Spending Review 2022–2026 - Phase 2

Temporary incapacity for work (IT)

Madrid, 4 February 2026

AIReF Public Expenditure Evaluation Division

Content

1 Context and situation of temporary incapacity for work (IT)
2 Determinants of IT
3 Proposals

1. Context and situation of temporary incapacity for work (IT)

Context: Statutory replacement rates and financing responsibilities

📅 Sick leave period
% Statutory replacement rate
(% of the regulatory earnings base)
🏛 Financing responsibility
Days 1–3
0%
(No statutory benefit – qualifying period)
🧾
No statutory coverage
Loss of income borne by the worker
(unless supplemented through collective bargaining agreements)
Days 4–15
60%
🏭
Financed by the employer
Prevention incentive
Days 16–20
60%
🏛️
Financed by the National Social Security Institute (INSS)
Day 21 onwards
75%
🏛️
Financed by the National Social Security Institute (INSS)
Legal reference: Articles 172 and 173 of the General Social Security Act (LGSS). Replacement rates apply to the worker’s regulatory earnings base.

Interactive IT monitoring tool (more than 9,500 different subgroups)

Recurrence: the share of individuals starting more than one IT episode per year is increasing

Concentration of IT episodes per person

Source: AIReF based on IT episode data (INCA).

Share of individuals starting more than one IT episode per year

Source: AIReF based on IT episode data (INCA).

5% of individuals with IT account for 22% of all episodes
The number of individuals starting more than one IT episode per year has increased

2. Determinants of IT

2. Determinants of IT

1. Lack of supervision and monitoring of temporary incapacity for work episodes
2. More protective regulatory developments and benefit supplements provided through collective bargaining agreements
3. Expansionary economic cycle
4. Rising demand for primary care services
5. Longer waiting lists

1. Lack of supervision and monitoring of temporary incapacity for work episodes: a structural principal–agent problem

Bears the public expenditure but has limited capacity for immediate intervention

Disconnect

The 17 regional public health services prescribe IT without internalising the economic cost
The INSS does not carry out proactive monitoring of IT episodes lasting fewer than 365 days

1. Towards an integrated and interoperable information system

1. Strengthening proactive management and early intervention

Pillar 1: Capacity building

Creation of a specialised INSS unit for monitoring IT

Pillar 2: Targeting

Prioritising resources for recurrent episodes, mental health and musculoskeletal conditions, and duration deviations

Pillar 3: Support for primary care physicians

Providing more information (job characteristics), training in IT, and improving coordination with the specialised IT unit and medical inspection services

2. More protective regulatory developments and benefit supplements provided through collective bargaining agreements

Evolution of the regulatory framework governing temporary incapacity for work benefits

Source: AIReF.

The regulatory review reveals an increasingly protective trend from 2018 onwards

2. More protective regulatory developments and benefit supplements provided through collective bargaining agreements

Increase in the salary supplement for public sector employees (RD 956/2018)

Trends in the probability of starting an IT episode

Source: AIReF, based on temporary incapacity episode data (INCA) linked to the Continuous Sample of Working Lives (MCVL).

Impact on the probability of starting an IT episode

Source: AIReF, based on temporary incapacity episode data (INCA) linked to the Continuous Sample of Working Lives (MCVL).

2021 labour market reform

Impact of the change in contract type on the probability of starting an IT episode


Source: AIReF, based on temporary incapacity episode data (INCA) linked to the Continuous Sample of Working Lives (MCVL).

Increasing the salary supplement from 50% to 100% leads to a 40% increase in the probability of starting an IT episode

The transition from a temporary contract to an open-ended contract increases the probability of starting an IT episode by around 30%

2. More protective regulatory developments and benefit supplements provided through collective bargaining agreements

Increase in benefit levels under collective agreements (% of the regulatory base)

Statutory benefit rate (baseline regulation)

0%
✕
Days 1–3
60%
✓
Days 4–15
60%
✓
Days 16–20
75%
↑
From day 21 onwards

Benefit enhancement through collective agreements

80%
↑
Days 1–3
91%
↑
Days 4–15
91%
↑
Days 16–20
97%
↑
From day 21 onwards
Note: Approximately 60% of collective agreements signed each year include wage supplements to temporary incapacity benefits
Analysis conducted using artificial intelligence techniques by AIReF, based on more than 16,000 company-level and sectoral collective agreements from the REGCON register of the Ministry of Labour and Social Economy (MITES)

3. Economic cycle: temporary incapacity is procyclical

Correlation between the economic cycle and IT

Trends in IT incidence and the unemployment rate in Spain

Source: AIReF, based on Labour Force Survey (EPA) data for the unemployment rate and aggregated IT statistics published by the Ministry of Inclusion, Social Security and Migration (MISM).

Trends in the share of workers with temporary incapacity and model predictions

Source: AIReF, based on INCA microdata linked to the Continuous Sample of Working Lives (MCVL) 2024.

Scatter plot of annual changes in the unemployment rate and IT incidence

Source: AIReF, based on Labour Force Survey (EPA) data for the unemployment rate and aggregated IT statistics published by the Ministry of Inclusion, Social Security and Migration (MISM).

Economic upturns tend to be associated with stronger workers’ bargaining power, linked to an increase in job vacancies

4. Increase in demand for primary care since COVID-19

Trends in primary care episodes per 1,000 people and IT incidence (episodes per 1,000),
2017-2024

Mental and behavioural disorders

Diseases of the bones, joints and muscles

Respiratory diseases

Source: AIReF, based on INCA microdata, the Primary Care Clinical Database (BDCAP), and statistics on the affiliated population.

The analysis of the Primary Care Clinical Database (BDCAP), temporary incapacity microdata from INCA, and statistics on the affiliated population shows a correlation between rising demand for primary care and IT incidence

5. Longer waiting lists: a positive correlation between waiting times and the duration of IT episodes

Scatter plot of surgical waiting times vs. average IT duration, 2017–2024

Scatter plot of outpatient consultation waiting times vs. average IT duration, 2017–2024

Source: AIReF, based on INCA and SISLE-SNS data.

3. Proposals

Policy proposals to improve the effectiveness and efficiency of IT

PROPOSAL 1
Integrated information system
  • Interoperability between INSS, the National Health System (SNS), mutual insurance funds and employers
  • AI-based algorithms to estimate expected durations
  • Automated alerts for deviations
PROPOSAL 2
Strengthening INSS capacities
  • Early and specialised intervention
  • Prioritisation of episodes with recurrent episodes and larger deviations
  • Creation of a specialised IT unit
PROPOSAL 3
Support for primary care physicians
  • Information on working conditions and IT-specific training
  • Digital decision-support tools
  • Stronger coordination with medical inspection services and the specialised IT unit
PROPOSAL 4
Promoting employer engagement
  • Prevention and promotion of occupational health
  • Proactive and early management
  • Gradual return-to-work programmes
PROPOSAL 5
Assessing NHS waiting lists – improving data quality, coverage and accessibility

José Abascal, 2-4, 2nd floor 28003 Madrid
+34 910 100 599
evaluacion@airef.es
www.airef.es/en

Independent Authority for Fiscal Responsibility (AIReF)
@AIReF_es