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© OECD, 2004.
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Ageing and Employment Policies
(Vieillissement et politiques de l’emploi)
Norway
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960,
and which came into force on 30th September 1961, the Organisation for Economic
Co-operation and Development (OECD) shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a
rising standard of living in member countries, while maintaining financial
stability, and thus to contribute to the development of the world economy;
– to contribute to sound economic expansion in member as well as non-member
countries in the process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory
basis in accordance with international obligations.
The original member countries of the OECD are Austria, Belgium, Canada,
Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United
Kingdom and the United States. The following countries became members
subsequently through accession at the dates indicated hereafter: Japan
(28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand
(29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995),
Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996)
and the Slovak Republic (14th December 2000). The Commission of the European
Communities takes part in the work of the OECD (Article 13 of the OECD Convention).
© OECD 2004
Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through
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or CCC Online: www.copyright.com. All other applications for permission to reproduce or translate all or part of this book
should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France.
FOREWORD
–3
FOREWORD
Older people offer tremendous potential value to businesses, the economy
and society. Unfortunately, they often represent an untapped and discriminatedagainst resource, as many public policy measures and private workplace
practices pose serious barriers to work, both paid and unpaid. Many of these
policies and practices are relics from a bygone era. There is a need to look
beyond traditional stereotypes about ageing in order to benefit from the growing
numbers of older citizens, many of whom would, in fact, choose to work for
longer given appropriate policies and workplace practices.
The OECD has reported extensively on public pension and early retirement
systems and the need for reforms of these systems to cope with some of the
challenges posed by population ageing. However, these reforms will not be
enough to encourage later retirement and to reduce the risk of future labour
shortages. Measures are also required to adapt wage-setting practices to greying
workforces, to tackle age discrimination and negative attitudes to working at an
older age, to improve job skills of older people and their working conditions,
and to better “activate” older jobseekers. Relatively little is known about what
countries have been, or should be doing, in these areas. Therefore, in spring
2001, the OECD Employment, Labour and Social Affairs Committee decided to
carry out a thematic review of policies to improve labour market prospects for
older workers covering both supply-side and demand-side aspects.
For the purpose of this thematic review, it was decided to define older
workers as all workers aged 50 and over. The age of 50 is not meant to be a
watershed in and of itself in terms of defining who is old and who is not.
Perceptions about being old are inherently subjective and only loosely
connected with chronological age. However, in many countries, the age of 50
marks the beginning of a decline in participation rates by age. Moreover, to
facilitate international comparisons, it is preferable to refer to the same age
group for all countries. Thus, all references to “older workers” in this report
should be taken as shorthand for workers aged 50 and over (or in some cases,
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
4 – FOREWORD
because of data constraints, workers aged 50 to 64), and should not be seen as
implying that all workers in this group are “old” per se.
This report on Norway is one in a series of around 20 OECD country
reports that will be published as part of the older worker thematic review, which
has been developed by Raymond Torres. It has been prepared by
Patrik Andersson, under the supervision of Mark Keese (team leader), with a
contribution from Steven Tobin and the technical and statistical assistance of
Clarisse Legendre, Anne-Marie Gray and Alexandra Geroyannis. A draft of the
report was discussed at a seminar on “Norwegian Policies to Improve Labour
Market Outcomes for Older Workers” in Oslo on 30 October, 2003, which was
organised by the Norwegian Ministry of Labour and Government
Administration. Discussants at the seminar included representatives of the
national authorities, the social partners and non-governmental organisations, as
well as academics. The final report, which incorporates the comments received
at the seminar, is published in this volume on the responsibility of the
Secretary-General of the OECD.
***
This report is based on the proceedings of a seminar and is published in
English only. However, a French translation of the Executive Summary and
Recommendations has been included in this volume (see p. 21).
***
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
TABLE OF CONTENTS
–5
TABLE OF CONTENTS
EXECUTIVE SUMMARY AND RECOMMENDATIONS ..................... 11
The challenges facing Norway ................................................................ 11
Measures for older workers and to address the demographic situation .... 14
Areas where further reform is required ................................................... 17
RÉSUMÉ ET PRINCIPALES RECOMMENDATIONS............................ 21
INTRODUCTION...................................................................................... 33
Chapter 1. THE CHALLENGE AHEAD ................................................... 35
1.
2.
The demographic challenge .......................................................... 35
Potential economic and social impacts.......................................... 38
Chapter 2. THE CURRENT LABOUR MARKET SITUATION
OF OLDER WORKERS....................................................... 43
1.
Labour market participation ......................................................... 43
Key issue I: Maintaining high participation rates .................... 43
2.
Employment situation................................................................... 46
A.
Current job characteristics....................................................... 47
B.
Key issue II: Reversing the trend decline in hours worked ...... 48
3.
Unemployment amongst older workers in Norway is low............. 52
4.
Patterns of inactivity..................................................................... 53
A.
Key issue III: Reducing inactivity by strengthening
work-incentives....................................................................... 54
A.
Chapter 3. PROTECTING PEOPLE WHILE ENHANCING
WORK INCENTIVES .......................................................... 57
1.
2.
A.
B.
C.
D.
3.
A.
Welfare schemes – a way out of the labour market? ..................... 57
Old-age pensions .......................................................................... 59
Trends in public expenditures on old-age pensions ................. 59
The current public pension system .......................................... 60
Reforming the public pension system...................................... 64
Developing the occupational pension system further............... 66
Alternative pathways to early retirement ...................................... 67
The contractual early retirement scheme (AFP)....................... 70
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
6 – TABLE OF CONTENTS
B.
C.
D.
Sickness and disability pensions.............................................. 72
Few older people on unemployment benefits .......................... 77
Combating early retirement in Norway ................................... 78
Chapter 4. ENCOURAGING EMPLOYERS TO RETAIN AND
HIRE OLDER PEOPLE........................................................ 83
1.
A.
B.
2.
A.
B.
3.
A.
4.
A.
B.
5.
A.
B.
C.
Employment policies and older workers ....................................... 83
Attitudes towards older people ................................................ 83
The presence of age discrimination ......................................... 85
Labour costs ................................................................................. 86
The impact of high relative wages for older workers ............... 86
Social security contributions for older workers ....................... 88
Employment protection — obstacle or security?........................... 89
The role of employment protection legislation ........................ 90
Subsidising labour costs for older workers ................................... 92
Wage subsidies to employers .................................................. 93
Reducing social security contributions .................................... 93
Measures taken by social partners ................................................ 94
Achieving a more inclusive workplace.................................... 94
Encouraging older people to remain in work longer ................ 97
Developments at the individual firm level ............................... 97
Chapter 5. STRENGTHENING EMPLOYABILITY................................. 99
1.
A
B.
2.
A.
B.
C.
D.
3.
A.
B.
4.
A.
Education attainment and labour market status ............................. 99
A key to higher participation rates........................................... 99
New skills – a way to strengthen employability .................... 101
Training of older workers ........................................................... 104
Incidence of training declines with age ................................. 104
The role of collective agreements.......................................... 105
The Norwegian Competence Reform .................................... 106
Effectiveness of training ....................................................... 109
Active labour market programmes and vocational rehabilitation 109
Older people are under-represented....................................... 110
Impact of ALMPs and vocational rehabilitation .................... 112
Work environment and job satisfaction ...................................... 114
Working conditions in Norway are relatively good ............... 115
Chapter 6. MOBILISING LABOUR SUPPLY MORE GENERALLY .... 117
1.
2.
Increasing hours of work ............................................................ 117
Alternative ways to boost labour supply ..................................... 118
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
TABLE OF CONTENTS
A.
B.
3.
4.
–7
In the short-term: Increasing immigration ............................. 118
In the long term: Raising fertility rates .................................. 119
Policy coherence ........................................................................ 119
Maintaining the momentum........................................................ 120
BIBLIOGRAPHY .................................................................................... 121
List of Boxes
Box 3.1.
Box 4.1.
Box 4.2.
Box 4.3.
Box 4.4.
The Swedish flexible old-age pension system ........................ 65
Laying off older workers in Norway: the case
of Norsk Hydro ....................................................................... 84
Employment subsidy schemes for older workers in
selected OECD countries ........................................................ 92
The tripartite agreement on a more inclusive workplace.......... 95
Good practice at the firm level in Norway: the case
of Linjegods............................................................................ 97
List of Figures
Figure 1.1.
Figure 1.2.
Figure 1.3.
Figure 1.4.
Figure 1.5.
Figure 2.1.
Figure 2.2.
Figure 2.3.
Figure 2.4.
Figure 2.5.
Figure 2.6.
Figure 3.1.
Life expectancy at birth and total fertility rates
in Norway, 1960-2050......................................................... 35
Demographic dependency ratios, 2000-2050....................... 37
Projected population growth in Norway
by age group, 2000-2050..................................................... 38
Labour force growth in Norway, 1950-2050 ....................... 40
Labour force growth in OECD countries, 1950-2050 .......... 41
Participation rates by gender and age in Norway,
1972-2002 ........................................................................... 44
Participation rates by age and gender
in OECD countries, 2002 .................................................... 45
Differences in Norwegian employment rates between
prime-age and older workers by gender, 1972-2002 ............ 46
Average actual weekly working hours in Norway
by gender and age, 1995-2001............................................. 49
Unemployment rates in Norway by age groups,
1987-2002 ........................................................................... 53
Inactivity by single year of age in Norway, 2001................. 54
Retirement rate by age in Norway, 2001 ............................. 58
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
8 – TABLE OF CONTENTS
Figure 3.2.
Figure 3.3.
Figure 3.4.
Figure 3.5.
Figure 3.6.
Figure 3.7.
Figure 3.8.
Figure 3.9.
Figure 3.10.
Figure 3.11.
Figure 4.1.
Figure 4.2.
Figure 5.1.
Figure 5.2.
Figure 5.3.
Figure 5.4.
Figure 5.5.
Figure 5.6.
Reasons for leaving last job in Norway, 2000...................... 59
Public expenditure on old-age pensions in Norway and
other OECD countries, 2000-2050 ...................................... 60
Retirement incentives in Norway and other OECD countries .... 63
Average effective retirement age in Norway, 1960-2002..... 68
Effective and official retirement ages
in OECD countries, 1997-2002 ........................................... 69
Recipients under the AFP-scheme in Norway ..................... 71
Long-term sickness in Norway, 1992-2001 ......................... 74
Lost working time in Norway because of sickness, 2002..... 74
Inactivity because of illness or disability
in selected OECD countries, 2000....................................... 75
Disability pension claimants in Norway, 2001 .................... 76
Relative wages for older workers and effective
retirement age ..................................................................... 87
Age-earnings profiles in selected countries ......................... 88
Participation rates in Norway by age and
level of education, 2001 .................................................... 100
Education levels in OECD countries, 2000........................ 102
Projected rise in education levels of
older workers, 2000-2025.................................................. 103
Incidence of job-related training for workers by age
in selected OECD countries, 1994-98................................ 105
Age profile of participants in ALMPs and
the registered unemployed in Norway, first half of 2003 ... 110
Age profile of vocational rehabilitation participants,
employees on sick leave and disability benefit inflows,
first half of 2003................................................................ 112
List of Tables
Table 1.1.
Table 2.1.
Table 2.2.
Table 2.3.
Table 2.4.
Projected growth in the Norwegian labour force
under different scenarios ..................................................... 40
Norwegian older workers by selected
job characteristics, 2001 ...................................................... 48
Employment-population rates for persons aged 50-64
before and after adjustment for hours worked, 2000............ 50
Part-time work by age and gender, 2002 ............................. 51
Employees absent from work by reason in selected
OECD countries, 2002 ........................................................ 52
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
TABLE OF CONTENTS
Table 2.5.
Table 4.1.
Table 4.2.
Table 4.3.
Table 4.4.
Table 5.1.
Table 5.2.
Table 5.3.
Table 6.1.
–9
Inactivity status in Norway and on average
in OECD countries, 2001 .................................................... 55
Satisfaction with timing of early retirement
in Norway, 2001.................................................................. 85
Employers’ social security contribution rate
in OECD countries, 2001 .................................................... 89
Strictness of employment protection for regular employment
in OECD countries in late 1990s ......................................... 91
Wage subsidies for hiring the unemployed in Norway,
1998 .................................................................................... 93
Participation in ALMPs by age and type of programme
in Norway, 2001................................................................ 111
Incidence of selected working conditions in Norway
and the EU ........................................................................ 115
Wish to switch job by reason in Norway, 2001 ................. 116
Wish to increase hours of work by present hours of work
in Norway, 2001................................................................ 118
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
EXECUTIVE SUMMARY AND RECOMMENDATIONS
– 11
EXECUTIVE SUMMARY AND RECOMMENDATIONS
The challenges facing Norway
Like most other OECD countries, Norway is facing a range of
socio-economic challenges arising from rapid population ageing. By 2050,
almost one-quarter of its population is projected to be aged 65 and over
compared with around one in seven in 2000. As a result of a long-term decline
in fertility rates, Norway’s labour force is likely to grow much more slowly than
in the past. Lower fertility rates combined with rising life expectancies will also
mean that growing expenditures on pensions will have to be financed by taxes
on a smaller number of workers relative to the number of pensioners. On the
basis of current rates of labour force participation, the ratio of workers to
“retirees” (i.e. all persons aged 50 and over who are not in the labour force) is
projected to decline from almost 3 to 1 in 2000 to just over 1.7 to 1 in 2050.
Consequently, over the next few decades, Norway faces a risk of slower
economic growth, serious labour shortages and rising tax rates.
Nevertheless, in some respects Norway is better placed than many other
OECD countries to cope with population ageing. First, its population is
projected to age less rapidly over the next half century than on average among
OECD countries. Thus, while demographic dependency ratios in Norway are
relatively high currently, they are projected to converge to the OECD average
by 2050 and to levels well below the average for the European Union. Second,
labour market outcomes for older people in Norway are generally better than in
many other OECD countries. Norway has the second highest employmentpopulation ratio for persons aged 50-64 in the OECD (74.1%), and about one
third of people aged 64-74 are still in employment. The overall unemployment
rate in Norway in 2002 was 3.9% and for older workers it was even lower at
around 1.4%. And, last but not least, Norway has substantial petroleum
revenues and possesses extensive financial assets, mostly accumulated in the
Government Petroleum Fund.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
12 – EXECUTIVE SUMMARY AND RECOMMENDATIONS
A growing need for labour
However, Norway cannot rest on its laurels. Since labour force
participation in Norway is high overall, present and future labour shortages
cannot be easily compensated by an increase in female participation rates or
through older workers staying longer in work. Thus, the risk of bottlenecks
occurring in the economy is greater than in most other OECD countries.
Low annual working time and high sickness absence depress effective labour
supply
One potential area where effective labour supply could be boosted is the
average working time of Norwegians. Average annual hours worked per person
in employment are substantially lower in Norway than in most other OECD
countries and the trend continues to be negative. Thus, an increase in annual
average hours worked could ease the pressure from population ageing in the
future decades, but also help to ease labour shortages, especially in the health
sector where many part-time jobs are found.
One factor behind low hours of work is the high rate of sickness absence,
especially for older workers. Like in Sweden, sickness absence has exploded in
recent years. On average in 2002, each worker took 25 days off work because of
sickness. The sickness benefit scheme is very generous and reimburses 100% of
the salary without any waiting period. Employers pay benefits for the first
16 calendar days of a sickness spell while the National Insurance Scheme pays
beyond that up to one year.
Generous and easily accessible disability and early retirement schemes
In principle, old-age pensions are obtained at the age of 67, but there are
ways to stop working beforehand. The majority of those exiting the labour
market before the official retirement age do so via either the disability pension
scheme or the early retirement pension (AFP). Both benefits count when
assessing pension years and pension points as if retiring at 67. Therefore, an
individual on a full disability pension or AFP will get the same pension as a
person retiring at 67. Moreover, all pensioners face a reduced tax rate since they
only pay part of the social security contribution. Thus, incentives are weak to
continue working once eligible for the AFP or after obtaining a disability
pension.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
EXECUTIVE SUMMARY AND RECOMMENDATIONS
– 13
The proportion of the Norwegian population receiving disability benefits is
also very high compared with most other OECD countries. About 10% of the
working-age population is registered as disabled. Furthermore, about
one-quarter of those aged 55-59 and about one-third of those aged 60-66 are
recipients of disability benefits. These relatively high rates can be explained by,
at least in part, factors such as lax medical criteria and the lack of alternative
pathways out of the labour market.
The alternative to disability pension is the AFP-scheme. The scheme is
based on agreements between the social partners covering around 60% of all
employees. When this scheme was introduced in January 1989, the minimum
age of eligibility for an AFP pension was set at 66. During the 1990s, the
minimum age was gradually reduced to reach 62 in 1998. The employee can
decide whether he/she wants to use this option or not. Thus, in practice, the
AFP-scheme can be seen as an extension of the standard old-age pension system
to those aged 62 to 66 and about 20% of this age group is currently retired early
under this scheme. In the private sector, employers pay for the benefits in full
between the age of 62-64 – while the state pays for 40% of the benefit thereafter
until the age of 67. For state and municipal employers, the costs are fully
integrated in their respective budgets.
The old-age pension system lacks flexibility
The Norwegian public pension system is a defined benefit scheme and
fully integrated in the state budget. Because of demographic changes and
maturity of the system, expenditures are projected to increase from 7% to 18%
of GDP by 2050 (including disability pensions). The system is rather inflexible
and provides no possibilities for a smooth transition from work to retirement or,
more generally, to withdraw earlier than the age of 67, except for some specific
occupations or through the two schemes mentioned above.
Moreover, while all state and municipal employees are covered by an
occupational pension scheme, only 30% of the employees in the private sector
are covered by such a scheme. Since entitlements are portable only within the
public and the private sectors but not across them, mobility between the private
and public sectors is very low.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
14 – EXECUTIVE SUMMARY AND RECOMMENDATIONS
Measures to improve employment prospects for older workers and to
address the demographic situation
Although labour market prospects for older workers in Norway seem less
problematic than in most other OECD countries, the government and the social
partners have introduced, or plan to introduce, a number of measures to improve
these prospects further.
Reforming the old-age pension system
The Norwegian government decided, in March 2001, to appoint a pension
commission to decide on the major objectives and principles for a new pension
system to cope with the challenges of population ageing. The commission
consisted of representatives from the political parties in the parliament,
independent experts and a council consisting of the main social partners. In the
final report presented on 13 January 2004, the commission recommended
modernising the pension scheme to strengthen the link between earned income
and entitlements. It also suggested introducing flexible retirement age from 62
and onwards with no restriction for combining work and pension income, an
adjustment of pension entitlements to the remaining life expectancy at the
age of 67 and linking outgoing pensions to the mean of wage and price changes.
Moreover, the commission recommended that the new pension system should
affect fully persons born in 1965 or after. Those born between 1951 and 1964
should be covered partially by the new and the old system, while those born
before 1951 would not be affected by the reform.
The proposals of the pension commission will be circulated for public
consultation and the government, in turn, will submit a report to the Parliament.
The Parliament will subsequently determine the main principles for the reform.
Whatever reforms are decided upon, these will not enter into force until 2010
due to the need for passing new legislation as well as the need for adapting new
administrative structures and systems.
Reforming the disability pension system
Many people currently on long-term sickness will transfer into the
disability pension system. Thus, as a result of the sharp increase in long-term
sickness, the already large share of disability pensioners is likely to rise
substantially in the near future. Another problem associated with the present
disability pension scheme is the negligible outflow to employment. To reduce
the inflows to permanent disability benefits a system of temporary disability
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
EXECUTIVE SUMMARY AND RECOMMENDATIONS
– 15
benefits will be introduced as from 1 January 2004. This benefit will be granted
for a period of one to four years and can be extended once thereafter. Moreover,
a permanent disability pension will only be granted to individuals evaluated as
having no potential work capacity.
Achieving a more inclusive workplace
The government and the social partners have been putting much effort into
encouraging people on different non-employment measures such as disability,
AFP and sickness benefits to return to work or at least to supply some work. As
a result, in October 2001, the government and the social partners reached an
agreement to achieve a more inclusive workplace to the benefit of individuals,
employers and society. The agreement ends on 31 December 2005 and sets
three objectives:
•
A reduction in sickness absence by at least 20% by 2005;
•
An increase in labour market participation among the disabled; and
•
An increase in labour market participation among older people (i.e. an
increase in the effective retirement age).
The aim is to achieve these objectives via voluntary company-level
agreements between employers and the National Insurance Authority. The
measures that will be used to achieve these objectives include: greater
possibilities to purchase health care services and rehabilitation; reducing
employers’ social security contributions for workers aged 62 years or older by
4 percentage points; increasing wage subsidies for enterprises that employ
disabled persons; and special subsidies for adapting the workplace to disabled
people’s needs. The outcome of the agreement which was evaluated in
mid-2003 indicates that there has been a slowdown in sickness absence for
firms subject to the agreement. A final evaluation will also follow at the end of
the agreement. Since only the first objective of the agreement has a quantitative
target, the government is currently trying to develop similar targets for the other
two objectives as well. At this stage, around 85% of the central unions and
employer organisations have signed the agreement. On a company level the
coverage has increased from 25% of all employees in late 2002 to around 48%
in November 2003 and the parties involved believe that this number will
increase further.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
16 – EXECUTIVE SUMMARY AND RECOMMENDATIONS
As the agreement is intended to promote better use of older people’s
resources and competencies in the workplace, the government introduced the
National Initiative for Senior Workers and assigned the responsibility for coordinating it to an NGO, the Centre for Senior Policy. The Centre has worked
out a national plan in co-operation with the social partners to make individuals,
companies and politicians aware of the advantages of hiring and retaining
workers over the age of 45. Moreover, the Centre is also arranging conferences
for different levels of management staff, union representatives and senior
workers. It also runs information campaigns, creating networks of human
resource managers, producing handbooks and other material on how to develop
a seniors’ policy in a company. The government will provide annual financial
support to this national plan for the years 2001-2005.
Reforming the education and training systems
In order to better handle labour shortages and to cope with increasing skill
demands by employers, Norway has also reformed its education and training
systems with the goal to increase overall competence levels. Some measures
that have been taken already are: i) a legal right for adults to enter higher
education on the basis of non-formal competencies; ii) a legal right for
employees to have three years study leave; and iii) funding of joint projects
between enterprises and providers of education in order to plan systematic
competence building.
Strengthening job-search efficiency and removing barriers to hiring older
people
To reduce the actual number of long-term unemployed or to avoid the risk
of becoming long-term unemployed, the public employment service provides
wage subsidies to groups such as immigrants, persons over 60 years, the
disabled and youths. The purpose of the measure is to motivate employers to
hire these persons for ordinary jobs with normal pay and working conditions.
