability rarely regain work ability in the following years, supporting their work ability is crucial in preventing permanent exclusion from working life.