Workers with chronic illness are in higher risk of unemployment. This article investigated the worker and workplace characteristics associated with labour market inclusion for workers with a diagnosed chronic illness.

Linked employer-employee register data covering all Norwegian employers and employees each month from February 2015 to December 2019 were merged with patient data from specialist healthcare (136 196 observations (job spells); 70 923 individual workers). Survival analysis was used to estimate the risk of employment exit, with age, gender, chronic illness, full-time/part-time employment, skill level, marital status, children in household, branch, share of chronically ill workers, firm size and unemployment rate as covariates.

85% of the study population was employed in December 2019; 58% remain employed throughout the follow-up period. Mental illness, male gender, young age, part-time employment and lower skill levels were the worker-level predictors of labour market exit. Employments in secondary industries, in firms with high shares of chronically ill workers and, to some extent, in larger firms were the significant workplace-level determinants.

Only a minority of our sample of workers with chronic illness experienced labour market exclusion. Targeted measures should be considered towards workers with poor mental health and/or low formal skills. Chronically ill workers within public administration have the best labour market prospects, while workplaces within the education branch have an unfulfilled potential.