The subsidy amounts to 50% of the salary for a maximum period of 18 months.
There is no rigorous evaluation of the labour market outcomes of these
subsidies but a survey of participants revealed that 40% of the people in the
group 60 years and older believed that the subsidy was of great importance for
obtaining their present job.
At this stage, Norway has no legislation that outlaws age discrimination.
However, the government has decided to adopt the necessary provisions of the
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
EXECUTIVE SUMMARY AND RECOMMENDATIONS
– 17
EU directive 2000/78/EC on equal treatment in employment and occupation in
line with the European Union’s timetable.
Enhancing incentives for older people to continue working
Another general rule that covers all employees in the labour market from
the age of 60 is the right to one additional week of vacation per year. This
measure is a way to reduce work stress on older people and, in combination
with flexitime or time banks, it gives older workers increased opportunities to
recover by having longer vacations or shorter consecutive working periods.
One part of the 2002 wage negotiations in the state sector focused on how
to retain older workers longer. The outcome was that employees aged 62 years
and over can receive one additional day of vacation per month and still retain
their full salary or a 10% increase in their gross wages if they agree to retire on
a later date. This is in addition to the extra week of vacation all persons above
the age of 60 already receive. At this moment, it is too early to evaluate this
measure.
Areas where further reform is required
Norway has taken many important steps to cope with the future situation.
Though these achievements and initiatives should be acknowledged, there is
still room to improve further employment prospects for older workers.
In sum, a comprehensive reform strategy is needed to improve
employment prospects of older workers. It should encompass not only measures
to enhance the work incentives that are embedded in the welfare system, but
also action on the demand-side. Therefore, the following policy
recommendations are put forward as possible elements of this strategy:
•
Strengthen the link between contributions and pensions entitlements.
As part of reforming the public old-age pension system, it would be
very desirable to link more closely lifetime earnings and pension
entitlements. This could be done by switching to a defined
contribution-based system (underpinned by a safety net), which would
enhance incentives to remain longer in work. At the same time, public
spending would be reduced and greater fairness between individuals
achieved.
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18 – EXECUTIVE SUMMARY AND RECOMMENDATIONS
•
Increase flexibility in the retirement decision. The old-age pension
system should be made more flexible. Flexibility could be enhanced
by abolishing the statutory retirement age and applying actuarial
methods for calculating entitlements. To have a smooth transition
from work to retirement would also require that work income and
pensions can be combined easily without significant financial loss.
This would simplify the abolition of existing early retirement schemes
and the strengthening of the eligibility criteria for granting a disability
pension.
•
Limit the early retirement scheme. The government should try to
abolish the early retirement scheme (AFP). However, this may be
problematic since it is based on agreements between the social
partners. Nevertheless, the system is subsidised with state funds and
these should be eliminated. At the very least, actuarial neutrality in the
AFP scheme should be introduced when calculating old-age pension
entitlements. Moreover, entitlements and conditions should be the
same for private and public sector employees.
•
Reduce rigidity in occupational pensions. In addition to reforming the
public pension system, rules for making occupational pensions less
rigid and less dependent on the public pension scheme should be
considered. Introducing new general rules for occupational pensions,
such as defined contributions-based schemes, to make pension rights
portable between the public and the private sectors would increase the
mobility of workers (including older workers) and increase
employability and possibly reduce the outflow from the labour market.
•
Separate disability benefits from old-age pensions. The disability
pensions system should be fully separated from the old-age pension
scheme and instead be integrated with the sickness insurance. This would
make it easier to have a clearer link between medical assessments and
disability pensions while at the same time, signalling that disability
pensions should not be used as an early retirement scheme.
•
Reduce the number of recipients on long-term sickness benefits. The
number of sick days is almost twice as large for older workers
compared to prime-age workers. In general, sickness benefits are not
only easier to access but are also higher than disability benefits. To
reduce the number of recipients, a system of checks and monitoring
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EXECUTIVE SUMMARY AND RECOMMENDATIONS
– 19
should be introduced and benefits could be made less generous,
e.g. by introducing a waiting period and by lowering benefits after, for
example, a three or six-month sickness period.
•
Review eligibility rules in the state sector for the older unemployed.
Employees in the state sector can use a special long-duration
unemployment benefit. This benefit is available to persons being laid
off because of downsizing and can last from the age of 55 to the
official pension age if no other job is available. In practice, this means
that state sector workers becoming unemployed at the age of 55 can
keep their benefits until retirement, i.e. up to the age of 67. This very
generous rule should be re-considered as a matter of urgency and
older workers being laid off from the state sector should be subject to
the same eligibility conditions as those laid off from the private sector.
•
Renegotiate the agreement on a more inclusive workplace after 2005
and introduce objective goals. Measures like this often take time to
implement and positive outcomes could easily be delayed. However,
to reverse negative long-term trends (i.e. to influence attitudes,
behaviour and overall hiring practices of firms) it is important that
these programmes run over a relatively long period. Therefore, the
agreement should be prolonged after 2005 but this should be subject
to a renegotiation of the agreement to incorporate reforms to the
sickness insurance scheme, as suggested above. Moreover, measurable
goals that are easy to follow up and evaluate should be introduced as
part of any renegotiation.
•
Raise average hours worked. Raising working hours will not prevent
economic dependency ratios from rising. However, it would boost
output and help to alleviate the effects of labour shortages or general
cut backs in welfare systems in the future. A non-negligible number of
part-timers want to increase their hours of work. Thus, apart from high
absence rates due to sickness, the quite large share of involuntary
part-time workers indicates that there is scope to increase the very low
hours of work in Norway.
•
Review immigration policies. Present and future labour shortages, for
example in teaching and health-care, could be eased by increasing
immigration of persons of working age. To this end, it would be
desirable to foster debate in Norway over the potential role of
immigration in helping alleviate the challenges of population ageing,
and what changes might be needed to existing immigration policies.
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RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
Les défis de la Norvège
Comme la plupart des autres pays de l’OCDE, la Norvège doit faire face
à une série de défis socio-économiques résultant du vieillissement rapide de sa
population. D’ici à 2050, on prévoit que près d’un habitant sur quatre aura plus
de 65 ans, contre un sur sept en 2000. Par suite de la baisse tendancielle des
taux de fécondité, la population active norvégienne augmentera probablement
beaucoup plus lentement que par le passé. La baisse des taux de fécondité
jointe à l’allongement de l’espérance de vie signifiera également qu’il faudra
financer les dépenses croissantes de pensions par les impôts acquittés par des
actifs moins nombreux que les retraités. Sur la base des taux d’activité actuels,
le rapport entre actifs et “retraités” (c’est-à-dire toutes les personnes de plus de
50 ans qui ne font pas partie de la population active) devrait baisser, tombant
de près de 3 pour 1 en 2000 à un peu plus de 1.7 pour 1 en 2050. Par
conséquent, au cours des prochaines décennies, la Norvège risque d’être
confrontée à un ralentissement de sa croissance économique, à de graves
pénuries de main-d’œuvre et à une hausse de ses taux d’imposition.
Néanmoins, à certains égards la Norvège est mieux placée que beaucoup
d’autres pays de l’OCDE pour faire face au vieillissement de la population. En
premier lieu, son vieillissement démographique au cours des cinquante
prochaines années devrait progresser moins rapidement qu’en moyenne pour
l’ensemble des pays de l’OCDE. Par conséquent, bien que les ratios de
dépendance démographique de la Norvège soient relativement élevés
actuellement, on prévoit qu’ils se rapprocheront de la moyenne de l’OCDE
d’ici à 2050 et qu’ils tomberont à des niveaux nettement inférieurs à la
moyenne de l’UE. En second lieu, la situation des travailleurs âgés sur le
marché du travail norvégien est généralement meilleure qu’elle ne l’est dans
de nombreux autres pays de l’OCDE. La Norvège se place au deuxième rang
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22 – RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
des pays de l’OCDE pour le rapport emploi-population des personnes âgées de
50 à 64 ans (74.1 %) et environ un tiers des personnes âgées de 64 à 74 ans
sont toujours pourvues d’un emploi. En 2002, le taux de chômage global en
Norvège s’établissait à 3.9 % et pour les travailleurs âgés il était encore plus
faible, de l’ordre de 1.4 %. Enfin, et surtout, la Norvège tire des revenus
considérables de son pétrole et elle possède d’importants avoirs financiers,
accumulés pour l’essentiel dans le Fonds pétrolier du gouvernement.
Des besoins croissants en main-d’œuvre
Cependant, la Norvège ne peut pas se reposer sur ses lauriers. Son taux
global d’activité étant élevé, elle ne peut pas aisément faire face aux pénuries
actuelles et futures de main-d’œuvre par un recours accru à l’activité des
femmes ou au maintien des travailleurs âgés dans la vie active. Par
conséquent, le risque de goulots d’étranglement dans l’économie est plus
grand que dans la plupart des autres pays de l’OCDE.
La faible durée annuelle du travail et le nombre important d’arrêts de travail
pour maladie pèsent sur l’offre effective de travail
Un domaine où il serait possible de stimuler l’offre effective de travail est
celui de la durée moyenne du travail des travailleurs norvégiens. La durée
annuelle effective moyenne du travail par actif occupé de la Norvège est
nettement inférieure à celle de la plupart des autres pays de l’OCDE et son
évolution continue d’être négative. Par conséquent l’augmentation de la durée
moyenne annuelle du travail pourrait permettre de faire face aux difficultés
résultant du vieillissement démographique dans les décennies à venir, mais
elle contribuerait aussi à atténuer les pénuries de main-d’œuvre, surtout dans
le secteur de la santé où il existe de nombreux emplois à temps partiel.
Le taux élevé des arrêts de travail pour maladie est l’un des facteurs
expliquant la faible durée du travail, en particulier pour les travailleurs âgés.
Comme en Suède, ce taux s’est envolé ces dernières années. En moyenne, en
2002 chaque actif a pris 25 jours de congé pour maladie. Le régime
d’assurance maladie est très généreux et il rembourse 100 % du salaire sans
aucun délai de carence. L’employeur verse des indemnités pour les
16 premiers jours de l’arrêt de travail pour maladie, et le régime national
d’assurance prend le relais pour une période d’un an maximum.
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Des régimes d’invalidité et de retraite anticipée généreux et facilement
accessibles
En principe, les pensions de retraite sont versées à l’âge de 67 ans, mais il
existe des moyens de cesser de travailler avant cet âge. La majorité de ceux
qui quittent le marché du travail avant l’âge légal de la retraite le font par le
biais soit du régime de pensions d’invalidité, soit du système de retraite
anticipée (AFP). Dans le calcul des années de service ouvrant droit à pension
et des points de retraite, ces deux prestations sont prises en compte comme si
l’intéressé prenait sa retraite à 67 ans. Par conséquent, une personne qui
touche une pension d’invalidité à taux plein ou une préretraite recevra la
même pension qu’une personne qui part en retraite à 67 ans. De plus, tous les
titulaires d’une pension bénéficient d’un taux d’imposition réduit, puisqu’ils
ne versent qu’une partie de la cotisation de sécurité sociale. Un travailleur
admis à bénéficier de la préretraite ou qui a obtenu une pension d’invalidité
n’est donc pas très incité à continuer à travailler.
La proportion de Norvégiens qui reçoivent des prestations d’invalidité est
elle aussi très élevée comparativement à celle de la plupart des autres pays de
l’OCDE. Près de 10 % de la population d’âge actif sont atteints d’une
invalidité reconnue. En outre, près d’un quart des personnes âgées de 55 à
59 ans et près d’un tiers de celles âgées de 60 à 66 ans bénéficient de
prestations d’invalidité. Ces taux relativement élevés peuvent s’expliquer, du
moins en partie, par divers facteurs comme des critères médicaux laxistes et
l’absence d’autres voies permettant de sortir du marché du travail.
L’alternative à la pension d’invalidité est la préretraite (AFP). Ce système
repose sur des accords conclus par les partenaires sociaux couvrant environ 60 %
de l’ensemble des salariés. Lorsque ce système a été introduit en janvier 1989,
l’âge minimum d’accès à la préretraite a été fixé à 66 ans. Pendant les
années 1990, l’âge minimum a été progressivement abaissé et depuis 1998 il est
de 62 ans. Le salarié décide s’il ou elle souhaite bénéficier de cette option. On peut
donc considérer, en pratique, le système de préretraite comme une extension du
régime normal de pension de retraite pour les personnes âgées de 62 à 66 ans et
actuellement environ 20 % d’entre elles sont en préretraite grâce à ce dispositif.
Dans le secteur privé, les employeurs financent l’intégralité des prestations pour
les salariés de 62 à 64 ans – tandis que l’État prend en charge ensuite 40 % de la
prestation jusqu’à l’âge de 67 ans. En ce qui concerne les employeurs publics et
municipaux, les coûts sont pleinement intégrés dans leurs budgets respectifs.
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Le régime de pension de retraite manque de souplesse
Le système norvégien de retraite publique est un régime à prestations
définies et il est entièrement intégré dans le budget de l’État. En raison des
changements démographiques et du fait que le système arrive à maturité, les
dépenses devraient augmenter, passant de 7 % à 18 % du PIB d’ici à 2050
(pensions d’invalidité incluses). Ce système est assez rigide et il n’offre
aucune possibilité de passer souplement du travail à la retraite ou, plus
généralement, de cesser de travailler avant l’âge de 67 ans, sauf pour certaines
professions spécifiques ou par le biais des deux systèmes évoqués plus haut.
En outre, alors que tous les salariés de l’État et des municipalités sont
couverts par un régime de pension professionnel, seulement 30 % des salariés
du secteur privé sont couverts par un tel régime. Étant donné que les droits à
pension ne peuvent être transférés qu’à l’intérieur du secteur public et du
secteur privé, mais pas de l’un à l’autre, la mobilité entre secteur privé et
secteur public est très faible.
Mesures visant à améliorer les perspectives d’emploi des travailleurs âgés
et à faire face à la situation démographique
Bien que les perspectives des travailleurs âgés sur le marché du travail
norvégien semblent moins défavorables que dans la plupart des autres pays de
l’OCDE, le gouvernement et les partenaires sociaux ont introduit, ou se
proposent d’introduire, un certain nombre de mesures visant à améliorer leurs
perspectives.
Réformer le système de pension de retraite
Le gouvernement norvégien a décidé, en mars 2001, de créer une
commission des pensions ayant pour mission d’arrêter les principaux objectifs et
principes régissant un nouveau système de pension qui soit en mesure de relever
les défis du vieillissement de la population. Cette commission se composait de
représentants des partis politiques au parlement, d’experts indépendants et d’un
conseil regroupant les principaux partenaires sociaux. Dans le rapport final
présenté le 13 janvier 2004, la commission a recommandé de moderniser le
régime de pensions afin de mieux affirmer le lien entre les revenus du travail et
les droits à pension. Elle a également suggéré d’introduire un dispositif de
retraite flexible à partir de 62 ans n’imposant aucune restriction au cumul des
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RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
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revenus du travail et des prestations de pension, un ajustement des droits à
pension en fonction de l’espérance de vie à 67 ans et l’ajustement des pensions
aux salaires moyens et aux variations des prix. De plus, la commission a
recommandé que le nouveau système de pension s’applique pleinement aux
personnes nées en 1965 ou après cette date. Celles nées entre 1951 et 1964
devraient être couvertes en partie par le nouveau système et par l’ancien
système, tandis que celles nées avant 1951 ne seront pas touchées par la
réforme.
Les propositions de la commission des pensions feront l’objet d’une
consultation publique après leur diffusion et le gouvernement soumettra alors
un rapport au parlement. Le parlement déterminera ensuite les principaux
principes de la réforme. Quelles que soient les réformes qui seront arrêtées,
celles-ci n’entreront pas en vigueur avant 2010 car il sera nécessaire de
promulguer une nouvelle législation ainsi que de mettre en place des structures
et systèmes administratifs nouveaux.
Réformer le système des pensions d’invalidité
De nombreuses personnes actuellement en arrêt de travail pour longue
maladie seront basculées sur le système des pensions d’invalidité. Par
conséquent, en raison de la forte augmentation du nombre de personnes en
congé de longue maladie, il faut s’attendre à ce que la proportion déjà
importante de titulaires de pensions d’invalidité augmente fortement dans un
proche avenir. Un autre problème corrélé au système actuel de pensions
d’invalidité est que le nombre de titulaires d’une pension qui reprennent un
emploi est négligeable. Afin de réduire l’accès aux prestations d’invalidité
permanentes, un système de prestations d’invalidité temporaires sera introduit
à compter du 1er janvier 2004. Cette prestation sera accordée pour une période
de un à quatre ans, qui pourra être prolongée une fois par la suite. De plus, la
pension d’invalidité permanente ne sera accordée qu’aux personnes qui après
évaluation ont été jugées comme présentant une incapacité totale au travail.
Introduire plus d’inclusion au lieu de travail
Le gouvernement et les partenaires sociaux ont déployé des efforts
considérables pour encourager les personnes bénéficiant des différentes
mesures dans des situations de non-emploi, comme les pensions d’invalidité,
la préretraite (AFP) et les indemnités maladie, à reprendre un travail ou, au
moins, à effectuer certains travaux. Au terme de ce processus, le
gouvernement et les partenaires sociaux ont conclu, en octobre 2001, un
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26 – RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
accord en vue de parvenir à une meilleure inclusion au lieu de travail, dans
l’intérêt des individus, des employeurs et de la société. Cet accord expirera le
31 décembre 2005 et fixe trois objectifs :
•
•
•
une réduction du nombre d’arrêts de travail pour maladie d’au moins
20 % d’ici à 2005 ;
une augmentation de la participation au marché du travail des
personnes handicapées ; et
une augmentation des taux d’activité des personnes âgées (autrement
dit, un relèvement de l’âge effectif de départ à la retraite).
Il s’agit d’atteindre ces objectifs par le biais d’accords volontaires conclus à
l’échelon des entreprises entre les employeurs et le régime national d’assurance.
Les mesures qui seront mises en œuvre à cette fin sont entre autres :
l’élargissement des possibilités d’accès aux services de soins de santé et à la
rééducation ; la réduction de 4 points de pourcentage des cotisations de sécurité
sociale des employeurs pour les travailleurs âgés de 62 ans ou plus;
l’augmentation des subventions salariales accordées aux entreprises qui
emploient des personnes handicapées; et l’octroi d’aides spéciales pour adapter
le lieu de travail aux besoins des personnes handicapées. L’évaluation des
résultats obtenus grâce à l’accord, qui a été faite au milieu de 2003, indique que
le nombre d’arrêts de travail pour maladie a diminué dans les entreprises qui y
ont adhéré. L’accord fera également l’objet d’une évaluation finale fin 2005.
Étant donné que le premier objectif de l’accord est le seul qui soit exprimé en
termes quantitatifs, le gouvernement s’efforce actuellement de formuler les deux
autres objectifs en termes similaires. A ce jour, environ 85 % des syndicats et
des organisations d’employeurs ont signé l’accord. Au niveau des entreprises, sa
couverture est passée de 25 % de l’ensemble des salariés fin 2002 à environ
48 % en novembre 2003 et les parties concernées estiment qu’elle va encore
augmenter.
La finalité de l’accord étant de promouvoir une meilleure utilisation sur le
lieu de travail des ressources et des compétences que possèdent les travailleurs
âgés, le gouvernement a lancé une Initiative nationale en faveur des
travailleurs seniors et il a confié la responsabilité de sa coordination à une
ONG, le Centre pour les politiques en faveur des seniors. Le Centre a mis au
point un plan national en coopération avec les partenaires sociaux afin de
sensibiliser les individus, les entreprises et les hommes politiques aux
avantages du recrutement et du maintien dans l’emploi des travailleurs de plus
de 45 ans. En outre, le Centre organise aussi des conférences pour des cadres,
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RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
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des représentants des syndicats et des travailleurs âgés à différents niveaux
hiérarchiques. Il mène également des campagnes d’information, créant des
réseaux de gestion des ressources humaines, produisant des manuels et
d’autres documents traitant de la mise en place d’une politique en faveur des
seniors dans l’entreprise. Le gouvernement fournira un soutien financier
annuel à ce plan national pour la période 2001-2005.
Réformer les systèmes d’éducation et de formation
Pour mieux faire face aux pénuries de main-d’œuvre et répondre à la
demande croissante de qualifications des employeurs, la Norvège a aussi
réformé ses systèmes d’éducation et de formation dans le but de relever les
niveaux de compétences en général. Quelques-unes des mesures qui ont déjà
été prises sont les suivantes : i) la reconnaissance légale du droit d’accès des
adultes à l’enseignement supérieur sur la base de qualifications obtenues en
dehors du système formel ; ii) la reconnaissance légale du droit des salariés de
prendre un congé d’étude de trois ans ; et iii) le financement de projets
communs entre les entreprises et les prestataires de services éducatifs afin de
planifier de façon systématique l’acquisition des compétences.
Rendre la recherche d’un emploi plus efficace et supprimer les barrières au
recrutement de travailleurs âgés
Afin de réduire le nombre de chômeurs de longue durée ou d’éviter aux
chômeurs actuels le risque de tomber dans le chômage longue durée, le service
public de l’emploi accorde des subventions salariales à certains groupes, par
exemple les immigrants, les personnes de plus de 60 ans, les personnes
handicapées et les jeunes. Le but de cette mesure est d’inciter les employeurs à
recruter ces personnes pour occuper des emplois ordinaires avec une
rémunération et dans des conditions de travail normales. Cette subvention
représente 50 % du salaire pour une période maximum de 18 mois. Aucune
évaluation rigoureuse n’a été faite pour déterminer l’efficacité de ces
subventions sur le marché du travail, mais une enquête auprès des participants
a révélé que 40 % dans le groupe des personnes âgées de 60 ans et plus
estimaient que c’était en grande partie grâce à la subvention qu’ils avaient
obtenu leur emploi du moment.
Pour l’instant, la Norvège n’a pas adopté de loi interdisant la
discrimination par l’âge. Le gouvernement a cependant décidé d’adopter les
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28 – RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
dispositions correspondantes de la Directive 2000/78/CE de l’UE sur l’égalité
de traitement dans l’emploi et les professions, conformément au calendrier de
l’Union européenne.
