The case for a better Covid-19 leave policy

Dr Eric Crampton
The Dominion Post
16 November, 2020

It sounds so easy: If waiting on a Covid-19 test, stay home. It’s probably just a cold, but the costs if it isn’t are high.

And if your employee is getting a test, pay them to stay home so they don’t wind up causing all of your customers to get uncomfortable phone calls from a Covid-19 tracing team.

If only it were easy. But small changes in policy could make it easier.

The reasons it isn’t easy are obvious.

Every sick day kept in the bank is valuable. You might get sick later in the year and be caught short. You might need to stay home to tend to a sick kid. Unless this day is likely to be one of the five worst days of the year, workers aren’t likely to stay home.

On the other side, and especially for smaller employers, scrambling to fill an unexpected vacancy can be costly. If you have a hundred people on deck, you’d expect one or two to be absent and have enough staff to cover. Sorting out that coverage can be much harder for a small firm. If every worker stayed home with every mild cold, your sick leave budget would blow out.

During a pandemic, it is incredibly risky if neither the worker nor the employer really want a worker to wait on a test result. But measures like doubling the number of available sick days are both too blunt and too costly.

They are too blunt because, for mild symptoms, the calculus doesn’t change much: Unless the day is likely to be in your 10 worst of the year, you’ll prefer to go in. And when accommodating sick leave is costly, it is very easy to start wondering whether an employee is taking the mickey

The costs of having each worker out for an additional five days per year, if it’s all used up, do add up.

How to square the circle? On January 29, Singapore implemented its Quarantine Order Allowance Scheme. The self-employed or employers of workers falling under a Quarantine Order could claim $100 per day. Employers needed to show proof that they continued to pay the quarantined workers, and employees were required not to break the quarantine order.

That scheme solves the incentive problem. The employer cannot access the funding unless the worker maintains quarantine. And the worker must not break the order. Both have a reason for the worker to stay home.

New Zealand’s Covid-19 Leave Support Scheme took a page from Singapore’s book, but needs a few tweaks to really be effective. The scheme compensates employers, including the self-employed, if they need to self-isolate and cannot work from home.

It provides excellent coverage for workers who have been required to self-isolate because they have Covid or because they have been told to self-isolate as a close contact of a case.

It covers you if your child has been told to self-isolate and you need to provide support.

And, for a few workers in a few critical health sectors, it also provides coverage while waiting on a test result.

All of that is laudable.

But if you’re a hospitality worker, or a retail clerk, or a bus driver, you will not be eligible if you’ve developed symptoms, gone to a mobile testing station, and are waiting on results. The pernicious calculus remains. Are your symptoms really that bad? How many sick days do you have left? How annoyed is the manager going to be if you need to stay home for a couple of days?

The Covid-19 leave scheme should be updated to avoid those kinds of problems. Really, it should never have had those holes in coverage in the first place.

In the week to November 13, 24,574 people not linked to the border were tested for Covid-19. If each spent two days at home while waiting on a test result, that’s about 50,000 days of Covid-leave. The median weekly wage is about $1000. If every person staying home were compensated, it would cost about $10 million per week.

A week of Auckland being at alert level 3 costs, by one estimate, $440m per week. If a nationwide Covid-leave policy reduced the chances of a four-week Auckland lockdown by only a single percentage point in each week it was in place, it would have paid for itself almost twice over.

And we could, like Singapore, couple the scheme with rather substantial penalties for firms telling workers to show up while waiting on test results.

The 2020 Budget was meant to have allocated enough funding to cover the Covid Response. But actual public health measures, like proper Covid-leave to encourage people to stay home when they may be infectious, have been nickel-and-dimed. Meanwhile, the budget included over $70m in support for horse racing – enough to cover about seven weeks of proper Covid-leave.

Telling people to stay home while waiting on a test result sounds easy but fails to recognise the costs a lot of people face in doing so. Better Covid-19 leave policy to avoid that problem also sounds easy but requires governments to get their priorities straight.

Unfortunately, that’s not as straightforward as it should be.





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