Améliorer les incitations à continuer à exercer une activité pour les
travailleurs âgés
Il existe une autre mesure générale qui intéresse l’ensemble des salariés
sur le marché du travail à partir de l’âge de 60 ans, à savoir le droit à une
semaine de vacances supplémentaire par an. Cette mesure est un moyen de
réduire le stress lié à la vie professionnelle pour les personnes âgées et,
associée aux horaires flexibles ou au crédit-temps, elle offre aux travailleurs
âgés plus de possibilités de récupérer en prenant des vacances plus longues ou
en travaillant ensuite pendant des périodes plus courtes.
Les négociations salariales de 2002 dans le secteur public ont porté en
partie sur les moyens permettant de retenir les travailleurs âgés plus longtemps
dans la vie active. Le résultat concret a été l’octroi aux salariés âgés de 62 ans
et plus d’une journée de congé supplémentaire par mois avec un salaire
inchangé ou une augmentation de 10 % de leur salaire brut s’ils acceptent de
différer leur départ en retraite. Cet avantage s’ajoute à la semaine
supplémentaire de congé à laquelle toutes les personnes de plus de 60 ans ont
déjà droit. Il est trop tôt, pour le moment, pour évaluer l’efficacité de cette
mesure.
Domaines où une réforme plus poussée est nécessaire
La Norvège a adopté un grand nombre de mesures importantes pour faire
face à l’évolution future de la situation. Ces efforts et ces initiatives doivent
certes être reconnus, mais il reste une certaine marge d’action pour améliorer
encore les perspectives d’emploi des travailleurs âgés.
En bref, il est nécessaire de mettre en oeuvre une stratégie de réforme
globale pour améliorer les perspectives d’emploi des travailleurs âgés. Celle-ci
devrait englober non seulement les mesures destinées à renforcer les
incitations au travail faisant déjà partie intégrante du système de protection
sociale, mais aussi des mesures visant à agir sur la demande. Les
recommandations d’action ci-après pourraient donc constituer les éléments de
cette stratégie :
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•
Renforcer le lien entre les cotisations et les droits à pension. Dans le
cadre de la réforme du régime public des pensions de retraite, il
serait très souhaitable de corréler plus étroitement les revenus avec
les droits à pension. Il serait possible de le faire en remplaçant
l’ancien système par un système basé sur des cotisations fixes
(complété par un filet de sécurité), qui inciterait davantage à rester
plus longtemps dans la vie active. Parallèlement, les dépenses
publiques seraient réduites et l’on instaurerait une plus grande équité
entre les individus.
•
Introduire plus de flexibilité dans la décision de partir à la retraite.
Il conviendrait de rendre plus flexible le système de pensions de
retraite. Pour augmenter la flexibilité, on pourrait abolir l’âge officiel
de départ à la retraite et appliquer des méthodes actuarielles pour
calculer les droits à pension. Pour que le passage de l’emploi à la
retraite se fasse souplement, il faudrait aussi que les revenus du
travail et les pensions puissent être cumulés aisément sans que
l’intéressé subisse de pertes financières importantes. Il serait plus
simple ainsi de supprimer les dispositifs de préretraite existants et de
durcir les critères d’admissibilité à une pension d’invalidité.
•
Limiter le dispositif de préretraite. Le gouvernement devrait s’efforcer
de supprimer le dispositif de préretraite (AFP). Une telle solution
risque cependant d’être difficile à appliquer, car le système repose sur
des accords conclus par les partenaires sociaux. Il est néanmoins
financé à l’aide de fonds publics et ce financement devrait être
éliminé. La moindre des choses à faire serait d’introduire une
neutralité actuarielle dans le dispositif au moment du calcul des droits
à la pension de retraite. En outre, les droits et les conditions devraient
être les mêmes pour les salariés du secteur privé et ceux du secteur
public.
•
Réduire la rigidité des régimes professionnels de retraite.
Parallèlement à la réforme du régime de retraite public, il
conviendrait d’envisager d’adopter des dispositions qui assouplissent
les régimes professionnels de retraite et les rendent moins tributaires
du régime de retraite public. L’introduction de nouvelles dispositions
générales concernant les régimes professionnels de retraite, par
exemple des dispositifs à cotisations fixes, destinées à permettre le
transfert des droits à pension entre le secteur public et le secteur
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
30 – RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
privé auraient pour effet d’accroître la mobilité des travailleurs (y
compris des travailleurs âgés), d’accroître leurs chances de trouver
un emploi et éventuellement de réduire les sorties du marché du
travail.
•
Dissocier les prestations d’invalidité des pensions de retraite. Le
régime des pensions d’invalidité devrait être entièrement dissocié du
régime de pensions de retraite et rattaché au régime d’assurance
maladie. Il serait ainsi plus aisé de corréler plus clairement les
évaluations médicales et les pensions d’invalidité, tout en faisant
passer le message que les pensions d’invalidité ne doivent pas servir
de voie d’accès à la préretraite.
•
Réduire le nombre de bénéficiaires des prestations d’assurance
maladie de longue durée. Le nombre de jours d’arrêts de travail pour
maladie pris par les travailleurs âgés est pratiquement le double de
celui des travailleurs d’âge très actif. En règle générale, les
prestations maladie ne sont pas seulement plus faciles à obtenir, mais
aussi plus élevées que les prestations d’invalidité. Pour réduire le
nombre de bénéficiaires, un système de contrôles et de suivi devrait
être mis en place et le montant généreux des prestations pourrait être
réduit, par exemple en introduisant un délai de carence et en
diminuant le montant des prestations au bout, par exemple, d’un
congé maladie de trois ou six mois.
•
Revoir les conditions d’attribution de certaines prestations du
secteur public aux chômeurs âgés. Les salariés du secteur public
peuvent prétendre à une indemnité spéciale de chômage de longue
durée. Cette prestation est accordée aux personnes licenciées à la
suite d’une réduction d’effectifs et elle peut leur être versée dès l’âge
de 55 ans, jusqu’à l’âge légal de la retraite si elles ne trouvent aucun
autre emploi. Dans la pratique, cela signifie que les travailleurs du
secteur public qui se retrouvent au chômage à l’âge de 55 ans
peuvent toucher leurs indemnités jusqu’à leur départ en retraite,
autrement dit, jusqu’à 67 ans. Cette disposition très généreuse
devrait être revue de toute urgence et les conditions d’attribution de
ces prestations devraient être les mêmes pour les travailleurs âgés
licenciés dans le secteur public prestations et ceux licenciés dans le
secteur privé.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
– 31
•
Renégocier l’accord sur l’amélioration de l’inclusion au lieu de
travail après 2005 et définir des objectifs quantifiés. Des mesures
de cet ordre sont longues à mettre en oeuvre et peuvent aisément
tarder à donner des résultats positifs. Cependant, pour inverser à
long terme ces évolutions négatives (autrement dit pour influencer
les attitudes, le comportement et les pratiques de recrutement en
général des entreprises), il est important que ces programmes soient
exécutés sur une période relativement longue. Par conséquent,
l’accord devrait être prorogé après 2005, mais cela devrait se faire
dans le cadre d’une renégociation de l’accord qui permette d’y
incorporer les réformes du régime d’assurance maladie, comme il a
été suggéré plus haut. En outre, des objectifs mesurables dont le
suivi et l’évaluation sont faciles devraient être introduits dans le
cadre de toute renégociation.
•
Augmenter la durée moyenne du travail. L’augmentation de la durée
du travail n’empêchera pas les taux de dépendance économique
d’augmenter. Toutefois, elle stimulera la production et contribuera à
atténuer les effets des pénuries de main-d’œuvre ou des réductions
générales des prestations dans les régimes de protection sociale à
l’avenir. Un nombre non négligeable de personnes travaillant à
temps partiel souhaitent allonger leur durée de travail. Par
conséquent, si l’on fait exception du nombre élevé d’arrêts de travail
pour maladie, la proportion assez importante de personnes qui
travaillent involontairement à temps partiel montre qu’il existe des
possibilités d’augmenter la durée très faible du travail en Norvège.
•
Revoir les politiques d’immigration. Il serait possible d’atténuer les
pénuries actuelles et futures de main-d’œuvre, par exemple dans les
secteurs de l’enseignement et de la santé, en augmentant les flux
d’immigration de personnes d’âge actif. Il serait souhaitable, à cette
fin, d’encourager l’ouverture d’un débat en Norvège sur le rôle que
l’immigration peut jouer en aidant à relever les défis du
vieillissement démographique et les changements qu’il faudrait
peut-être apporter aux politiques d’immigration en vigueur.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
INTRODUCTION
– 33
INTRODUCTION
The Norwegian population will age rapidly over the next 50 years. The
proportion of those 65 years or older is projected to increase from around 15% of
the population in 2000 to 24% by 2050. At the same time, labour force growth will
slow considerably. Thus, population ageing will generate increased pressures on
public expenditures that are already high and bring about labour shortages, which
could create bottlenecks and a slow-down in economic activity.
Although employment rates for older people are relatively high in Norway,
faced with the pressures of population ageing, older workers should be given
better incentives to continue working in terms of pension entitlements, suitable
training opportunities and improved working conditions. It is of utmost
importance that labour force participation rates remain high and that older
workers are retained longer in employment. The main purpose of this report is
to reflect on the different avenues for reform that will need to be pursued in
order to meet this objective.
Chapter 1 provides the background to the report by setting out the
challenges ahead. It highlights the importance of improving the employment
prospects of older workers as the key to meeting the ageing challenge.
Chapter 2 discusses the current labour market situation for older workers in
terms of their employment and unemployment situation, but also in terms of
absenteeism and people outside the regular labour market. Chapter 3 discusses
the role of supply-side factors in influencing the participation rates of older
people and how incentives to work are affected by benefit levels and eligibility
criteria in the welfare system. But removing supply-side barriers to employment
is not enough. Actions on the demand-side are also needed. Thus, Chapter 4
examines those factors which negatively affect the attitudes of employers
towards older workers. Chapter 5 looks at barriers that workers themselves face
to gaining access to better jobs and to remaining in these jobs longer. Finally,
Chapter 6 examines the possibilities to raise the overall employment rate in the
future, emphasising the importance of introducing a broad range of reforms. It
also examines the importance of co-operation between government bodies,
social partners and individuals.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
CHAPTER 1. THE CHALLENGE AHEAD
– 35
Chapter 1
THE CHALLENGE AHEAD
1.
The demographic challenge
The Norwegian population is ageing as a result of declining fertility rates
and rising life expectancy. The total fertility rate has fallen from almost three in
the beginning of 1960s to 1.85 in 2000, but in contrast to the development in
most other OECD countries, it has increased since a low point in the mid-1980s.
Fertility rates are projected to stabilise at 1.80 over the coming decades – the
fifth highest level in OECD (Figure 1.1).
Figure 1.1.
a
Life expectancy at birth and total fertility rates in Norway, 1960-2050
Life expectancy women
Life expectancy men
Fertility rate
90
3.2
3
85
80
2.6
75
2.4
2.2
70
2
65
60
1960
1.8
1970
1980
1990
2000
2010
2020
2030
2040
Source: Statistics Norway, population projections 2001–2050 (baseline projections).
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
1.6
2050
Fertility rate
Life expectancy at birth
2.8
36 – CHAPTER 1: THE CHALLENGE AHEAD
Starting from one of the highest levels in OECD, life expectancy has
continued to rise during the past decades. In 2000, life expectancy at birth was
76.0 years for men and 81.4 years for women, giving Norway the seventh
highest life expectancy rate in the OECD area. By 2050, life expectancy is
projected to further increase to 84.2 years for men and to 88.1 years for women.
Changes in fertility rates, improvements in life expectancy and changing
immigration policy shape the outlook for population growth. A broad indicator
of the rising economic burden that an older society may place on the workingage population is given by the old-age dependency ratio, i.e. the ratio of the
population aged 65 and over to the population aged 20 to 64.1 An examination of
the old-age dependency ratio reveals that, despite recent stability, the ratio for
Norway is set to increase from its current level of 26% to 45% in 2050 (Figure 1.2).
For the OECD area and the European Union, these ratios will more than double
during the next 50 years, reaching 46% and 53%, respectively. Thus, while the
old-age dependency ratio in Norway is relatively high currently, it is projected
to converge to the OECD average by 2050 and to levels well below the average
for the EU.
The old-age dependency ratio tells only one part of the story. The total
dependency ratio defined as the ratio of people below 20 years and above 64 to
the working-age population (20-64), takes also the number of children into
account. In Norway, the number of children is expected to be very stable during
the next five decades, thus the increase in the total dependency ratio will be
smaller than the increase in the old-age dependency ratio. In fact, the total
dependency ratio in Norway will only rise from 70% in 2000 to 86% in 2050.2
This increase is also less dramatic than that projected for the OECD and EU
averages.
1.
The old-age and total dependency ratios are conventionally defined with respect
to the population aged 15 to 64. However, in most OECD countries, the large
majority of teenagers aged 15 to 19 are still in school and so it was decided to
exclude this group from the denominator.
2.
Both the old-age dependency ratio and the total dependency ratio are quite stable
with respect to different assumptions concerning future trends in mortality,
fertility and immigration. In fact, according to the three main variants of the
population projections by Statistics Norway (high, medium and low), the old-age
dependency ratio in 2050 varies from 44.3% to 46.7% and the total dependency
ratio varies from 80.1% to 91.7%.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
CHAPTER 1. THE CHALLENGE AHEAD
Figure 1.2.
– 37
Demographic dependency ratios, 2000-2050
Percentages
80
120
A. Old age dependency ratioa
Japan
70
B. Total dependency ratiob
110
Czech
Rep.
60
100
Japan
50
Sweden
EU
Norway
US
OECD
40
30
Sweden
EU
Norway
20
Mexico
EU
90
OECD
Norway
Sweden
US
Turkey
OECD
US
US
Sweden
80
70
Sweden
US
Norway
OECD
EU
60
Norway
OECD
EU
EU
US
OECD
Norway
Sweden
Turkey
Turkey
Korea
Turkey
10
0
1975
50
Mexico
2000
2025
2050
40
1975
2000
2025
2050
a) Ratio of the population aged 65 and over to the population aged 20-64.
b) Ratio of the sum of the population aged less than 20 and the population aged more than 65 to
the population aged 20-64.
Source: National projections; EUROSTAT Population Projections (1999 revision); and UN, World
Population Prospects 1950-2050 (the 2000 Revision).
Altogether, the population in Norway is projected to grow from the present
level of 4.5 million people to 5.6 million by 2050. However, much of this
growth will be skewed towards the older age groups (Figure 1.3), and is thus
likely to put upward pressure on public spending in terms of pensions, healthcare, etc. In fact, almost three-quarters of the population growth will take place
in the age group 60 and over. Thus, in 2050, there is likely to be almost twice as
many people above the age of 60 as there are today but only 5% more in the age
group 20-49. Consequently, if the participation rate from the labour market
continues to fall, growth in Norway’s labour force could possibly stagnate over
the course of the next half-century.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
38 – CHAPTER 1: THE CHALLENGE AHEAD
Figure 1.3.
Projected population growth in Norway by age group,
a
2000-2050
Index, population in 2000 = 100
0-19
20-49
50-66
67+
210
200
190
180
170
160
150
140
130
120
110
100
90
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
a) The projections are based on the Norwegian medium population projection scenario. This
assumes an increasing life expectancy, fertility rates of 1.8 and an annual net immigration of
13 000 from 2004 to 2050 (i.e. as the average over the period 1990-2001).
Source: Statistics Norway, Population Projections for Norway, 2002-2050.
2.
Potential economic and social impacts
The ageing of Norway’s population is likely to have serious economic and
social repercussions. On the basis of current rates of labour force participation,
the ratio of workers to “retirees” (i.e. all persons aged 50 and over who are not
in the labour force) is projected to decline from almost 3 to 1 in 2000 to just
over 1.7 to 1 in 2050. This might exacerbate intergenerational tensions if the
younger working generation is required to finance the large growing cohort of
retirees through higher savings, increased taxes or higher contributions. These
tensions will be intensified if individuals choose to retire earlier.
A key factor in meeting these challenges will be the extent to which
Norway’s potential labour supply can be fully mobilised, especially with respect
to older people.
The future size of the Norwegian labour force will depend not only on
demographic changes but also on changes in participation rates. To what extent
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
CHAPTER 1. THE CHALLENGE AHEAD
– 39
could slower labour force growth in Norway as a result of population ageing be
offset by increased labour market participation? To depict the effects different
participation rates could have on labour force growth during the next five
decades, three different scenarios are used (Figure 1.4):
•
First, in the “constant” or baseline scenario, participation rates by age
and gender are assumed to remain constant at their 2000 levels.
Accordingly, growth in Norway’s labour force is projected to slow
and subsequently will be stagnant over the period 2025-2040 before
rising again after 2040. By 2050, the labour force is projected to be
around 2.67 million, i.e. about 320 000 higher than in 2000.
•
In the second or “minimum” scenario, participation rates for the older
population are assumed to converge over the period 2000-2030 to the
lower OECD average levels of 2000 and remain constant thereafter.
This allows for the possibility that more workers in the future will
choose to retire at an earlier age than currently. In this case, labour
force growth starts to slow more rapidly and stays at a lower level.
However, the labour force will still increase – although only by
170 000 people – to around 2.52 million in 2050.
•
Finally, in the “maximum” scenario, participation rates by age and
gender are assumed to converge over the period 2000-2030 to the
corresponding maximum rate observed across OECD countries in
2000 and remain constant thereafter.3 For Norway, this means a
particularly steep increase in participation rates for men in all age
groups, but especially so for the group aged 65-69. Under this
scenario, the labour force will continue to grow at a similar pace as for
the period 1990-2000 for the next three decades. Thereafter, it will
slow somewhat to reach around 3.09 million in 2050 (an increase of
740 000).
Clearly, marked increases in participation rates would lead to much
stronger labour force growth, thereby helping to meet some of the challenges
posed by population ageing.
3.
Excluding Iceland, Luxembourg and Mexico.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
40 – CHAPTER 1: THE CHALLENGE AHEAD
Figure 1.4.
Historical
a
Labour force growth in Norway, 1950-2050
Millions, projections after 2000
Constant
Minimum
Maximum
3.1
2.9
2.7
2.5
2.3
2.1
1.9
1.7
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
20
25
20
30
20
35
20
40
20
45
20
50
1.5
a) See text for an explanation of the different scenarios.
Source: OECD estimates based on the Norwegian Labour Force Survey and Statistics Norway,
Population Projections for Norway, 2002-2050 (medium variant).
Norway has already relatively high participation rates for older people.
Nevertheless, the three scenarios show a wide range of possible labour force
growth over the next half-century (Table 1.1). They also suggest that there is
considerable scope for changes in policy and institutional settings that affect
participation rates to influence the rate at which labour force growth develops
over the coming decades and to limit the extent of any eventual slowdown in the
labour force. In particular, they point to the importance of ensuring that a high
proportion of older people continue to work.
Table 1.1.
Projected growth in the Norwegian labour force
a
under different scenarios
Average annual percentage change
Constant
Minimum
Maximum
2000-2020
0.46
0.26
0.93
2020-2050
0.12
0.06
0.30
2000-2050
0.25
0.13
0.54
a) See text for an explanation of the different scenarios.
Source: OECD estimates based on the Norwegian Labour Force Survey and Statistics Norway,
Population Projections for Norway: 2002-2050 (medium variant).
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
CHAPTER 1. THE CHALLENGE AHEAD
– 41
To see how the future potential labour force growth in Norway compares
with other OECD countries, the “constant” scenario is applied to some selected
countries in the OECD area (Figure 1.5). Over the next two decades, the
Norwegian labour force will grow somewhat faster than the OECD average and
in stark contrast to a declining labour force in the European Union. For the
period 2020-2050, the Norwegian labour force will continue to record a small
increase, again in contrast to a large projected decline in the EU labour force.
Figure 1.5.
a
Labour force growth in OECD countries, 1950-2050
Average annual growth
1950-2000
2000-2020
2020-2050
%
-0.8
-0.6
-0.4
-0.2
0.0
Norway
0.2
0.4
0.12
Netherlands
0.6
-0.02
United Kingdom
1.4
2.0
2.2
0.65
1.65
0.63
-0.07
-0.04
1.8
0.61
0.08
0.57
0.58
-0.46
1.6
1.24
0.23
-0.18
1.2
0.86
0.46
United States
OECD
1.0
-0.05
-0.13
Sweden
EU
0.8
0.37
1.24
a) The projection of labour force growth over the period 2000-2050 assumes that participation rates
by five-year age groups and gender remain constant at their 2000 level.
Source: OECD estimates.
Under the “constant” scenario, the slowdown in labour force growth could
result in a reduction in average annual real GDP growth by 0.40 percentage
points over the next 50 years, as compared to average growth experienced over
the period 1950-2000.4 Under the “declining” and “maximum” scenarios the
4.
In accounting for GDP growth, the contribution from labour force growth is
often given a weight of around 0.65. The slowdown in labour growth of
0.61 percentage points – the difference in the average annual growth rate over
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
42 – CHAPTER 1: THE CHALLENGE AHEAD
reduction in average annual real GDP growth would be around 0.47 and
0.21 percentage points, respectively. Of course, the impact of slower or negative
labour force growth on overall economic growth could be offset by either a rise
in total factor productivity growth and/or faster growth in capital inputs.
Therefore, promoting higher rates of labour force participation among
older people will play a key role in responding to the economic challenges
raised by population ageing. The current labour market situation of older
workers is therefore examined in more detail in the next chapter.
the period 1950-2000 (0.86%) and the projected growth rate over the period
2000-2050 (0.25%) under the “constant” scenario – means that annual average
potential growth in GDP would decline by around 0.40 percentage points
(0.65x0.61).
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
– 43
Chapter 2
THE CURRENT LABOUR MARKET SITUATION
OF OLDER WORKERS
Norway has one of the best performing labour markets in the OECD area.
Between 1993 and 1998, Norway enjoyed a period of strong economic
expansion that was accompanied by dramatic improvements in the overall
labour market situation: employment growth was strong and the unemployment
rate was cut in half to 3.2% in 1999. Since 1998, economic growth has
stabilised to some extent with the unemployment rate rising to 3.9% in 2002.
However, the labour market remains tight and there are concerns about
containing wage inflation. Of particular concern is the emergence of labour
shortages that will be exacerbated by the large groups of older persons leaving
the labour market. Consequently, the purpose of this chapter is to identify those
areas where action to improve the labour market outcomes of older people can
help address the future challenges discussed in Chapter 1.
1.
Labour market participation
As pointed out in the previous chapter, maintaining and, if possible,
increasing the current relatively high participation rates is a necessary step in
addressing the challenges of population ageing.
A.
Key issue I: Maintaining high participation rates
The overall labour force participation rate in Norway has increased
significantly over the past three decades, rising from just under 70% in 1972 to
almost 82% in 2002. Most of the increase can be explained by the dramatic rise
– 26 percentage points – in female participation rates. In fact, with the exception
of women aged 65-69, the participation rates of women in all age groups have
significantly increased (Figure 2.1). On the other hand, male participation trends
have been mixed. The participation rates of prime-age men have remained more
or less stable and relatively high – never dropping below 90%. For older men
the story is different.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
44 – CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Figure 2.1.
Participation rates by gender and age in Norway, 1972-2002
Men
100
Women
100
50-54
25-49
90
90
80
80
25-49
55-59
70
50-54
70
60-64
60
60
50
50
55-59
65-69
30
30
20
20
10
10
0
0
60-64
65-69
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
40
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
40
Source: OECD Labour Force Statistics.
As a group, the participation rate of men aged 50-64 increased by
3 percentage points over the past decade – having declined more than
10 percentage points during the 1970s and 1980s. Despite some volatility, while
the participation rates of men aged 50-54 and 55-59 have more or less
maintained their 1972 level, the decline in the participation rate of men
aged 60-64 has been steep – a drop of 20 percentage points. Consequently, in
2002 the participation rate of men aged 50-54 is more than 30 percentage points
higher than that of the age group 60-64 – compared to only 11 percentage points
in 1972. As well, at more than 76% in 1972, the participation rate of men
aged 65-69 was relatively high – only 14 percentage points below men
aged 50-54. Since then, the participation rate for the age group 65-69 has
declined dramatically to only 24% in 2002 – or 65 percentage points below that
of the group aged 50-54. As will be discussed in Chapter 3, the increased
number of disability pensions and the introduction of the contractual early
retirement scheme (AFP) appear to be the main factors behind the steep declines
in the labour force participation of men aged 60-64 and 65-69.
The rise in the participation rates of women aged 50-64 has been
spectacular – from 46.2% in 1972 to just over 70% in 2002. However, for the
age group 60-64, the increase has been less steep. Consequently, as was the case
for men, the gap in participation rates between women aged 50-54 and 60-64
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CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
– 45
has grown from over 15 percentage points in 1972 to over 31 percentage points
in 2002. It is also worth noting that the labour market participation of women
aged 65-69 has declined by more than 10 percentage points since 1972.
Figure 2.2.
Participation rates by age and gender in OECD countries, 2002
Percentages
Men aged 25-49
Men aged 50-64
ISL
MEX
JPN
CHE
LUX
CZE
GRC
FRA
AUT
SVK
NLD
DEU
PRT
BEL
ESP
DNK
GBR
IRL
CAN
KOR
ITA
FIN
USA
NZL
NOR
TUR
POL
AUS
SWE
HUN
0
20 40 60 80 100
0
Women aged 25-49
TUR
0
ISL
MEX
KOR
JPN
TUR
PRT
USA
NZL
NOR
IRL
CHE
AUS
CAN
DNK
SWE
GBR
GRC
POL
CZE
ITA
NLD
FIN
DEU
AUT
ESP
HUN
LUX
SVK
FRA
BEL
20 40 60 80 100
0
Women aged 50-64
ISL
SWE
FIN
DNK
SVK
NOR
CHE
CAN
AUT
CZE
PRT
FRA
POL
DEU
NLD
GBR
USA
BEL
NZL
AUS
HUN
IRL
LUX
JPN
ESP
GRC
ITA
KOR
MEX
20 40 60 80 100
Men aged 65-69
ISL
JPN
MEX
CHE
NZL
SWE
NOR
KOR
USA
DNK
IRL
CAN
GBR
PRT
CZE
ESP
AUS
NLD
GRC
FIN
DEU
FRA
SVK
ITA
AUT
LUX
TUR
POL
BEL
HUN
Women aged 65-69
ISL
SWE
NOR
FIN
DNK
NZL
USA
CHE
GBR
CAN
JPN
FRA
PRT
KOR
AUS
CZE
DEU
NLD
IRL
POL
SVK
AUT
HUN
MEX
GRC
ESP
BEL
LUX
ITA
TUR
0
20 40 60 80 100
20 40 60 80 100
ISL
KOR
JPN
PRT
USA
MEX
NOR
TUR
CHE
NZL
GBR
SWE
CAN
AUS
POL
DNK
IRL
CZE
GRC
DEU
NLD
AUT
FIN
ITA
ESP
FRA
HUN
LUX
BEL
SVK
0
20 40 60 80 100
Source: European Labour Force Survey and national labour force surveys.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
46 – CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
In comparison to the rest of the OECD, individuals aged 50-64 in Norway
fare relatively well with participation rates ranking amongst the highest in the
OECD area (Figure 2.2). And in 2002, the gender gap of less than 9 percentage
points in participation for the age group 50-64 is amongst the lowest in the
OECD. Furthermore, the difference in participation rates in 2002 between older
(50-64) and prime-age individuals (25-49) is only 11.7 and 12.3 percentage
points for men and women, respectively. However, even though the
participation rates of prime-age and older workers aged 50 to 64 are close to the
highest rates in the OECD area, there is considerable scope to increase the
participation rates of persons aged 55 and above, especially for women.
2.
Employment situation
To some extent, the employment situation of older workers is encouraging.
In fact, older workers have profited from the recent economic prosperity. Since
1993, the number of jobs held by individuals aged 50 to 64 has increased by
168 000 or by 42%.
Figure 2.3.
Differences in Norwegian employment rates between prime-age
and older workers by gender, 1972-2002
Percentage points
Men
Women
20
18
16
14
12
10
8
6
4
2
00
98
96
94
92
02
20
20
19
19
19
19
88
86
84
82
80
78
76
74
90
19
19
19
19
19
19
19
19
19
19
72
0
Source: Norwegian Labour Force Survey.
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CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
– 47
By contrast, over the same period the employment of prime-age
individuals increased only 8.5% or by 109 000 jobs. Of course, the ageing
process has meant a growing cohort of individuals aged 50-64 over this period –
an increase of nearly 30%. But the employment rate for this age group has
grown steadily over the past two years.
Despite relatively high employment rates, the gap between older and
prime-age workers persists though it has tended to decline recently (Figure 2.3).
Between 1972 and 1987, the gap increased from less than six to almost
19 percentage points for women and from 8 to 13 percentage points for men.
Since then, however, the gap has declined significantly for both men and
women despite the introduction of the early retirement scheme in 1989. The gap
for both men and women was 12 percentage points in 2002, the lowest
difference for women since 1983. Since 1997, the gap for men has reversed its
downward trend and has increased nearly 2 percentage points.
A.
Current job characteristics
Future employment prospects for older persons will be influenced by the
type of jobs they can attain and their workplace environment. Nearly 90% of
older workers in Norway are classified as employees of whom only 3% are in
temporary jobs (Table 2.1). Most of the remainder (almost 10%) are
self-employed – almost double the proportion among prime-age workers. By
gender, older working men are much more likely to be self-employed than older
employed women.
In terms of allocation by industry, older workers are under-represented in
“construction”, “wholesale and retail”, “transport, storage and communication”
and “financial, real estate and business services”, but overrepresented in
“agriculture, hunting and fishing” and “public administration, education, health
and social work”. Indeed, this latter sector accounts for over 40% of all jobs for
older people and more than 60% in the case of older women. By occupation,
older workers are concentrated in professional-related and, especially for
women, service-oriented occupations and are over-represented in the category
of legislators, managers, and senior officials – not surprising given the required
experience level for such occupations. However, more than a third of older men
in employment are still working in manual occupations.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
48 – CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Table 2.1.
Norwegian older workers by selected job characteristics, 2001
Older workers (aged 50 - 74) in each category:
As a share of all
employed persons in each
category
All employed
Total
26.7
Men
27.3
By employment status:
Self-employed
Family worker
Permanent employee
Temporary employee
39.3
32.6
27.5
10.1
41.3
25.4
27.1
12.0
34.3
36.8
28.0
8.8
36.4
36.0
27.2
24.8
20.9
24.0
23.6
By industry:
Agriculture, hunting, forestry and fishing
Mining and quarrying, manufacturing,
electricity, gas and water supply
Construction
Wholesale and retail
Transport, storage and communication
Financial, real estate and business services
Public administration, education, health
and social work
By occupation:
Legislators, senior officials and managers
Professionals
Technicians and associate professionals
Clerks and related workers
Service workers and sales workers
Agricultural and fishery workers
Craftsmen and related workers
Plant and machine operators
Elementary occupations
As a share of all older
workers
Women Total
26.1
100.0
Men
100.0
Women
100.0
9.9
0.4
86.4
3.2
13.6
0.2
83.4
2.8
5.6
0.7
90.1
3.7
37.5
5.3
7.3
2.9
27.4
24.9
20.6
25.0
24.8
26.6
23.9
21.2
21.6
21.8
15.2
6.2
13.7
6.7
10.6
21.1
10.5
12.4
8.9
12.4
8.1
1.0
15.2
4.0
8.4
30.2
33.8
28.5
42.4
27.3
60.3
37.2
28.3
26.8
28.9
22.2
37.3
23.8
25.9
27.6
37.7
31.8
29.7
22.1
19.8
36.7
24.2
24.9
18.3
35.7
23.3
24.2
32.0
23.1
38.9
19.5
31.0
31.7
9.9
12.2
23.1
9.1
17.8
4.9
9.8
7.6
5.5
13.7
15.0
22.7
4.0
7.9
6.7
16.9
11.1
2.1
5.4
9.0
23.6
15.3
29.5
2.7
1.4
3.4
9.7
Source: Norwegian Labour Force Survey.
B.
Key issue II: Reversing the trend decline in hours worked
Though employment rates are relatively high and the gap between older
and prime-age workers relatively low, one key issue plaguing the Norwegian
labour market is the downward trend in hours worked. In the context of a tight
labour market and an ageing population, this trend threatens to hamper
economic growth. Since 1995, the average number of hours worked has fallen at
least five hours per week for older and prime-age workers. The drop has been
most severe for men and women aged 60-64 whose hours per week have
dropped nearly nine hours and seven hours respectively. Consequently, in 2001,
men and women aged 60-64 were working on average less than 30 hours and
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
– 49
20 hours per week (Figure 2.4). With the exception of workers aged 60-64, the
average number of hours worked amongst older workers is comparable to
prime-age workers. As a larger share of women work part-time, it is not
surprising to find that they work on average eight hours less per week than men.
Figure 2.4.
Average actual weekly working hours in Norway by gender and age,
1995-2001
Men
Women
45
45
50-54
25-49
40
40
35
35
55-59
60-64
25-49
30
50-54
30
55-59
25
25
20
20
60-64
15
15
1995
1996
1997
1998
1999
2000
2001
1995
1996
1997
1998
1999
2000
2001
Source: Norwegian Labour Force Survey.
In Table 2.2, employment rates for people aged 50-64 (i.e. the proportion
of the age group in employment) are shown for OECD countries both before
and after an adjustment for actual hours worked per week.5 Older men in
Norway work the fewest hours in OECD and Norwegian women the second
lowest reported hours of work. Thus, taking actual hours worked into account
reduces employment rates in Norway by more than 14 percentage points for
men and by almost 26 percentage points for women, i.e. lowering employment
rates from 78.3% to 67.3% and from 64% to 41.4%, respectively. Consequently,
Norway’s ranking in terms of employment rates for older men changes from
fourth highest to eleventh highest on an hours-adjusted basis and from third
highest to seventh highest for older women.
5.
It would be preferable to make an adjustment on the basis of annual rather than
weekly hours worked but the relevant data by age are not available.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
50 – CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Table 2.2.
Employment-population rates for persons aged 50-64 before and after
a
adjustment for hours worked, 2000
Unadjusted employment
rates
Men
Women
Rate Rank Rate Rank
(%)
(%)
Australia
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Iceland
Ireland
Italy
Japan
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
United
Kingdom
United States
Average
Adjusted employment rates
Rate
(%)
Men
Rank
Women
Rate
Rank
(%)
Weekly hours
of work
Men
Women
67.6
56.3
51.5
70.3
59.1
54.7
57.7
66.0
95.8
71.1
54.4
84.1
65.5
78.3
70.8
64.9
73.7
83.6
68.6
11
17
20
9
15
18
16
12
1
7
19
2
13
4
8
14
5
3
10
46.6
32.4
27.0
60.1
57.6
42.9
39.6
29.5
82.7
34.7
23.1
54.8
38.2
67.3
48.6
25.6
70.4
59.2
52.9
11
16
18
4
7
12
13
17
1
15
20
8
14
3
10
19
2
6
9
68.6
57.6
46.9
59.6
50.8
53.4
59.0
71.3
116.7
76.5
54.0
96.1
57.6
64.0
69.0
63.9
65.5
86.7
65.6
8
15
20
13
19
18
14
6
1
5
17
2
16
11
7
12
10
3
9
33.3
27.4
18.2
41.8
42.1
33.3
29.0
27.8
69.9
24.6
19.3
49.1
19.1
41.4
40.6
21.6
52.4
37.8
33.5
11
15
20
6
5
12
13
14
1
16
18
4
19
7
8
17
2
9
10
40.6
40.9
36.4
33.9
34.4
39.0
40.9
43.2
48.7
43.0
39.7
45.7
35.2
32.7
39.0
39.4
35.5
41.5
38.2
28.6
33.8
27.0
27.8
29.2
31.0
29.4
37.7
33.8
28.3
33.4
35.8
20.0
24.6
33.5
33.7
29.8
25.5
25.3
73.7
68.4
6
59.6
47.6
5
76.8
68.0
4
52.4
35.7
3
41.7
39.5
35.2
30.2
a) The adjusted employment rate is obtained by multiplying the employment rate by actual hours
worked weekly and dividing by 40.
Source: OECD Labour Force Statistics and OECD database on hours of work.
Reasons for low hours of work
One explanation for the relatively low hours worked is a relatively high
incidence of part-time work. In fact, Norway has the ninth highest incidence of
part-time work in the OECD area for both prime-age and older workers
(Table 2.3). Moreover, the incidence of part-time work among older women, at
over 34%, is considerably higher than that of older men, which only amounts
to 6.8%.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Table 2.3.
– 51
Part-time work by age and gender, 2002
Percentage of total employment
Both
Australia
Austria
Belgium
Canada
Denmark
France
Germany
Greece
Ireland
Italy
Japan
Korea
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Repubic
Spain
Sweden
Turkey
United Kingdom
United States
Men
Women
25-49
50-64
25-49
50-64
25-49
50-64
22.8
14.5
16.7
12.4
9.9
12.6
18.6
5.5
15.6
11.8
20.4
5.4
13.5
11.5
27.9
17.7
15.3
8.8
5.4
1.2
7.1
10.1
5.3
18.6
7.9
24.2
12.7
19.7
16.2
12.4
15.4
20.2
5.3
22.2
12.9
26.3
9.6
11.7
14.4
33.2
21.2
19.6
14.3
13.7
3.2
6.2
14.5
9.5
25.8
9.4
10.5
2.2
4.6
4.7
4.8
4.0
4.0
2.5
3.8
4.1
7.9
3.1
2.1
4.2
5.5
5.1
4.4
4.2
2.0
0.7
1.9
4.4
2.9
3.7
2.8
14.1
3.8
8.9
7.8
6.3
6.2
5.5
2.9
8.5
6.1
14.0
7.9
1.6
6.6
13.1
9.8
6.8
10.8
6.4
1.8
1.4
8.2
6.0
9.2
4.7
38.4
29.0
32.2
21.0
15.4
22.9
36.6
10.0
30.7
23.7
39.0
9.1
29.8
24.4
55.9
32.3
27.6
14.3
9.4
1.7
15.3
16.4
12.9
36.9
13.5
38.3
26.1
38.4
26.9
20.0
26.7
40.6
10.2
47.9
26.7
44.5
12.0
31.9
33.0
66.7
36.1
34.2
18.6
23.1
5.3
17.2
21.1
17.7
46.3
14.1
Source: OECD database on part-time work.
The other main explanation for low hours of work is absence from work
(Table 2.4). In comparing older and prime-age employees, the overall incidence
and reasons for working few hours are very similar. Holidays account for the
largest share of reduced working time in most countries. The presence of illness
and injury – albeit relatively small – also plays a role in Norway. This is true for
older and prime-age employees of whom around 2% – accounting for 6% of all
absence – worked fewer hours than normal due to illness or injury. For older
Norwegians, this is, together with the Netherlands, the second highest rate of
the countries shown in Table 2.4 after the highest rate of 3.6% is in Sweden.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
52 – CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Further, given the high incidence of part-time work, it is not surprising to
see that the presence of variable hours is a major determinant of working time.
All together, more than 31% of older employees in Norway worked less than
their usual hours in the reference week with little or no gender differences,
which is the fourth highest rate of absence.
Table 2.4.
Employees absent from work by reason in selected OECD countries,
a
2002
Percentages of total employment in each age group
25-49
Family/ Variable
Other
hours
Belgium
Czech Republic
Denmark
Finland
Ireland
Netherlands
Norway
Poland
Portugal
Slovak Republic
Spaiin
Sweden
Switzerland
United Kingdom
1.9
0.6
0.6
1.1
0.2
1.6
1.7
0.3
0.6
0.1
0.3
2.4
2.4
1.9
0.3
0.8
8.0
10.1
0.3
2.1
4.2
1.2
0.1
0.2
0.2
8.1
1.8
17.0
Illness/
Injury
0.6
0.4
0.8
1.3
0.2
1.9
1.8
0.1
0.2
0.3
0.2
2.4
0.7
1.9
50-64
Holidays Total
17.6
12.3
16.0
22.3
10.9
19.6
22.1
6.4
16.7
14.6
13.5
24.7
10.9
12.6
20.4
14.2
25.4
34.7
11.6
25.2
29.8
7.9
17.6
15.2
14.2
37.6
15.7
33.4
Family/
Other
1.7
0.7
0.3
0.7
0.1
1.5
1.1
0.1
0.3
0.1
0.2
0.7
1.5
1.7
Variable Illness/
Holidays
hours
Injury
0.1
0.8
7.0
9.3
0.3
1.9
4.2
1.0
0.1
0.0
0.2
7.2
2.0
14.4
0.5
0.4
0.9
1.5
0.2
2.0
2.0
0.0
0.2
0.3
0.2
3.6
1.1
1.4
18.1
11.8
17.3
23.2
10.4
19.1
23.8
6.5
17.1
15.3
14.4
25.9
9.5
12.8
Total
20.4
13.7
25.4
34.8
11.0
24.6
31.2
7.7
17.7
15.8
15.1
37.4
14.1
30.3
a) Absence from work refers to employees whose actual weekly hours of work were less than their
usual weekly hours of work.
Source: European Labour Force Survey.
3.
Unemployment among older workers in Norway is low
Unemployment rates for older workers in Norway have followed a similar
path to that of prime-age workers but at a lower level (Figure 2.5). A dramatic
fall in oil prices in 1986 triggered higher unemployment levels and the onset of
a slump in the world economy in the early 1990s exacerbated the problem with
unemployment peaking in 1993. However, unemployment rates subsequently
fell substantially to around 1% for older workers and 2.5% for prime-age
workers. Since 1998, unemployment rates have risen slightly.
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CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
– 53
Still, unemployment rates in Norway for both older and prime-age workers
remain among the lowest in the OECD area. Furthermore, while the incidence
of long-term unemployment for older Norwegians is somewhat higher than for
prime-age persons, it too is among the lowest in OECD.
Figure 2.5.
Unemployment rates in Norway by age groups, 1987-2002
Percentages
6
25-49
5
4
50-54
3
2
60-64
1
55-59
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
89
19
88
19
87
0
Source: OECD Labour Force Statistics.
4.
Patterns of inactivity
The situation of older workers in Norway can largely be explained by the
institutional framework and the incentives it creates. As discussed in the
following chapter, schemes such as the early retirement pension (AFP) and the
disability pension scheme effectively lower the retirement age and create a
disincentive to participation among those eligible. The upshot is that very few
older people are unemployed; most are inactive.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
54 – CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
A.
Key issue III: Reducing inactivity by strengthening work-incentives
Success in reducing inactivity will be an important element to maintaining
and encouraging labour market participation. Not surprisingly, inactivity
increases with age (Figure 2.6). In fact, by the age of 62 and well before the
official retirement age of 67, inactivity rates for both men and women are
above 40%. In particular, between the ages of 61 and 62, the inactivity rate of
men jumps from 28% to just over 43%. It is also the case that at each single
year of age, the inactivity rate of women is higher than for men.6
Figure 2.6.
Inactivity by single year of age in Norway, 2001
As a percentage of the population by single year of age
Men
Women
100
90
80
70
60
50
40
30
20
10
0
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74
Source: Norwegian Labour Force Survey.
6.
The inactivity rate of women is also higher at each single year of age between 40
and 50.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
25-49
14.6
5.1
100.0
0.5
0.0
2.9
5.5
23.1
a
7.4
4.5
100.0
0.4
0.0
2.9
5.2
15.2
84.8
79.6
100.0
3.0
4.6
12.4
0.3
0.0
4.5
85.3
2.4
87.7
Total
0.4
3.2
100.0
0.7
18.6
9.0
3.2
31.9
68.1
64.9
100.0
0.3
1.3
21.3
0.3
5.0
14.4
77.6
1.1
78.7
Men
50-64
17.9
2.7
100.0
1.0
22.1
9.0
2.2
52.7
47.3
45.1
100.0
6.9
1.6
31.5
0.4
3.8
18.8
67.8
0.7
68.5
Women
9.2
3.0
100.0
0.9
20.3
9.0
2.7
42.3
57.7
55.0
100.0
3.6
1.5
26.4
0.4
4.4
16.6
72.7
0.9
73.6
Total
0.3
2.1
100.0
0.6
3.5
6.3
3.2
12.7
87.3
84.1
100.0
0.2
1.3
10.7
0.1
0.4
8.7
88.2
1.1
89.3
Men
Percentages
15.9
3.7
100.0
1.1
3.6
7.2
3.0
31.5
68.5
65.5
100.0
4.7
1.9
20.9
0.2
0.5
13.6
78.2
0.9
79.1
Women
50-54
8.1
2.9
100.0
0.8
3.6
6.8
3.1
22.2
77.8
74.7
100.0
2.5
1.6
15.8
0.2
0.5
11.2
83.2
1.0
84.2
Total
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0.3
2.6
100.0
1.0
13.8
9.5
3.0
27.3
72.7
69.7
100.0
0.0
1.4
17.1
0.3
1.8
13.6
81.4
1.5
82.9
Men
18.8
4.4
100.0
1.3
18.1
8.7
1.6
51.3
48.7
47.1
100.0
5.7
1.6
28.8
0.3
1.3
19.9
70.4
0.8
71.2
Women
55-59
9.7
3.5
100.0
1.2
16.2
9.1
2.2
39.6
60.4
58.1
100.0
2.9
1.5
23.0
0.3
1.6
16.8
75.9
1.2
77.1
Total
Inactivity status in Norway and on average in OECD countries, 2001
a) The OECD average excludes Australia, Canada, Korea, Japan, Mexico, New Zealand and Turkey.
Source: National Labour Force Surveys and the European Labour Force Survey.
0.3
3.9
100.0
0.3
0.0
2.8
Discouraged
Retired
Illness or disability
Family responsibilities
Other
Total
4.9
7.3
76.9
71.4
100.0
100.0
92.7
87.8
5.8
5.5
Unemployed
Inactive
Active
Employed
OECD
a
Family responsibilities
Other
Total
0.1
3.7
16.5
0.3
0.0
4.9
8.2
0.3
0.0
4.1
Discouraged
Retired
Illness or disability
81.4
2.1
91.8
89.1
2.7
Employed
Unemployed
Inactive
83.5
Women
Active
Norway
Men
Table 2.5.
0.3
1.9
100.0
0.8
44.2
10.0
1.0
57.2
42.8
41.7
100.0
0.8
0.6
43.8
0.7
16.8
24.9
55.6
0.6
56.2
Men
60-64
17.9
4.1
100.0
0.6
40.1
8.7
0.5
71.5
28.5
28.0
100.0
12.0
1.8
52.6
0.7
12.7
25.4
47.2
0.2
47.4
Women
9.4
3.1
100.0
0.7
42.2
9.3
0.8
64.6
35.4
34.6
100.0
6.4
1.2
48.2
0.7
14.8
25.2
51.4
0.4
51.8
Total
56 – CHAPTER 2. THE CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Compared to the OECD average, the incidence of inactivity and the
reasons for inactivity are quite different in Norway (Table 2.5). First of all,
inactivity for older people is significantly lower in Norway. As an example,
inactivity of Norwegian men and women in the age group 60-64 is around 44%
and 53%, respectively, compared with the OECD average of around 57% for
men and 72% for women. By reason, for Norwegians aged 50 to 64, almost
two-thirds of all inactivity is explained by illness or disability while for the
OECD average this amounts to only one-fifth with retirement accounting for
almost half of all inactivity. Further, almost 18% of older females in the OECD
area are inactive because of family responsibilities, which is considerably
higher than for Norwegian females (less than 7%).
It is difficult to draw any firm conclusions from these comparisons of the
status of people not in the labour force, since there are numerous reasons for the
differences between Norway and the OECD average. The more obvious
explanations may be differences in social security systems and definitions of,
for example, disability and early retirement. However, the fact that the statutory
retirement age is set at 67 in Norway may play a role. But it is clear that most
other OECD countries have a relatively larger potential labour reserve than
Norway consisting mainly of women, since on average around 23% of women
aged 25-49 and 53% aged 50-64 were not in the labour force in the OECD area
in 2001 compared with around 17% and 32%, respectively, in Norway.
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CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
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Chapter 3
PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
Finding a balance between guaranteeing an adequate income for the
elderly while not undermining work incentives is a challenge facing all OECD
countries. The relative generosity of each country’s welfare system is one
important determinant of the actual retirement decisions of older people, but
also a way to support vulnerable groups and to cover both temporary and
permanent losses of labour income. Individual decisions to work depend highly
on benefit levels and eligibility criteria in the public pension system and in other
social security schemes. This chapter examines the details of the Norwegian
welfare benefits system and assesses the likely impact these arrangements may
have on the retirement decisions of older workers.
1.
Welfare schemes – a way out of the labour market?
As discussed in the previous chapter, the substantial drop in labour market
participation starts already at the ages of 59-60 for both men and women. At
this age, the share of persons outside the labour market more than doubles
compared to persons in their early 50s. In 2001, around 85% of all men and
72% of all women aged 58 years participated in the labour force. However by
the age of 62, only 57% of the men and 50% of the women do so. This decrease
cannot be explained by changes in health status alone, although more than 36%
of all people in the age group 60-64 are in receipt of a disability pension.
A clearer picture of how the different exit paths influence retirement
decisions can be gleaned from data on “retirement rates” by single year of age
for older people, as estimated from changes in labour force participation rates
(Figure 3.1). In the case of Norway; there are noticeable spikes in the retirement
rate at the ages of 62, 65 and 67 (for men) and at 62 and 67 (for women). These
spikes correspond to the age at which a large share of the population becomes
eligible for the contractual early retirement pension (AFP) and the age at when
the public old-age pension becomes available, i.e. the age of 67. The spike at the
age of 65 is mainly explained by a lower retirement age in some occupations
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58 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
and occupational pension schemes. Thus, it appears that the different options to
leave the labour market do influence retirement decisions in Norway.
a
Figure 3.1.
Retirement rate by age in Norway, 2001
In percent
60
Females
50
40
Males
30
20
10
0
-10
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
a) Percentage decline in the participation rate between successive years of age, based on an
average of participation rates in 2000 and 2001.
Source: Norwegian Labour Force Survey.
In contrast to many other countries, Norway has only two major exit paths
before the statutory age of 67 for the ordinary old-age pension – the disability
pension system and the early retirement scheme (AFP). In 2000, more than 85%
of the men and 66% of the women in the age group 50-59 who left the labour
market did so because of illness or disability (Figure 3.2). This share is
somewhat lower in the age group 60-64; however, it is compensated by the
increase in the proportion of early retirees reaching 37% of all men and 23% of
all women. For the age group 65-69, the ordinary old-age pension is, not
surprisingly, the main route to retirement.
In the future, there will be even greater pressure on the social security
system since the number of people above 50 years of age will grow relatively
faster than the prime-age will. Thus, even if the inflow rates to these systems
stay constant, there will be dramatic increases in public spending. This is one of
the reasons why Norway is in the process of reforming its old-age pension
system.
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CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
Figure 3.2.
– 59
a
Reasons for leaving last job in Norway, 2000
As percentage of inactive in each age group
Illness or disability
Early retirement
Normal retirement
Job ended
Personal reasons
Others
100
90
80
70
60
50
40
30
20
10
Men 50-59
Men 60-64
Men 65-69
Women 50-59
Women 60-64
Women 65-69
a) The category “job ended“ consists of both dismissals and the ending of a temporary contract; the
category “personal reasons” also covers training.
Source: European Labour Force Survey.
2.
Old-age pensions
For the majority of people in Norway, their income after retirement is still
mainly derived from a public pension. Occupational pensions cover only about
half of all employed.
A.
Trends in public expenditures on old-age pensions
Currently, expenditures on public pensions in Norway account for only
about 5% of GDP, one of the lowest figures in the OECD area (Figure 3.3).
However, during the next five decades this will change dramatically. Norwegian
public pension expenditures, as a share of GDP, are projected to double in the
next 20 years or so and reach around 13% in 2050. The dramatic increase in
expenditures is mainly driven by population ageing and the maturing of the
supplementary pension scheme.
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60 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
Figure 3.3.
Public expenditure on old-age pensions in Norway and other OECD
a
countries, 2000-2050
As a share of GDP
Levels in 2000 (%)
Change between 2000 and 2050 (% points)
Italy
France
Germany
Poland
Austria
Spain
Sweden
Belgium
Finland
Portugal
Japan
Czech Republic
OECD Average
Denmark
Hungary
Netherlands
Canada
Norway
New Zealand
United States
United Kingdom
Australia
Korea
0
2
4
6
8
10
12
14
16
-4
-2
0
2
4
6
8
10
12
a) For France, the estimates refer to the period 2000-2040.
Source: OECD (2001b).
B.
The current public pension system
The Norwegian old-age pension scheme consists of a basic pension, a
supplementary pension and a special supplement. Old-age pension benefits are
granted only when reaching the official age of retirement at 67. The system is a
defined benefit scheme and is fully integrated in the state budget. The basic
pension is paid to all residents with at least three years of contributions between
the age of 16 and 66. A full basic pension requires a minimum residence period
of 40 years; shorter periods reduce the pension proportionally. A full basic
pension is one G for a single person.7 People with earnings exceeding one G for
7.
Most benefits from the National Insurance Scheme are determined in relation to
a basic amount, G (“Grunnbeløpet”). It is based on the expected general wage
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CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
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any three years during their working life receive an earnings-related pension,
i.e. the supplementary pension. Those pensioners who have no or only a small
supplementary pension are entitled to a special supplement (from 1 May 2003,
the minimum pension amounts to NOK 101 964).
The supplementary pension scheme was introduced in 1967 to complement
the basic amount and mitigate the sharp fall in income after retirement. The
amount of the supplementary pension depends on the number of years with a
pensionable income and the yearly pension points.8 A full supplementary
pension requires as a general rule 40 years of work with a pensionable income.
In the case of less than 40 years, pension entitlements are reduced
proportionally. The average pension points of the person’s best twenty income
years multiplied by the supplementary pension percentage, 42%, and the
proportion of pension earning years in relation to the required 40 years,
provides the supplementary pension in terms of basic amounts (or G). The
maximum supplementary pension that can be granted varies from one year to
another but is at present approximately NOK 200 000.
With minimum old-age pensions as a floor and upper limits on pension
points as a ceiling, old-age pension replacement rates fall as former income
rises and range from above 100% for workers with a former income below 2 to
3 G to less than a third for high-income workers. Consequently, high-income
earners need to rely heavily on occupational pension schemes if they are to
obtain a pension close to their previous salary.
The lack of flexibility in the retirement decision
To encourage continued labour force participation of older workers, it is
important that pension systems are flexible in terms of retirement age. The
system should, among other things, leave room for combining income from
work and pensions. At present, the system is rather inflexible and gives no
possibilities to have a smooth transition from work to retirement or, more
increase and as at 1 May 2003 the annual amount of G was NOK 56 861, which
is equivalent to EUR 6 900 (in March 2003, EUR 1 corresponded to NOK 7.9).
8.
Pension points are computed for each year by multiplying pensionable income
by G minus one (i.e. subtracting the basic pension). The pensionable income is
the sum of all income up to 6 G plus one third of income between 6 and 12 G.
Income exceeding 12 G is disregarded. Thus, the maximum pension points that
can be credited for any single year are 7 G.
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62 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
generally, to withdraw earlier than the age of 67. Although it is possible to
delay retirement beyond the official retirement age, the old-age pension is paid
out from the age of 67. Thus, withdrawing before the official retirement age is
only possible through the early retirement schemes (AFP) or through a
disability pension (both schemes can be used on a part-time basis).
A higher degree of flexibility could be introduced by abolishing the
statutory retirement age of 67 and applying actuarial methods for calculating
entitlements, or – as in other countries – by having an age-retirement interval.
To have a smoother transition from work to retirement would also require that
income from work and pensions can be easily combined without much loss.
This would not only simplify any decision to abolish the existing early
retirement scheme and reduce the inflow to the disability pension system, but
would also enhance people’s flexibility with regard to when to retire.
The impact of the public pension system on retirement decisions
The level of Norwegian pensions can be benchmarked against those
available in other countries as a way of assessing their relative generosity and
likely impact on retirement decisions (Figure 3.4). The replacement rate, i.e. the
level of pension benefits relative to former earnings can be used as an indicator
of whether public pension systems are constructed in such ways that they
provide incentives to go on working after a certain age (OECD, 2001c). Clearly,
high replacement rates provide a greater incentive to retire, all else equal, than
low replacement rates. But retirement decisions will also depend on changes in
pension wealth, i.e. the change in the net present value of all future pension
payments that the eligible person can expect to receive from working an
additional year. Clearly pension wealth is affected not only by the size of the
pension, but also by the point of retirement, since that determines over how
many years the income stream is paid. Thus, even if replacement rates were
only modest, workers may still choose to retire rather than work an additional
year if continuing to work would effectively result in a large drop in their
pension wealth.
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CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
a
Figure 3.4.
Retirement incentives in Norway and other OECD countries
Percentages
A. Net replacement rates
110
110
100
100
90
90
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71
Norway
Sweden
Netherlands
UK
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71
Age
US
Norway
Germany
France
Age
Switzerland
B. Change in pension wealth from working an additional year
100
100
80
80
60
60
40
40
20
20
0
0
-20
-20
-40
-40
-60
-60
-80
-80
-100
-100
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71
Norway
Sweden
Netherlands
UK
Age
US
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71
Age
Norway
Germany
France
Switzerland
a) The estimates refer to public pensions including occupational pensions, where relevant, for
workers earning the equivalent of Average Production Worker (APW) earnings in each country.
Source: OECD estimates.
There is no simple relationship between the level of replacement rates and
effective retirement ages across countries and, of course, financial incentives to
withdraw can come from other sources such as social security benefits, own
savings, etc. Nevertheless, Panel B in Figure 3.4 shows a large fall in the
pension wealth at the age of 67 in Norway, which is a strong disincentive to
continue working after the age of 67. On the other hand, replacement rates are
relatively low for Norway. However, replacement rates do not increase with age
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64 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
unlike in many other OECD countries. In order to discourage early retirement,
the public pension system should encourage delayed retirement by letting
replacement rates increase for every extra year of work beyond 67 and by
perhaps relaxing the earnings test rule.
There are two main reasons for the strong disincentives to go on working
after the official retirement age. First, between ages 67 and 70, labour incomes
above 2 G reduce pension entitlements by 40% and thus weaken incentives to
go on working. From the age of 70, however, the old-age pension is paid out
independently of other incomes. Second, the general rule is that work after the
age of 67 does not accrue new pension rights, which reduces the incentives
further.9 Thus, as shown in Figure 3.4, there is no positive adjustment of
pension entitlements after the official retirement age.
C.
Reforming the public pension system
In spite of Norway’s favourable fiscal position due to substantial oil revenues, it
will still be necessary to change the pension system over time in order to ensure its
financial sustainability. If not, it may be necessary to increase taxes substantially or
cut public services.10 Therefore, the Norwegian government decided, in March 2001,
to appoint a pension commission to decide on the major objectives and principles for
a new pension system. The commission consisted of representatives from the political
parties in the parliament, independent experts and a council consisting of the main
social partners.
In the final report presented on 13 January 2004, the commission
recommended modernising the pension scheme to strengthen the link between
earned income and entitlements. It was suggested that pension entitlements
should correspond to 1.25% of yearly labour income and that a contribution rate
of 17.5% of labour income should be shared between the employee and the
employer. It also suggested introducing a flexible retirement age from 62 with
unrestricted possibilities to combine work and pension income. However, after the
9.
Up to 2007, people between 67 and 70 will be able to accrue pension rights. The
reason is that the supplementary pension system was introduced in 1967 and is
still maturing, i.e. it is not yet possible to have the 40 years of contribution,
which is necessary to receive a full supplementary pension.
10.
Press release “Goals, principles and alternative courses for the pension system”
issued by the Pensions Commission, 4 September 2002.
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CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
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age of 70, labour income no longer accrues new pension rights (this age limit is
suggested to be raised in line with increases in life expectancy). Moreover, it is
suggested that pension entitlements should adjust to the remaining life expectancy at
the age of 67 and that outgoing pensions be linked to the mean of wage and price
changes. Finally, the commission recommended that the new pension system should
affect fully persons born in 1965 or after. Those born between 1951 and 1964 should
be covered partially by the new and the old system, while those born before 1951
would not be affected by the reform.
Box 3.1. The Swedish flexible old-age pension system
Reasons behind the reform: First of all, the old pension system had become
too costly and risked becoming financially unsustainable faced with an ageing
population. Secondly, to cope with the overall future pressure on public
expenditures, incentives to work had to be improved and thus the link between
lifetime earnings and pension entitlements had to be strengthened. A closer link
between contributions and pension entitlements was also a way to ensure greater
fairness between individuals such that a person with a longer work record would
receive a correspondingly higher pension entitlement than a person with a shorter
work record, all else equal.
Main elements of the reform: The new pension system can, in broad terms,
be characterised as a switch from a defined-benefit to a defined-contribution
scheme. The system consists of an earnings-related pension and a minimum
guaranteed pension. In turn, the earnings-related pension consists of a definedcontribution PAYG component and a defined-contribution pre-funded component.
The total contribution amounts to 18.5% of income, and income up to the ceiling will
generate pension rights. The earnings-related pension is autonomous in relation to
the state budget with a contribution of 16%. The pre-funded system is based on the
remaining 2.5% of the contribution and individuals choose from a large number of
mutual funds how their contributions should be invested.
Increasing flexibility: From the age of 61 onwards, it is possible to work and
draw a pension at the same time. The pension can be drawn at 100% or partially in
steps at 75%, 50% or 25% and combined with full-time or part-time work. Since
there is no longer a stipulated retirement age, pension entitlements can be earned
for an indefinite period. However, the guaranteed pension benefit cannot, in contrast to
the earnings-related pension, be drawn before the age of 65.
Actuarial calculations: By switching to a new formula based on lifelong
earnings instead of the 15 best years out of 30, incentives to work and to maximise
earnings while in work have increased. New pension entitlements will always be
accrued on any pensionable income. Therefore, if a person continues or re-enters
employment after retirement, the pension will increase. The calculation of new
entitlements takes into account the shorter remaining life expectancy when new
entitlements are converted to pension, thus the age at which new pension credits
are earned affects the pension level as well
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66 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
The proposals of the pension commission will be circulated for public
consultation and the government, in turn, will submit a report to Parliament.
The Parliament will subsequently determine the main principles for the reform.
Whatever reforms are decided upon, these will not enter into force until 2010
due to the need for passing new legislation as well as the need for adapting new
administrative structures and systems. The suggested reforms are in line with
the new Swedish public old-age pension system. In 1999, Sweden switched
from a system similar to the current system in Norway to a more flexible and
financially sustainable retirement system (Box 3.1).
D.
Developing the occupational pension system further
In many countries the private pension system plays a fundamental role in
providing retirement income or in topping-up the public pension system. In
Norway though, only about 50% of all employees are covered by an
occupational pension scheme. In general, all state and municipal employees are
compulsory members of an occupational pension scheme while only 30% of
private sector employees are covered (most manual workers have no access to
these schemes). There exists a vast array of different occupational pension
schemes in Norway. Thus, the arrangements are – in this respect – quite
different to the other Nordic countries (Solem and Øverby, 2002).11
The Norwegian tax law stipulates that these schemes cannot pay benefits
before the age of 67, if the scheme is to enjoy tax privileges. This is to ensure
that private pensions do not serve as a tax-subsidised early retirement. Further,
it is not possible to receive a full occupational pension and still work full-time.
When combining pension and work income, the pension is reduced
proportionally with the reduction in the worker’s earned income. But there are
some exemptions from this main rule: it is possible to receive a full
occupational pension and still work fulltime, if the occupational pension is from
a governmental or municipal system and the work income comes from an
employer in the private sector or vice versa. Moreover, the transfer of
entitlements can only take place between homogeneous pension schemes, for
instance from one private occupational scheme to another.
11.
These schemes differ widely in construction, however, estimates by the Ministry
of Finance in co-operation with the Banking Insurance and Securities
Commission indicate that these schemes account for about 14% of total pension
entitlements for those eligible.
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Introducing new general rules for occupational pensions, to make
portability of pension rights between the public and the private sectors possible,
would increase the low mobility of workers (also of older workers) and thereby
possibly reduce the inflow to AFP and disability pensions. Introducing more
defined-contributions based schemes would – at least partly – solve this
problem.12 Another issue that should also be considered is how to increase the
coverage to all employees in the labour market. Although, this is up to the
social partners to decide upon, it would clearly increase equity.
3.
Alternative pathways to early retirement
Despite Norway’s relatively high statutory retirement age, a key problem
over the past decade has been the fall in the effective age of retirement (see
Figure 3.5).13 Since the late 1980s, the effective retirement age has fallen by
around four years for both men and women, which has been encouraged by the
introduction of the AFP scheme in 1989.
The effective retirement age has followed a downward trend since the mid1960s for women and since the early 1980s for men (except for some years in
mid-1990s). Since the declining trend has shown no signs of levelling off in
recent years, there is a serious risk that the situation could deteriorate further
and older workers continue to exit earlier from the labour force. Thus, the
economic challenges ahead could worsen.
This trend is similar in many countries and it has become routine for older
people in Norway and most other OECD countries to retire earlier than the
statutory retirement age (Figure 3.6). In general, women appear to retire earlier
than men, except in Ireland and Luxembourg where women work for around
half-a-year longer. Further, there seem to be no close link between the levels of
statutory retirement ages and effective retirement ages. Overall, the effective
12.
The vast majority of occupational pension schemes are defined-benefit schemes.
The reason is that tax deductions for premiums to defined-contribution schemes
were first allowed from 2001 (Ministry of Finance).
13.
The effective age of retirement refers to the average age at which people aged 40
and over withdrew from the labour force over any given five-year period. It is
estimated using information on participation rates and effectively assumes that
no exits from the labour market occur because of death and that the population
structure by age remains constant over time.
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retirement age is still relatively high in Norway, but this could change rapidly if
the downward trend continues.
a
Figure 3.5.
Average effective retirement age in Norway, 1960-2002
Men
Women
70
69
68
67
66
65
64
63
62
61
1997-02
1995-00
1993-98
1991-96
1989-94
1987-92
1985-90
1983-88
1981-86
1979-84
1977-82
1975-80
1973-78
1971-76
1969-74
1967-72
1965-70
1963-68
1961-66
60
a) Average age of withdrawal from the labour force for individuals older than 40 based on changes
in participation rates by five-year age cohorts over five-year intervals.
Source: OECD estimates based on the Norwegian Labour Force Survey.
Although there are generally no possibilities to retire earlier than the age
of 67 under the Norwegian old-age pension scheme, several occupations have
lower retirement ages (e.g. policemen can retire at the age of 60 and physicaleducation teachers at the age of 65). More generally, the social security system
provides a number of alternative pathways into early retirement. Thus, older
people in Norway can withdraw, on average, several years before the official
retirement age by using one of the following four possible exit routes: the early
retirement pension (i.e. the AFP-scheme), the disability pension, long-term
sickness benefits, and the unemployment insurance. Older workers who leave
the labour force are most likely to do so on long-term sickness, transferring to a
disability pension after one year. In fact, almost 22% of the total population
aged 50–59 received disability benefits in June 2002.
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a
Figure 3.6.
Effective and official retirement ages in OECD countries, 1997-2002
Men
80
75
70
65
60
55
50
France
Belgium
Hungary
Belgium
Slovak Republic
Hungary
Austria
Slovak Republic
Czech Republic
Luxembourg
Poland
Italy
Austria
Effective
Finland
Poland
Germany
Spain
Netherlands
Czech Republic
Turkey
Greece
Canada
United Kingdom
Australia
Norway
Sweden
New Zealand
Ireland
United States
Portugal
Denmark
Korea
Switzerland
Japan
Iceland
Mexico
45
Official
Women
70
65
60
55
50
Effective
Netherlands
France
Finland
Luxembourg
Italy
Australia
Germany
Greece
United Kingdom
New Zealand
Spain
Canada
Turkey
Sweden
Denmark
Norway
United States
Portugal
Switzerland
Japan
Ireland
Korea
Mexico
Iceland
45
Official
a) Average age of withdrawal from the labour force for individuals older than 40 based on changes
in participation rates by five-year age cohorts over five-year intervals.
Source: OECD estimates.
The replacement rate for early retirees will depend on the former firm and
the path used for retirement. In general, replacement rates range from 50%
to 90% of former income. The replacement rate for the disability pension is
around 50% to 55% depending on the person’s former income but, in order to
increase the employees’ incentives to apply, employers in many firms pay a
small company pension in addition to the state paid disability pension, thereby
increasing the replacement rate up to 80%. The standard replacement rate for
the unemployment benefit is 62.4%. Replacement rates for the AFP-scheme
vary between 50% and 60%, depending on the employer. Also for this scheme it
is becoming increasingly common that firms pay an additional company
pension to former employees (Dahl, Øivind and Kjell, 2002).
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70 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
A.
The contractual early retirement scheme (AFP)
In the 1988 wage settlement, it was decided to introduce an agreement-based
early retirement pension (AFP). To avoid high wage increases, many employers
associations subsequently accepted the trade union’s demand for a reduction in the
retirement age (Brinch, Hernœs and Strøm, 2001). The AFP-scheme was
introduced in 1989 for large groups of employees aged 66 and over. This age limit
was then successively lowered during the 1990s to 62 in March 1998. The system
has become more widespread than in 1988 and covers, at present, 43% of all
employees in the private sector and all employees in the public sector,
i.e. approximately 60% of all employees (Hernœs, Sollie and Strøm, 2000).
Main elements of the system
To be eligible for an AFP pension, the worker’s company has to be
covered by the relevant agreement and certain individual requirements must be
fulfilled as well. First of all, pension rights must have been credited under the
public pension scheme for at least 10 years during the period starting with the
year in which the person turns 50 and including the year before the year of
claiming the AFP pension. Second, only people employed at the time of
claiming benefit are eligible. Third, the claimant must have as a general rule a
yearly income above one G at the time of claiming benefit. Finally, it is required
that the pension is conditional upon an average income of at least twice the
basic amount during the ten best income years since 1966. If these requirements
are fulfilled, the claimant can chose to retire at the age of 62.
The amount of the AFP pension is calculated based on actual earnings
history and a projection of earnings from AFP take-up up to age 67 as though
the retiree had been working (see the former section on public pensions).
Further, those who withdraw on an AFP pension but continue to work are
considered to be part-time pensioners and as such receive a pension share equal
to the actual reduction of the labour income. For instance, if the labour income
after retirement is 40% of the pre-retirement income, the person is considered to
be 60% retired and the benefit is thus calculated accordingly (a yearly income
of about EUR 1 800 will, however, not change the anticipated work/pension
share).
The effect of AFP on labour supply
The system has grown considerable in popularity since its introduction,
and in 2001 almost 19% of the population in the age group 62-66 was receiving
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a pension under the AFP-scheme (Figure 3.7). One reason for this is the
lowering of the eligibility age to 62. In 2001, there appeared to be a slowdown
in the increase, which may be explained by the low number of people in the prewar cohorts but also by the tightening of the additional wage amount that can be
earned without a reduction in the pension.
Figure 3.7.
Recipients under the AFP-scheme in Norwaya
As a percentage of the population aged 62-66
24
20
16
Men
12
Total
8
Women
4
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
a) Prior to 1992, only those aged 65 and over were eligible for an AFP pension. In 1993, eligibility
was extended also to those aged 64 and in 1997, this age level was further lowered to 63. Since
1998, the AFP scheme covers people in the age group 62-66.
Source: OECD estimates based on data from the Rikstrygdeverket.
The introduction of the AFP-scheme is a major explanation for the drop in
the labour market participation among older workers in the past decade. In fact,
participation rates for those aged 62-66 declined from 48% in 1985 to 39% in
2000. The decline in this age group was substantially stronger among men than
among women. While participation rates between 1985 and 2000 for men fell
by 15 percentage points from 59% to 44%, women’s participation rate fell by
only 5 percentage points from 39% to 34%. Estimations by the National
Insurance Administration indicate that the AFP-scheme actually reduced the
expected age of retirement for those aged 60 and over by 8½ months between
1995 and 2001.
Brinch, Hernœs and Strøm (2001) studied the impact on labour force
participation of abolishing the AFP-scheme. The main conclusion of their
simulation is that if the AFP-scheme had been abolished at the end of 1999, the
overall labour force participation for the population aged 16-74 would be
1.8 percentage points higher in 2005 or, more strikingly, 10.3 percentage points
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72 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
higher for the age group 62-74. Another study by Hernœs and Strøm (2000)
investigated the effect of taxing AFP pensions as labour earnings instead of as
pensions. They find a substantial decline in immediate and delayed retirement
but also a significant shift towards full-time work among men. In contrast,
women’s labour supply is hardly affected. Thus, the empirical evidence points
to substantial negative effects on labour supply induced by the AFP-scheme.
B.
Sickness and disability pensions
As in several other OECD countries, disability benefits are sometimes used as
a channel to exit the labour market. For example, older workers without a severe
disability may be able to obtain disability benefits for labour market reasons,
i.e. when it is considered that they have only a low chance of finding a new job, or
because medical controls are not very strict. Partial benefits may also be available
for relatively minor disabilities. In many countries, workers on a disability benefit
can subsequently transfer to the old-age pension, which is usually more generous,
once they reach the official retirement age. Moreover, in some countries, the period
on the benefit is counted as adding to an individual’s insurance contribution record
for the purpose of calculating the amount of the old-age pension. In a number of
countries disability pension has accounted for a considerable proportion of early
exits from the labour force (Casey et al., 2003).
From long-term sickness to disability pension
Receipt of a disability pension in Norway usually follows one year of sick
leave. Depending on the person’s age, a longer period on sickness benefits
could be followed by medical rehabilitation or a transfer to the public
employment service for vocational rehabilitation if that is deemed necessary.
To be eligible for a sickness benefit, the person is required to have an income
history of four weeks (prior to 2004 the requirement was 14 days). Further, after
three days of consecutive sick leave, a doctor’s certificate is needed and, for periods
lasting longer than eight weeks, a second doctor’s certificate is needed. For sick
leave lasting longer than twelve weeks, the national insurance authorities decide on
the right to further sick leave or if special measures such as medical treatment are
required. Benefits for employees equal 100% of a salary up to 6 G and are paid
from the first day of sickness for a period of up to 260 working days (52 weeks).
The employer pays the benefit for the first 16 calendar days and, thereafter, the
national insurance scheme. Self-employed persons get sickness benefits
corresponding to 65% of their total income from the previous year from the 17th day
of sickness for a period of up to 248 days.
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Since the mid-1990s, there has been a steady increase in the number of
long-term sick in Norway (Figure 3.8). This increase together with the rise in
the number of disability benefit claimants is at odds with long-term trends in the
health status of the Norwegian population and not well understood.
However, one explanation for this increase could be growing labour
shortages. When labour is scarce, “marginalised” workers who are more prone
to be absent, e.g. because of poor health or social problems, are offered jobs,
which may increase the sickness absence further. Second, an active labour
market policy may include efforts to mitigate marginalisation and temporary as
well as permanent exclusion from the labour force. Relevant measures involve
labour market training and assistance in finding a job. The policy is aimed at
those who become unemployed as well as those who have not succeeded in
establishing themselves in the labour market. If some of these individuals are
more prone to absence for health or other reasons, increasing absence rates may
be an adverse side effect of active labour market policy (Askildsen, Bratberg
and Øivind, 2002). A third potential reason is that working conditions may have
worsened – especially in municipalities, which are responsible for elderly care
and teaching. Finally, it should also be remembered that the route to a disability
pension usually goes through the sickness insurance. Thus, the sickness
insurance system is becoming a major exit path for older workers in Norway.
Absence because of sickness has a significant impact on labour supply,
especially in terms of hours worked but also in terms of participation rates –
especially for older workers since it often leads to a disability pension. On
average, around 1.5 weeks of full-time work per year and per person (seven
working days) are lost because of sickness. However, the number of days lost
varies significantly across gender and age groups (Figure 3.9).
There is a clear pattern between age and days on sick leave, on the one
hand, and gender and days on sick leave, on the other hand. In general, women
are more absent than men are and older people more absent than younger – at
least up to the age of 67, when suddenly the trend is broken. For people aged 67
and older, sickness absence goes down to figures that are lower compared to all
other age groups. One possible explanation for this may be that only healthy
people continue to work after the age of 67.
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74 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
a
Figure 3.8.
Long-term sickness in Norway, 1992-2001
In thousands
30 000
28 000
26 000
24 000
22 000
20 000
18 000
16 000
14 000
12 000
10 000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
a) Long-term sickness is defined as sick days paid by the national insurance scheme, i.e. sick days
following the period paid by the employer. Employers currently pay for the first 16 days of
sickness absence, up from 14 days prior to April 1998. From 1 January 2000, the data also
includes government employees.
Source: Trygdestatistisk årbok 2002.
Figure 3.9.
a
Lost working time in Norway because of sickness, 2002
As a percentage of total working time in each age group
Men
Women
14
12
10
8
6
4
2
0
-1
16
9
20
4
-2
9
-2
25
-3
30
4
35
9
-3
-4
40
4
45
9
-4
4
-5
50
-5
55
9
4
-6
60
-6
65
6
67
68
69
a) The sickness absence rate shows the number of full-time equivalent work days lost. Both
part-time/full-time work and partial/full sickness leave are taken into account. Further, the data
only cover sickness absence certified by a doctor, which underestimates the total sick days by
10 to 15%. Self-certified sickness absence is only asked in a survey of Norwegian firms and
cannot be broken down into age-groups.
Source: Statistics Norway and National Insurance Administration (RTV).
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Norway’s disability rate is among the highest in OECD
As discussed earlier, Norway has a relatively high share of older people who
report illness or disability as the reason for being inactive compared with most other
OECD countries (Figure 3.10). Few alternatives to withdraw before the official
retirement age compared to other countries and a rigid old-age pension system are
probably two important reasons. Moreover, relatively generous benefits levels
(including employer top-ups) for sickness may also be a factor.
Figure 3.10. Inactivity because of illness or disability
in selected OECD countries, 2000
As a percentage of population in each age group
Men 55-59
Men 50-54
0
5
10 15 20 25 30 35
0
5
10 15 20 25 30 35
IRL
ESP
BEL
LUX
CZE
USA
CHE
PRT
ICE
ITA
DEU
HUN
GRC
SVK
AUT
FRA
0
5
0
5
10 15 20 25 30 35
10 15 20 25 30 35
Women 60-64
NOR
NLD
UK
SWE
DNK
FIN
ICE
USA
LUX
PRT
CZE
BEL
ESP
CHE
FRA
DEU
HUN
ITA
IRL
AUT
GRC
SVK
NOR
NLD
DNK
UK
SWE
HUN
CZE
FIN
USA
PRT
BEL
LUX
ESP
FRA
DEU
AUT
CHE
ITA
ICE
IRL
GRC
SVK
5
10 15 20 25 30 35
FIN
NOR
UK
SWE
DNK
NLD
Women 55-59
Women 50-54
0
Men 60-64
FIN
UK
NLD
NOR
CZE
LUX
SWE
USA
DNK
IRL
HUN
ESP
FRA
BEL
DEU
PRT
CHE
ITA
GRC
AUT
ICE
SVK
FIN
UK
LUX
DNK
NOR
HUN
NLD
CZE
USA
SWE
IRL
BEL
ESP
FRA
DEU
PRT
GRC
ITA
ICE
CHE
AUT
SVK
NOR
SWE
FIN
DNK
NLD
ICE
PRT
UK
USA
ESP
ITA
CZE
LUX
IRL
HUN
CHE
DEU
GRC
FRA
BEL
AUT
SVK
0
5
Source: European Labour Force Survey.
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10 15 20 25 30 35
76 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
On the other hand, there is some evidence across countries that relatively
easy access to early retirement schemes goes hand-in-hand with relatively large
numbers of older workers on disability benefits. The end result is an early-exit
culture, which increases the burden on both the retirement and disability
schemes, because it makes it easier for employers to suggest to those of their
employees who are about to lose their job to request a disability benefit or an
early retirement benefit.
In Norway, disability pension benefits, like old-age pension benefits,
consist of a basic pension, a supplementary pension and/or a special
supplement. The benefit is also calculated in the same way as the old-age
pension benefit. The level of the supplementary pension depends on the number
of years with accrued pension rights and the annual pension points obtained. For
a full disability pension, 40 years of contributions are required. However, to
calculate a person’s disability pension, future insurance periods and future
pension points are estimated based on historical working record. Until the early
1990s, labour market conditions were a factor in the disability assessment.
However, at present the ability to work must be permanently reduced by at least
50% to qualify for a disability pension. Persons born disabled or having become
disabled before reaching the age of 26 are credited with a minimum pension.
Figure 3.11.
Disability pension claimants in Norway, 2001
As a percentage of the population in each age group
Men
55
Women
Total
50
45
40
35
30
25
20
15
10
5
0
25-49
50-54
55-59
60-64
65+
Source: Norwegian Ministry of Labour.
The disability rate is also closely correlated to age, much more so than
sickness absence (Figure 3.11). While 5% in the age group 25-49 is receiving a
disability pension, the same figure goes up to 15% for the age group 50-54 and
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then increases further by age. In the age group 65-67, almost half the population
receives a disability pension.
As a result of the increase in long-term sickness, many people currently on
long-term sickness will transfer into the disability system. This will certainly
raise the number of disability pensioners substantially in the near future. A
major problem associated with the present disability pension scheme is the
extremely low turnover rate, i.e. the outflow from disability pension to
employment. The transfer from disability excluding deaths is, in fact, almost
negligible except for people transferring to an old-age pension.
C.
Few older people on unemployment benefits
In some countries, unemployment benefits serve as a pathway out of the
labour market.14 As was shown in Chapter 2, unemployment rates have
remained low in Norway – especially so for older workers. Nevertheless, some
features of Norway’s unemployment benefits may be creating disincentives for
older workers who lose their job to find a new job. In general, unemployment
benefits can be received for up to 104 weeks (reduced from 156 weeks for new
applicants after 1 January 2003). However, persons turning 64 are entitled to an
unemployment benefit until they reach the standard retirement age at 67 at the
same time as requirements for active job search are lowered. Thus, it is possible
to receive unemployment benefits from the age of 62 up to retirement,
i.e. 104 weeks of unemployment benefits prior to the age of 64. Given that
unemployment is very low for older people, the exemption from active job
search from the age of 64 should be reconsidered.
Moreover, for employees in the state sector, a special long-duration
unemployment benefit is available. This benefit is available to persons being
laid off because of downsizing and can last from the age of 55 to the official
pension age if no other job is available. From 1 July 2002, this benefit has to be
14.
In Finland, for example, there is a programme called the “unemployment
pension”, which can be received from the age of 60. However, prior to this
scheme, the so called “tunnel to an unemployment pension” exists. The latter
programme extends the benefit period for persons 55 years or older up to the age
of 60 from when they do not have to actively search for a new job, i.e. they
become inactive. The possibility to receive unemployment benefits without
being obliged to look for a job was offered until recently to long-term
unemployed persons aged 50 and over in Belgium.
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78 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
paid by the authority or the public company dismissing the employee. This very
generous rule – exclusively for persons employed in the state sector – should be
re-considered and aligned with the general rules for unemployment benefits.
Further, all persons receiving unemployment benefits, including older
people, are obliged to accept job offers or training offers. More generally,
job-search requirements and demands of occupational and geographical
mobility are less strict, in practice, for persons above 60 years of age. Thus, the
unemployment insurance could actually work as an exit route, although few
seem to use it as such. One reason may be that there is less stigma attached to
retiring either on AFP or disability benefits.
D.
Combating early retirement in Norway
Although Norway has the second highest employment rates for older
workers in the OECD area, labour supply has become a key constraint for
achieving faster economic growth. Therefore, the government and the social
partners are encouraging people on different benefits such as disability, AFP
and sickness to return to work or at least to supply some work. In addition to
reforming the disability pension scheme and the old-age public pension system,
the government and the social partners also signed (in October 2001) an
agreement aiming to achieve a more inclusive workplace to the benefit of
individuals, employers and society. The agreement runs for four years and the
core aim is to reduce the sickness absence, the inflow to disability but also to
take greater advantage of older workers and persons with limited functional
capacity. This agreement will be discussed in detail in the next chapter. But
while this agreement takes several steps in the right direction, there are a
number of areas where further reforms are required to combat early retirement.
Strengthening financial incentives to remain longer in work
First of all, to stop the fall in effective retirement ages, it is of utmost
importance to strengthen the link between contributions and pension
entitlements. Typically, both the AFP-scheme and the disability pension provide
fairly generous benefit levels because they assess pension years and pension
points as if the individual retired at 67. Thus, a person on a full disability
pension or AFP will get the same pension as a person who continues working
up to the official retirement age. Furthermore, social security contribution rates
are lower for pensioners. Altogether, these systems strongly encourage
retirement before the age of 67.
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Moreover, the disincentive for employers to use the AFP scheme is, in
terms of financial burden, quite low. Employers in the private sector bear only
the full burden for the age group 62-63 and not more than 60% for the age
group 64-66, as the state subsidises the remaining part. In the public sector, the
government and municipalities bear the full cost for their respective employees
aged 62-66. Thus, the AFP scheme is an easy way for firms and the public
sector to lay off older workers when downsizing while escaping bad press.
Since the late 1980s, the scheme has increased in magnitude as a result
partly of lowered age criteria and partly by a broadening of the scheme.
However, the introduction of the AFP may also have increased the pressure on
the disability scheme from those not covered by the AFP and demands are now
increasing from other groups in the labour market not yet covered. Thus, there
is a large risk that early retirement will continue to grow in magnitude over the
coming years if no radical changes are imposed. Moreover, since the
AFP scheme only covers 60% of the labour market it could also be argued that
subsidising it is unfair to those not eligible. On the other hand, this may also be
an indirect reason for the loose eligibility conditions for obtaining a disability
pension.
Reforming the AFP scheme
Since the AFP scheme is based on collective agreements between the
social partners, it is not easy to abolish. However, reducing employers’ social
security contributions for people aged 62 and above (see Chapter 4) while at the
same time as the use of the AFP scheme is encouraged seems somewhat
contradictory. A more appropriate strategy would be to: i) limit or abolish the
state subsidy for financing AFP pensions to employers; ii) apply the same
income tax rate and social security contribution to AFP recipients as to persons
working and; iii) introduce an actuarial reduction in old-age pensions for
recipients of AFP pensions. Changing these rules would not interfere with the
collective agreements, but would definitely reduce the incentives for both
employers and employees to use it as an exit route.
Reforming the disability pension scheme
To reduce the inflow to disability, the government has proposed a reform
of the disability pension scheme. The proposal identifies two categories of
disability pensioners: i) those who are considered to be permanently disabled;
and ii) those whose future working capacity is uncertain. In other words, the
scheme will be divided into one permanent disability pension and one
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80 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
temporary disability benefit. The latter category will be granted a time-limited
disability benefit, lasting one to four years. After this period, the benefit will be
reassessed to consider whether the person is capable of returning to work or not.
This recognises that not all people with long-term health related problems
should be assessed as permanently disabled.
The proposed change in the disability scheme is an important initiative
because it is the major withdrawal route out of the labour market for older
people. In fact, 30% of the population above 55 years are recipients of this
benefit and more than 70% of the total number of recipients is above 50 years.
Thus, taking measures to reverse the trend is very important. However, in
addition to these proposed changes, changes in eligibility rules should also be
considered. Hence, introducing temporary disability benefits without
strengthening eligibility criteria will probably not make a large difference for
older workers. Moreover, the close connection between old-age pensions and
disability pensions should be reviewed since this relationship sends out wrong
signals.
Thus, the following features of the current system of sickness benefits and
disability pensions should also be re-considered:
i) Sickness benefits amount to – in general – 100% of the salary up to 6 G
(without any waiting period), resulting in low or no incentives to work. Benefits
should be made less generous, e.g. by introducing a waiting period and by
lowering benefits after, say, a three or six-month sickness period – and a
checking or a monitoring system should be introduced. Moreover, sickness
benefits are significantly higher than disability benefits, which increase
incentives to remain on sickness benefits;
ii) Sickness benefits are relatively easy to access, since only the claimant’s
own doctor’s approval is required. Therefore, additional medical assessments by
a doctor from the sickness insurance (or another doctor than the person’s
treating doctor) should be introduced;
iii) Disability pensions should be easier to review and not be granted
permanently;
iv) Both sickness and disability benefits are regarded as income and thus
accrue pension rights at the same rate as labour income, which further reduces
incentives to return to work, this should be reviewed;
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v) Disability benefits are taxed on a lower rate than income from work,
which skews the incentives further. This could be changed by, for example,
taxing sickness benefits and disability benefits in the same way, i.e. as labour
income; and
vi) The close connection between disability pensions and old-age pensions
should be relaxed – instead disability should be integrated with sickness
insurance.
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CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
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Chapter 4
ENCOURAGING EMPLOYERS TO RETAIN AND HIRE
OLDER PEOPLE
Factors influencing employers’ decisions to hire or retain workers are the
other side of the equation explaining lower employment rates for older people
than for prime-age people. In general, employers’ hiring and firing decisions
with respect to older people depend on factors such as their perceptions about
the adaptability and productivity of older workers, and the wages they have to
pay for them relative to younger workers. These decisions will also be affected
by government intervention in the form of targeted wage subsidies and other
active labour market policies, employment protection legislation and other
labour laws. Therefore, this chapter examines how attitudes to older people and
institutional settings might affect employers’ practices. It also looks at measures
that have been taken to influence employers’ behaviour and improve labour
market outcomes for older people.
1.
Employment policies and older workers
There is no single measure that would dramatically increase retention or
hiring rates for older workers. Moreover, some of the barriers preventing firms
from retaining or hiring older workers may be found in employer practices
concerning human resource management and attitudes towards older people. As
such, the ability of government measures to change these practices is limited
and changes will necessarily take time.
A.
Attitudes towards older people
Employers’ decisions concerning the retention, hiring and training of older
workers will be influenced by their general attitudes about the competency,
productivity and adaptability of workers as they age. Although difficult to
measure, there is a widespread belief that ageism is prevalent in the workplace.
This may have been reinforced by a number of recent cases where companies
have targeted older workers when laying off workers (see Box 4.1).
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84 – CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
In 1995, a research programme on working life and ageing was introduced.
The main reason for introducing the programme was the decrease in
participation rates among older workers in the previous 10-15 years. The
research programme consisted of more than twenty projects and ended in
2001.15 One general outcome from this programme was that employers’
attitudes are complex in the sense that they ascribe both positive and negative
characteristics to older workers. In this context, younger workers are often
preferred when new technology and work routines are introduced but older
workers are preferred when customers consist of older persons, and when
abilities such as loyalty, high experience and good management are important.
Box 4.1. Laying off older workers in Norway: the case of Norsk Hydro
In 2002, over 5 000 employees were laid off at Norsk Hydro. The cost of these
layoffs amounted to between a half to two-and-a half million Norwegian Kronor per
employee. The reason for these large amounts was that the company did not follow
the normal rules based on seniority and instead used packages and early
retirement deals for those who “voluntarily” resigned. Workers 58 years and older
were the most expensive ones to lay off, since they receive 70% of their former
salary. The company’s arguments for not following the LIFO (last-in/first-out) rule
was that it wanted a renewal of staff instead of only keeping employees with long
seniority, i.e. older workers.
Source: Økonomisk Rapport 16/2002.
Further, top-level managers are, in general, more positive to older people
than mid-level managers. However, most hiring is done by mid-level managers,
which therefore may bias recruitment in favour of younger workers more than
might be expected from reported attitudes of employers. Thus, it is very
important that long-term measures are taken in order to change attitudes among
both management and colleagues at the workplace. As an example of this, the
National Program on Ageing Workers in Finland has been quite successful in
influencing general attitudes towards ageing and older workers, partly by
raising the awareness through media and directly at the work places (Finnish
Ministry of Social Affairs and Health, 2002; OECD, 2004 forthcoming).
15.
The outcome from this project is summarised in Solem (2002).
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CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
B.
– 85
The presence of age discrimination
The negative attitude of employers vis-à-vis older workers noted above
may also reflect a certain degree of age discrimination and could pose a barrier
to employment opportunities for older people. For example, age limits imposed
by employers on job vacancies may prevent some older job seekers from
finding jobs. In some OECD countries, this practice has been banned. Currently,
Norway has no legislation that particularly forbids age discrimination However,
the government has decided to adopt the relevant provisions of the EU directive
2000/78/EC concerning anti-discrimination legislation and a bill has been
submitted to Parliament so that the directive can be implemented in line with
the European Union’s timetable.16
A number of studies have indicated that older people are subject to
discrimination in the workplace. For example, older workers are often given
less important jobs when firms invest in new technologies although they are
well able to cope with the challenges of new technologies (Lahn et al., 1999).
Another example is given in the report by the FAFO Institute for Applied
Science (2002) on early retirement among employees in the private sector
(Table 4.1). This study suggests that more than one-quarter of persons on AFP
in fact wanted to go on working, but were directly or indirectly forced to retire
because of technological change, downsizing or reorganization of the firm
(Midtsundstad, 2002).
Table 4.1.
a
Satisfaction with timing of early retirement in Norway, 2001
Percentages
Wanted to Retired when
retire earlier
wanted
Wanted to Do not know
retire later
White-collar / highly educated
29.8
33.7
30.1
6.5
Blue-collar
37.2
24.9
26.5
11.4
a) Former private sector employees only.
Source: FAFO Institute for Applied Science (2002).
16.
EU countries have until the end of 2006 to comply with the directive in terms of
prohibiting discrimination on the basis of age.
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86 – CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
The effectiveness of legislation against age discrimination is not clear,
however, and legislation alone will not be sufficient to change attitudes and
practices. Nevertheless, it sends out an important message that discrimination
should not be tolerated. Therefore, measures to combat age discrimination in all
aspects of the recruitment and retention of older workers should be developed.
At the very least, age restrictions in job advertisements should be prohibited.
Legislation to prohibit age discrimination could be preceded by an information
campaign to raise awareness of the issues amongst employers. For example, the
United Kingdom government has sought to change the climate of opinion by
issuing a voluntary “Code of Practice for age diversity in employment”, which
seeks to reduce age discrimination by employers (OECD, 2000b).
2.
Labour costs
One factor driving employer decisions with respect to employment of older
workers may be labour costs. Employers generally face two large items of
expenditures for their employees: wages and social security contributions.
Wages are usually decided through negotiations between social partners; while
the social security contribution rate is set by the government.
A.
The impact of high relative wages for older workers
In many countries, wages tend to grow with age. This may reflect
productivity gains associated with experience but may also be the result of an
implicit contract between the employer and the employee. For example, wages
may rise with seniority in order to enhance the employee’s commitment to the
firm. Beyond a certain age, however, the wage would exceed the employee’s
productivity, which would explain the employer’s incentive to encourage early
retirement.
In fact, across OECD countries, there is also a negative relationship
between effective retirement ages and relative wages for older workers
(Figure 4.1). Countries with high relative wages for older workers tend to have
lower effective retirement ages than countries with less prominent seniority
wage systems or countries where seniority is of less importance after a certain
age. The correlation coefficient between relative wages for older workers and
effective retirement ages is -0.60 for men and -0.75 for women, indicating that
seniority wage systems may have stronger negative impacts on women’s labour
force participation than on men’s.
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CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
Figure 4.1.
– 87
a
Relative wages for older workers and effective retirement age
Men
Women
75
70
70
Effective retirement age
75
Norway
65
r = - 0.602
60
Norway
65
r = - 0.746
60
55
55
50
50
50
100
150
200
250
50
100
150
200
250
Relative wage
a) The relative wage for older workers is defined as the ratio between the salary in the age
group 55-59 and the 25-29 group. For a definition of the effective retirement age, see Chapter 3.
Because of data limitations the following countries were used: Australia, Belgium, the Czech
Republic, Finland, France, Germany, Hungary, Italy, Japan, Korea, the Netherlands, Norway,
Sweden, the United Kingdom (for men only) and the United States.
Source: OECD database on earnings.
However, compared with other OECD countries, age-earnings profiles in
Norway are relatively flat, both for men and women (Figure 4.2). For example,
age-earnings profiles for both men and women are steeper in the United States
and Germany. In general, women’s profiles are flatter than for men, and hence,
the cost disadvantage of older women should be smaller than that for older men
(i.e. assuming the age-productivity development is the same for both sexes).
These comparisons suggest that seniority wages not corresponding to changes
in productivity may be less of a problem in Norway than elsewhere. If true, this
could account for higher employment rates for older people in Norway than in
most other countries.
In Norway, wages for some categories of workers follow wage plans
mainly based on tenure in the firm. This is true both in the state, in the
municipalities and in the private sector. In the state sector, about half of the
employees follow a wage plan but this share is probably higher in the
municipalities. In general, however, the seniority-based wage increase ceases
after 10 years of tenure. Overall, the wage structure in Norway is very
compressed, both between age groups and between different occupations.
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88 – CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
a
Figure 4.2.
Age-earnings profiles in selected countries
Earnings of 25-29 year olds = 100
Men
Women
150
150
140
140
130
130
120
120
110
110
100
25-29
30-34
35-39
40-44
45-49
50-54
55-59
Norway
Finland
Sweden
Germany
US
UK
60-64
100
25-29
30-34
35-39
40-44
Norway
Germany
45-49
Finland
US
50-54
55-59
60-64
Sweden
UK
a) In the Norwegian data, the age group 60-64 is 60 years and over.
Source: US Current Population Survey; Blöndal, Field and Girouard (2002), Statistics Norway.
B.
Social security contributions for older workers
Age-earnings profiles alone, however, do not give the whole picture of
relative costs of older workers. Another large component of labour costs in most
countries is social security contributions. For most countries, the contribution
rate is a fixed percentage of the employee’s salary and varies dramatically
between countries (Table 4.2). When this is combined with a seniority wage
system, it raises the costs for hiring and retaining older workers further.17
The contribution rate in Norway of under 13% is significantly lower than
in many other OECD countries, especially in Europe. This would, as well as the
absence of a steep seniority-wage system, work in favour of older workers’
employment rates being relatively high in Norway since employers’
disincentives to retain or hire older workers would be much less pronounced in
comparison to younger workers.
17.
Of course, if the social security contribution rate is a fixed percentage of an
employee’s salary, the absolute gap in labour costs between older and younger
workers will be higher than the gap in wage costs alone but the relative gap will
be the same.
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CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
Table 4.2.
– 89
a
Employers’ social security contribution rate in OECD countries, 2001
As a percentage of gross wage
France
Czech R epublic
Belgium
Hungary
Italy
Sweden
Spain
Greece
Finland
Portugal
Turkey
Austria
Germ any
Poland
Mexico
Luxem bourg
Norw ay
Netherlands
Ireland
United Kingdom
Switzerland
Japan
Korea
United States
Canada
Iceland
Australia
Denm ark
New Zealand
Slovak Republic
41.3
35.0
34.6
34.0
33.9
32.8
30.6
28.0
25.0
23.8
22.5
21.7
20.4
20.4
14.2
13.8
12.8
12.2
12.0
11.9
11.6
10.5
8.9
7.7
7.5
4.8
0
0
0
0
a) Based on an employee earning 100% of the average production worker wage.
Source: OECD.
3.
Employment protection — obstacle or security?
Another factor influencing firms’ hiring and retention decisions is the
strictness of employment protection legislation. The relationship between
employment protection legislation and employment and unemployment of older
workers is complex. In general, stricter legislation tends to reduce labour
turnover but its impact on employment levels is less certain (OECD, 1999).
Restrictive employment legislation may protect workers who already have a job
(insiders), but at the expense of those without a job (outsiders). Older workers
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90 – CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
are more likely than younger workers to be “insiders” since, on average, they
have longer average job tenure. However, older workers may pass from the
former to the latter category once they pass a certain age where their employer
no longer believes that their marginal productivity is equal to their labour costs,
and wants to lay them off.
A.
The role of employment protection legislation
The OECD has ranked countries according to the strictness of employment
protection governing individual dismissals based on a combination of several
different factors such as the notice period involved, the amount of severance
pay, the definition of unfair dismissals, etc. (Table 4.3). Altogether, Norway
was ranked 16th among OECD countries in terms of strictness of its employment
protection. However, employment protection for older workers in Norway may
be even stricter than these comparisons suggest.
In general, persons in Norway cannot be dismissed just because they reach
the official retirement age of 67. The Norwegian Working Environment Act
decides that after an employee reaches 66 years of age, but not later than
six months before the employee reaches retirement age, the employer may
inquire in writing whether the employee wishes to retire from his post upon
reaching retirement age. A reply to this inquiry must be returned in writing not
less than three months before the employee reaches the retirement age. Provided
that this is explicitly stated in the letter, protection against dismissal lapses if no
reply is received within the stated time limit.
The periods of notice may be longer for elderly workers
The Norwegian Working Environment Act does not directly protect jobs
for workers with long tenure, but the courts have in several cases considered
long tenure as objectively justified when it comes to the selection of which
workers are to be dismissed. The importance of long tenure in this context is
also regulated in different collective agreements.
Further, the Working Environment Act decides that in the case of
employees who, when notice is given, have been employed by the same firm for
at least five consecutive years or a minimum of ten years, at least two or
three months notice shall be given by either party. If an employee is dismissed
after at least ten consecutive years with the same employer, the minimum period
of notice varies by age as follows: at least four months after the age of 50; at
least five months after the age of 55; and at least six months after the age of 60.
In these cases, the employee may not terminate the employment contract with
less than three months notice.
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CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
Table 4.3.
– 91
Strictness of employment protection for regular employment
in OECD countries in late 1990s
Country ranking
United states
United Kingdom
Canada
Australia
Switzerland
Belgium
Denmark
Ireland
New Zealand
Hungary
Finland
Poland
Mexico
France
Norway
Greece
Austria
Spain
Turkey
Japan
Germany
Sweden
Italy
Czech Republic
Netherlands
Korea
Portugal
Overall strictness of protection
against individual dismissals
0.2
0.8
0.9
1.0
1.2
1.5
1.6
1.6
1.7
2.1
2.1
2.2
2.3
2.3
2.4
2.4
2.6
2.6
2.6
2.7
2.8
2.8
2.8
2.8
3.1
3.2
4.3
Source: OECD, 1999.
Thus, in Norway, employment protection for older workers is quite
strict, since they remain protected even after the age of 67. Moreover, rights
and periods of notice increase both with age and tenure, which may help to
explain the situation of relatively high retention rates among older workers
in Norway. But it may also be one of the reasons for why employers are
keen to “encourage” older workers to withdraw after age 62 via either AFP
or disability benefits. Moreover, strict employment protection makes it less
likely that firms will want to hire older workers, especially after the ages
of 62 or 67.
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92 – CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
4.
Subsidising labour costs for older workers
One way of facilitating access to the labour market for older people is by
making it more attractive for employers to hire and retain them. This can be
achieved by providing employers with subsidies. These subsidies can take
various forms, but two common methods are through a direct wage subsidy or
through a reduction in employer’s social security contribution. Indeed, a number
of OECD countries have implemented such schemes (Box 4.2).
Box 4.2. Employment subsidy schemes for older workers
in selected OECD countries
Austria: Employer’s unemployment insurance contributions are halved for
hiring workers between 50 and 55 years of age and eliminated for those over the
age of 55. This subsidy is one part of Austria’s Bonus-Malus system, where the
“malus” is a penalty payment for dismissing a worker over the age of 50. It is
staggered according to the age of the dismissed worker.
Belgium: Employers hiring long-term unemployed people aged 45 and over
are partially exempted from paying their social security contributions during
five years. In addition, as these newly hired workers are entitled to an employment
subsidy under the programme “Activa”, employers may reduce their wages by up to
EUR 500 per month.
Denmark: Under the Service Jobs Scheme, municipalities hiring individuals
who are more than 48 years old and have been unemployed for at least 18 months
are paid an indefinite wage subsidy of DKR 100 000 per year.
France: Companies hiring an unemployed person aged 50 or above can take
advantage of the “Contract to promote employment” (Contrat Initiative Emploi). The
subsidy consists of a total reduction in employer’s social security contributions at
the level of the minimum wage, i.e. amounting to around 40% of gross minimum
wages. The subsidy is normally paid for 24 months for a permanent employment
contract and indefinitely in the case of a person aged 50-64 who is disabled or has
been either unemployed or on social assistance for more than one year.
Germany: There is an “integration” subsidy (Eingliederungszuschüsse)
available for hiring long-term unemployed persons aged 55 and over. The subsidy
corresponds to 50% of wages.
Sweden: The Special Employment Subsidies programme encourages
employers to recruit persons above 57 years who have been unemployed for at
least two years. The subsidy is paid to employers during a maximum period of
24 months and up to 75% of the wage costs to a maximum of SEK 525 per day,
i.e. SEK 10 500 per month (roughly half of the average salary for a full-time worker).
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CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
A.
– 93
Wage subsidies to employers in Norway
In Norway, employers can receive a wage subsidy for hiring an
unemployed person. The subsidy is targeted at groups with a high risk of
long-term unemployment such as: immigrants, persons over 60 years, disabled
and youths. The purpose of the measure is to motivate employers to hire these
persons for ordinary jobs with normal pay and working conditions. The duration
and the amount of the subsidy vary according to the person’s capacity and their
need for support (Table 4.4). Thus, Norwegian wage subsidies are not, as in
several other countries, targeted specifically at older people in general.
Table 4.4.
Wage subsidies for hiring the unemployed in Norway, 1998
Maximum subsidy
as % of wage
Long-term unemployed
Youths < 25 years
Older (60+) and Immigrants
Disabled
Maximum length Maximum amount
in months
per month in NOK
50
50
75
40
75
40
6
9,000
12
6
6
6
18
9,000
12,000
12,000
12,000
12,000
Source: Centre for Economic Analysis (2001).
An evaluation of this wage subsidy scheme shows that 54% of all those hired
under the scheme still had a job one-and-a-half years after the end of the subsidy
period (Centre for Economic Analysis, 2001). Of the participants in the age group 60
and over, 40% responded that the subsidy was of great importance for obtaining their
present job, while another 40% responded that the subsidy was of no importance for
getting their present job. In October 2002, only 34 persons out of 1296 (2.6%) on this
measure were older than 60 and only 119 persons (9.2%) were between 50 and
59 years. Thus, among the target groups for the subsidy, very few older workers
benefited from it compared to younger and prime-age people. In fact, whereas the
older people (50 and over) account for around 27% of all employed and almost 18%
of all registered unemployed, the corresponding figure of older people in this measure
was less than 12%.
B.
Reducing social security contributions
In July 2002, the Norwegian government introduced a new system that
reduces employer’s social security contributions for employees above the age
of 62 by 4 percentage points (i.e. a reduction from 12.8% to 8.8%). The
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94 – CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
reduction applies to all workers above 62 years of age – not only those recently
hired. The measure is therefore designed to enhance the incentives for
employers to both hire and retain older people. To date, it is too early to say
whether employment rates have improved as a consequence of this reduction.
However, if this measure produces the desired effects, the government is ready
to consider a further reduction of the contribution rate.
5.
Measures taken by social partners
Because of existing labour shortages, which could well increase in the near
future, employers and union organisations have also introduced several
measures to reverse the downward trend in effective retirement ages and to
reduce absence from work. Some of these measures are being used in
collaboration with the government, but it is the social partners that have the
responsibility to implement them.
A.
Achieving a more inclusive workplace
The tripartite agreement
In October 2001, the government and the social partners in Norway
entered into an agreement aiming to achieve a more inclusive workplace to the
benefit of individuals, employers and society. The agreement runs for four years
and ends in December 2005. The original parties that signed the agreement were
the Ministry of Labour and Government Administration, the Ministry of Social
Affairs and the major social partners. The core of the agreement is to reduce
sickness absence, the inflow to disability and to better utilise older workers and
persons with limited functional capacity (see Box 4.3).
The agreement is signed on a voluntary basis and in early 2003, around
85% of all central unions and employers organisations had signed it. In terms of
employees covered by the agreement, coverage is much lower. In late 2002, it
covered only 25% of all employees but by November 2003, this figure had
reached 48.4%. Moreover, the parties involved are convinced that this number
will increase further. The agreement was evaluated in the third quarter of 2003,
and it was found that sickness absence on average had stagnated in firms
covered by the agreement. There will be a final evaluation at the end of the
period, i.e. end 2005.
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CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
– 95
Box 4.3. The tripartite agreement on a more inclusive workplace
The agreement’s objectives are to:
•
Reduce sickness absence by 20% over the contractual period as
compared with its level in the second quarter of 2001;
•
Improve employment prospects for a greater number of employees with
limited functional capacity; and
•
Increase participation rates for older workers.
The social partners have the main responsibility to reach these objectives.
Nevertheless, the government plays both a supportive role as a provider of
economic incentives to those employers that make serious efforts to achieve the
stated objectives. However, the main philosophy of the agreement is based on the
assumption that employers and employees in individual workplaces will co-operate
closely in carrying out research into the reasons for absence and early retirement
and for developing appropriate solutions.
Measures to reach these goals: To reduce the sickness rate, earlier
interventions in combination with better methods to follow up persons with sickness
benefits are being introduced (e.g. workplace-related measures). Companies are
also introducing a “work-ability index” to measure the ability employees have in
spite of sickness. Further, the government has increased the reimbursement of
companies’ expenditures for purchasing health care services and rehabilitation. To
improve employment prospects of persons with limited work-capacity, the
government has introduced not only wage subsidies for employers who hire
disabled people but also a special subsidy for adapting workplaces to the needs of
disabled people. To improve the labour market prospects for older people, the
government introduced the programme “The National Initiative for Senior Workers”.
Moreover, to stimulate employers to retain and recruit older people, the social
security contributions paid by employers have been reduced by 4 percentage points
for persons over 62 years of age.
The government’s obligations: Every enterprise signing the agreement will be
recognized by the authorities as an “inclusive workplace enterprise” (IW-enterprise).
Every IW-enterprise will sign a contract with their local security office, which will
manage the arrangement. In addition to the measures discussed above, the
government will also supply a regular contact person at the social security office to
help companies to take necessary actions and to follow up employees on sick
leave. The health services in IW-enterprises will be given a special refund rate from
the National Health Service for efforts to bring employees on extended sick leave or
disability benefits back to work. The government will also assist companies through
better coordination of the public services (the Public Employment Services, the
National Insurance Authorities and the Labour Inspectorate). The National
Insurance Service has organised workplace centres in all of Norway’s 19 counties
to assist the IW enterprises.
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96 – CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
The employer’s obligations: Firms that enter into this agreement must commit
themselves to work systematically to meet the objectives. When an employee is
unable to continue her/his job due to sickness or bad health, the employer is
obliged, in collaboration with the authorities, to supply training so the person can be
qualified for another job in the company.
The employee’s obligations: The employee is obliged to inform the firm about
their own functional capacity when on sick leave, so that relevant measures can be
implemented as quickly as possible. The employee should also agree to have a
dialogue with the employer concerning changes in work tasks, participation in
training or other necessary measures to continue working. In general, the employee
should co-operate with the employer in adapting the workplace as required.
So far, only the first objective in the agreement has a quantitative target.
The lack of targets in the other objectives will not only make progress in
achieving these objectives hard to monitor but also difficult to evaluate. Thus, it
is important to develop quantitative targets for the other two objectives and, in
fact, this will be considered by the government during the current evaluation
process.
Achieving a reduction in sickness absence (i.e. the first objective) is of
crucial importance. However, in IW-enterprises employees have the right to
take sick leave without a doctor’s certificate for an extended period of eight
calendar days per period of sick absence with a total upper limit of 24 days per
year. The reason for introducing this rule is to place more responsibility on the
employee and the employer since the doctors often prescribe sickness
certificates for longer periods than what is usually necessary. At this stage, the
sickness rates have in fact stagnated in the IW-enterprises.
The National Initiative for Senior Workers
The third objective of the inclusive agreement is to promote better use of
older workers’ resources and competences in the workplace. This target is the
responsibility of the Centre for Senior Policy (a NGO) through their campaign to
combat early retirement among older workers. For this purpose, the centre, in cooperation with the social partners, developed the National Initiative for Senior
Workers to make individuals, companies and politicians aware of the advantages
of hiring and retaining workers over the age of 45. The centre is arranging
conferences for different levels of management staff, union representatives and
senior workers. It also runs information campaigns, creates networks of human
resource managers and produces handbooks and other material on how to build
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CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
– 97
up a senior policy in a company. The centre’s work is financed by funds from the
Norwegian Government and through its own activities.
B.
Encouraging older people to remain in work longer
By law, all workers in Norway above 60 years of age have the right to one
additional week of vacation per year. Clearly, this imposes an extra cost to
employers when hiring and retaining older people. Moreover, during the wage
negotiations in the state sector in 2002 possibilities to encourage persons
62 years or older to continue working instead of withdrawing on an AFP
pension were discussed. It was agreed that an economic incentive should be
given to postpone retirement. The outcome was to offer workers 62 years or
older who decided to remain in work the possibility to have one extra day off
per month with full wage or an additional pay increase of 10% (or a
combination of these two). However, it is up to the local employer to decide on
how to use these measures.
C.
Developments at the individual firm level
Partly as a result of the “tripartite agreement on a more inclusive
workplace” and increasing labour shortages, many steps have already been
taken at the firm level to better accommodate the needs of older workers. Some
companies have, for example, developed alternative careers for their older
workers, implying that they can continue working but with less demanding
tasks. Others have introduced time flexibility or reduced working hours with
compensation. One example of good practice in this area is the programme
introduced at the transport company Linjegods (Box 4.4).
Box 4.4. Good practice at the firm level in Norway:
the case of Linjegods
Background: The company faced a sickness absence rate above the national
average, which was very costly and lowered their overall service quality. Average
retirement age at the company is currently 58 years but in the context of competition
with other companies for scarce workers it sought to retain the competence of its older
workers longer. Therefore, the company faced two main challenges: i) how to reduce
sickness absence; and ii) how to retain people longer in work.
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98 – CHAPTER 4. ENCOURAGING EMPLOYERS TO RETAIN AND HIRE OLDER PEOPLE
Measures taken: In 2001, the company initiated a project where local linemanagers and elected representatives of the staff were encouraged to come up
with solutions to improve the work environment. Thus, ideas and solutions would
flow from employees to management instead of the opposite.
Outcomes: The project has resulted in a closer follow up of staff absent on
sick leave and increased co-operation with the corporate health service. The
company has also introduced job rotation when it is possible or desirable and
supplies different forms of health promotion activities. Further, the human resource
division now meets with employees when they turn 55 to discuss their needs and
desires and the possibilities of senior careers. A follow up discussion is held again
when they turn 57. From the age of 62, there is also a possibility for employees to
reduce their working time to 80% with 90% of their salary, but also to switch from
inconvenient working hours to standard hours with wage compensation. Finally, the
company has introduced an exit bonus payable to all employees who work up to the
ages of 65, 66 and 67 (corresponding to one, one-and-a half and two months
additional salary, respectively).
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 99
Chapter 5
STRENGTHENING EMPLOYABILITY
Employability can be defined as having the necessary skills and ability to
either remain in a job, to switch easily between jobs or to find a new job in the
case of job loss. More generally, it means ensuring that there is a good match
between the type of jobs on offer and the types of jobs that are being sought.
The degree of employability of each person depends crucially on his or her
personal characteristics: e.g. level of formal education, having up-to-date skills,
and relevant work experience and on the types of jobs available. It will also
depend on appropriate incentives being in place for job seekers to take up
available job opportunities. This chapter analyses older people’s employability
and how it could be enhanced in Norway.
1.
Education attainment and labour market status
A
A key to higher participation rates
As discussed in Chapter 2, labour force participation rates in Norway are
relatively high and stable up to the age of around 60. However, there is
considerable variation in these participation rates when measured by level of
education (Figure 5.1). Typically, for all age groups up to the age of 60,
participation rates are the lowest for the least educated and show a declining
trend between the ages of 50 and 60, where as they remain constant or increase
for the highest educated. After the age of 60, participation rates decrease for all
education levels but become twice as large for those with tertiary education
relative to those with less than a secondary education. Thus, the impact
education has on participation rates becomes even more marked as older people
age further. Moreover, while participation rates within each age and education
group are always lower for women than for men, these gaps decrease for
persons with a higher level of education.
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100 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Figure 5.1.
Participation rates in Norway by age and level of education, 2001
Percentages
Primary
Secondary
Univeristy
100
90
80
70
60
50
40
30
20
10
0
25-49
50-54
55-59
60-64
Men
65-69
25-49
50-54
55-59
60-64
65-69
Women
Source: Norwegian Labour Force Survey.
Low education – not a reason for unemployment in Norway
Often, employers lay off older workers under the assumption that they are
less productive than younger workers or lack relevant skills. Another reason
may be that when firms are downsizing, the willingness of older workers to
move to other regions or to find new jobs is lower compared with younger
workers. However, Norway contrasts with many other countries in the sense
that unemployment rates for older people are lower than for prime-aged workers
(see Chapter 2).
Usually, unemployment rates are also strongly linked with education levels
and more often so for older people. In Norway, however, there appears to be no
significant differences in unemployment rates by level of education for older
workers: unemployment rates in the age group 50-54 range from 2% for people
with primary education to 0.8% for those with a tertiary education; in the age
group 55-59, there is almost no variation around an unemployment rate of just
over 1%; and, in the age group 60-64, unemployment rates range from 0.5% for
those with primary education to 0.8% for those with a tertiary education. These
low figures are testimony to the tight labour market that currently exists in
Norway, but may also – at least partly – be an indication of the relatively less
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 101
generous unemployment benefits that exist for older workers compared with
other inactivity benefits. Thus, older people in Norway may prefer to withdraw
on other benefits such as the AFP or the disability pension scheme (see
Chapter 3).
B.
New skills – a way to strengthen employability
As noted above, participation rates are generally very high for older people
in Norway, but decrease considerably by education level. Hence, like in most
other countries, continuing efforts should be made to raise educational
attainment. However, formal education needs to be upgraded and
complemented by continuous training otherwise there is a risk that knowledge
may become obsolete.
Is there scope to improve older peoples’ level of education in Norway?
In Norway, around 30% of the prime-age population have a high level of
education and less than 9% have a low level of education, leaving the vast
majority (around 60%) with an intermediate level of education. For older
people, the corresponding proportions are 22%, 26% and more than 50%. In
fact, in comparison with other OECD countries, education levels in Norway are
relatively high, both for prime-age and older people (Figure 5.2). Furthermore,
the share of prime-age persons in the lowest education category is smaller than
in most other OECD countries while the share in the highest education category
is amongst the largest, which augers well for the future.
Indeed, there is likely to be a dramatic improvement in the average
education level of older workers in Norway over the next decades (Figure 5.3).
By 2025, the results of simple extrapolations suggest that only around 5% of all
older workers in Norway will lack an upper secondary education level and
almost 37% will have a tertiary education. This would place Norway at the top
of the country rankings in terms of older workers with at least an upper
secondary education. The gap in the proportion of older workers with tertiary
education between Norway and some other countries such as Sweden, Germany
and the United States would also be narrower. This rapid rise in average
educational attainment could be an important source of future gains in
productivity (Bassanini and Scarpetta, 2001) and should further improve
employment prospects for older workers.
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102 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Figure 5.2.
a
Education levels in OECD countries, 2000
Percentages of the population in each age and gender group
Men 25-49
Tertiary
Men 50-64
Upper secondary
Less than upper secondary
United States
Canada
Switzerland
Germany
Finland
Ireland
Norway
Sweden
New Zealand
Denmark
Netherlands
Australia
United Kingdom
Belgium
Luxembourg
Iceland
France
Korea
Austria
Hungary
Greece
Spain
Czech Rep.
Mexico
Poland
Slovak Rep.
Turkey
Italy
Portugal
Canada
Ireland
United States
Switzerland
Korea
Sweden
Belgium
Finland
Norway
Australia
Spain
New Zealand
Germany
United
France
Denmark
Netherlands
Luxembourg
Iceland
Greece
Mexico
Austria
Hungary
Czech Rep.
Slovak Rep.
Turkey
Italy
Poland
Portugal
0
20
40
60
80
0
100
Women 25-49
Tertiary
20
40
60
80
100
Women 50-64
Upper secondary
Less than upper secondary
Canada
United States
New Zealand
Sweden
Finland
Ireland
Australia
Norway
Denmark
Belgium
United Kingdom
France
Germany
Netherlands
Iceland
Hungary
Luxembourg
Poland
Switzerland
Spain
Czech Rep.
Slovak Rep.
Greece
Austria
Italy
Mexico
Portugal
Turkey
Korea
Canada
Ireland
Finland
United States
Sweden
Norway
Belgium
Australia
New Zealand
Spain
Denmark
France
Iceland
Korea
United Kingdom
Germany
Greece
Netherlands
Luxembourg
Switzerland
Mexico
Hungary
Austria
Poland
Portugal
Slovak Rep.
Italy
Czech Rep.
Turkey
0
20
40
60
80
100
0
20
40
60
80
100
a) Countries are ranked by the proportion of the population in each age and gender group who
have a tertiary level of education.
Source: OECD (2002b).
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
Figure 5.3.
– 103
Projected rise in education levels of older workers, 2000-2025
Share of labour force aged 50-64 by level of educational attainment (%)
Tertiary
100%
Upper secondary
5.3
11.3
11.7
12.0
20.8
21.0
Less than upper secondary
7.4
19.0
20.2
17.3
12.3
11.1
8.8
29.2
37.2
80%
58.0
54.9
45.8
52.0
60%
43.4
42.8
66.7
54.1
42.0
50.1
55.3
54.4
49.3
59.8
61.7
32.3
40%
36.9
20%
36.7
24.1
28.7
42.2
36.3
33.4
25.1
38.8
37.0
30.5
19.4
23.7
28.3
41.9
27.9
19.8
0%
2000 2025 2000 2025 2000 2025 2000 2025 2000 2025 2000 2025 2000 2025 2000 2025
Norway
Sweden
Denmark
Finland
UK
France
Germany
United States
Source: For 2000, OECD (2002b), Education at a Glance; for 2025, OECD estimates obtained by
applying the participation rates observed in 2000 by educational attainment, gender and 5-year age
group between the ages 50-64 to the corresponding population aged 25-39.
However, while formal education is important, changing job requirements
mean that individuals regularly have to acquire new skills and upgrade their
existing skills. Hence, vocational training and lifelong learning activities, in
general, are important. Adult learning and training can also play a fundamental
role in addressing the lack of formal education in the older working population.
It can significantly enhance the employability and productivity of older
workers, not to mention wages and firm profits (OECD, 2001c and 2001d).18
Moreover, there is a current shortage of skilled labour in Norway in
certain professions such as doctors, nurses, teachers (especially in science
and technology). As a result of population ageing, this shortage is projected
18.
Continuous education and training is also associated with various non-economic
benefits such as better health and personal satisfaction.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
104 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
to increase further in the future. In particular, large groups of nurses will
leave the labour market over the next ten years or so, and at the same time
the need for their services in the health and long-term care sectors will
increase significantly. Thus, one of the most important measures in the
immediate future will be to counteract the shortage of labour and bottlenecks
through occupational and labour market-oriented training in areas where
there is a shortage of skilled labour.
2.
Training of older workers
Firms are often reluctant to train older workers because it is more
efficient to concentrate training on younger workers since economic returns
are likely to be larger because of the longer payback time (OECD, 1999). At
the same time, OECD (2003b) shows that many older workers see little
benefit to themselves in investing their time and effort in training. However,
if Norway and other OECD countries wish to encourage older workers to
continue working longer, it is going to be important to change this
perception on the side of firms concerning the returns from investing in
training older workers. At the same time, it will be necessary to motivate
older workers and prime-age workers to invest more in training.
A.
Incidence of training declines with age
Currently, both in Norway and other OECD countries, the incidence of
training for older workers is always lower than the incidence for prime-age
workers (Figure 5.4). In Norway, the gap is about 13 percentage points, which
is somewhat larger than in some other OECD countries such as Canada and the
United States. Nevertheless, in Norway, around 40% of older workers received
job-related training in the previous year, which places Norway second behind
Denmark among those OECD countries for which comparable data is available.
The relatively high incidence of training among older workers in Norway can be
ascribed to several factors including the growing emphasis on training in
collective agreements and a number of government measures to encourage
greater participation in training.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
Figure 5.4.
– 105
Incidence of job-related training for workers by age in selected
a
OECD countries, 1994-98
50-64
25-49
50
50
40
40
30
30
20
20
10
10
0
0
De
Ita
N
et
he l y
rla
nd
s
I re
Be
la
nd
lg
iu
m
(F
l. )
Po
la
nd
60
nm
ar
k
No
Un
rw
ay
it e
d
St
at
es
Fi
n
N
ew lan
d
Ze
al
UK
an
d
(E
ng
la
nd
)
C
an
ad
a
Cz Aus
t
ec
ra
l
h
Re ia
pu
bl
Sw
i t z ic
er
la
nd
60
a) The data refers to training received at some stage during the 12-month period prior to the
survey.
Source: International Adult Literacy Survey.
B.
The role of collective agreements
Since the mid-1990s, most collective agreements in Norway have sections
dealing with competence development and the possibility for the employee to
obtain leave for this purpose. In general, the social partners have acknowledged
the great importance of training both for the individual, the enterprise and for
society at large. They therefore underline the value of encouraging both
employees to improve their competence and enterprises to offer their staff
systematic education and training through internal and external courses. Several
surveys indicate that both employers and the shop stewards in the public sector
are rather satisfied with the content of collective agreements in this area
(OECD, 2002c). However, it would be useful to conduct further research to
investigate whether these agreements have effectively enhanced education and
training opportunities for older workers.
The aim of education and training, according to these collective
agreements, can be to maintain necessary competence for a present job or to
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106 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
prepare a worker for a new and more qualified task in the company. In the
private sector, the objective of competence development is to maintain and
improve competitiveness. The partners in the public sector underscore the fact
that continuous competence development is crucial for each institution’s ability
to solve its tasks effectively and in order to adapt to future changes in the
demand for public services.
In these agreements, it is generally recognised that the expenses for
training based on the needs of the enterprise shall be covered by the enterprise
itself. A government committee proposed that the social partners should give
priority to arrangements encouraging greater participation in further education
and that a grant should be set aside in the yearly wage negotiations for this
purpose. Financing lifelong learning is therefore likely to become an
increasingly important issue in wage negotiations in the future.
C.
The Norwegian Competence Reform
The Competence Reform in Norway was based on a report of a
Government Committee (Ministry of Education and Research, 1997). However,
the agreement reached between the government and the social partners in
connection with the 1999 and 2000 wage settlements also formed an important
basis for the reform. The main objective for introducing the Competence
Reform was to meet the increasing demand for competence in society, in the
workplace and by individuals. But it was also to promote an increase in the
number of older workers, whose employment rates fell during the 1990s. The
target groups for this measure are adults (whether working or not) who lack
formal educational qualifications, older people who did not have access to
education when they were young and adult immigrants with educational
qualifications which are not recognised in Norway.
One major reason for the reform was that the public education system
could not sufficiently meet the demand for competencies in the workplace.
Furthermore, the provision of education and training should as far as possible be
driven by demands of enterprises and adapted to individual needs (Norwegian
Institute for Adult Education, homepage). An overview of the most important
measures of the Competence reform is given below (see Ministry of Education
and Research, 2000, for further details).
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 107
Upgrading formal education levels of adults
To upgrade skills for people with low formal education levels, the reform
gives adults in need of primary, lower secondary or upper secondary education
the legal right to such education. The teaching methods should, as far as
possible, be based on prior learning (formal and non-formal) and be adapted to
suit the needs of the individuals. Generally, the provision of adult education is
the responsibility of the municipality or the county, but non-governmental study
associations, distance learning institutions and other bodies may also be used to
provide this education. Moreover, 37 municipalities from all over Norway are
taking part in a project in order to chart the need for primary and lower
secondary education and to develop teaching models that suit adults. For this
purpose, the government is allocating money to develop new teaching methods
targeting adults, but also with the intention to reduce participation costs in
courses.
Assessing non-formal competences
Following the Competence Reform, a project called Realkompetanse
Project 1999-2002 was established in order to develop a national system of
accreditation of adults’ non-formal competencies and informal learning, which
would be recognised in both the workplace and the education system. In
general, non-formal competencies can be acquired through jobs in Norway or
abroad, through activities in voluntary organisations, domestic work or other
learning settings.
To encourage higher education, it was also made possible for persons
aged 25 or over – without upper secondary education – to enrol in tertiary
education. However, this is only possible if the university or the college in
question approves the non-formal competence as sufficient. These admissions
are based on either written or oral tests, age limits in combination with guidance
and self-assessment or relevant work experience. Finally, non-formal
competencies may also lead to the shortening of a course or to exemption from
examinations or tests.
So far, this system has had some success in promoting training and
re-training of adults. Up to 2002, 26 000 adults had benefited from these
measures; the vast majority, 20 000, with regard to upper secondary education.
However, in 2001, around 2 600 students were given places in courses at
universities and colleges on the basis of their recognised non-formal
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108 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
competencies. A clear majority of these students (mostly prime-age women)
were enrolled in courses relating to health-care and teaching.
Study leave for adults
Employees that have been working for at least three years, and with the
same employer for at least two years, have a legal right to a fulltime or a parttime leave of absence for up to three years in order to participate in organised
education or training.19 Education beyond the level of upper secondary must,
however, be job-related in order to entitle the employee to a study-leave.
Moreover, employers have the right to refuse the request for a study leave if this
interferes negatively with the employer’s prospects to plan production and
manage personnel.20 While various study leave schemes exist in OECD
countries, only a limited number of employees have participated in such
schemes. They include special subsidies for part-time workers in Germany and
a “leave-saving scheme” in the Netherlands (see OECD, 2003b, for a more
complete list of existing schemes).
In general, compensation for living expenses during study leave is a matter
between employers and employees, but the State Educational Loan Fund can
also subsidise adults taking up education.21 In 2000, the rules of these study
loans, which provide support for most educational purposes, were changed in
order to better adapt them to the needs of the competence-building programme
19.
In the 1998 wage negotiations, an agreed action plan for competence building
was accepted as an appendix to the collective agreement. The action plan mainly
represented a follow-up of the proposals contained in the government committee
report in 1997 on the Competence Reform. In short, it emphasized the
responsibility of the authorities for carrying out the reform. The action plan
confirms the right of employees to be on leave for educational purposes on
certain conditions. This later became part of the Norwegian legislation.
20.
Due to the lack of data, it is not possible to review the take-up of study leave in
Norway and, at this stage, the Norwegian government has no plans to establish
any registration system for persons taking study leave.
21.
The State Educational Loan Fund (Lånekassen) provides grants and loans to students in
upper secondary schools and to university and college students. Most Norwegian
students finance their studies through grants and loans from the State Educational Loan
Fund. The loans are meant to cover the costs of studying in Norway, and the objective
is to give everyone in Norway equal rights to education.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 109
for adults. For example, monthly incomes in addition to the study loan grant
were increased from NOK 3 550 per month to NOK 5 000 per month. Also the
limit for the means-testing of family supplements was increased. In addition, in
1999, the tax on employers-financed education was abolished.
D.
Effectiveness of training
Clearly as part of an evaluation of the effectiveness of these measures to
boost adult training, it is important to establish how returns to training vary by
age and education. However, as opposed to the returns on initial education,
there are relatively few studies of the rate of returns to education and training
for adults whether in Norway or in other OECD countries. The ones that do
exist for Norway report very different estimates of the rate of return on training
and do not provide much indication of which types of training appear to be most
effective. A study by the Institute of Social Research reports fairly stable returns
to adult education and training of 4% to 7% over the period 1980-1995 (Barth
and Røed, 1999). However, Schøne (2002) estimates that the net rate of return
to training is actually much lower, but still statistically significant, at only 1%
once controls are included for individual characteristics (both observed and
unobserved), accumulated firm-specific skills and measurement error.22 For
older workers, these rates of return from training could be even lower given
their shorter expected remaining length of job tenure relative to other workers
and if they require more learning time than younger workers. Thus, it is
important that training courses are available for older workers that are relatively
short in duration and which build on their existing experience and skills. It is
also important to carry out more evaluations of the effectiveness of different
types of training, especially for older workers.
3.
Active labour market programmes and vocational rehabilitation
Apart from vocational training, it is also important that older people have
access to active labour market programmes more generally to help them find
jobs if they become unemployed and to vocational rehabilitation measures if
injured or disabled. In Norway, there are several regular active labour market
22.
These rates of return are based on observed increases in wage rates as a result of
training. Thus, they may not fully reflect all of the productivity gains from
training since these may be partly captured by the firm if it pays for the training.
Morover, these returns also reflect returns to training that is often of short
duration (i.e. on average, less than one week).
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110 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
programmes (ALMPs) for the unemployed as well as extensive programmes for
disabled job seekers. The main programmes are wage subsidies, traineeships,
various labour market courses to help find jobs and vocational rehabilitation
measures. However, apart from wage subsidies – where age is one of the criteria
for receiving a subsidy (see the discussion of these subsidies in Chapter 4) –
there are no programmes that are specifically targeted towards older workers. At
the same time, there are no explicit age limits to participation in these
programmes and so older people can and do participate in them.
A.
Older people are under-represented
In comparison with the age profile of the registered unemployed, older
people participate much less frequently in active labour market programmes for
“ordinary” job seekers than younger and prime-age people (Figure 5.5). For
example, whereas the older unemployed accounted for almost 18% of all
registered unemployed in the first half of 2003, the corresponding figure for
participants in active labour market programmes was under 8%.
Figure 5.5.
Age profile of participants in ALMPs and the registered unemployed
in Norway, first half of 2003
Percentages of the total for each category
Participants in ALMPs
Registered unemployed
35
30
25
20
15
10
5
0
<20
20-24
25-29
30-39
40-49
50-59
60-66
Source: Administrative data from Aetat (Norwegian public employment service).
Older people also appear to participate much less frequently in
programmes involving direct job experience (Table 5.1). For instance, in 2001,
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 111
while more than two-thirds of all young participants (aged under 25) were
placed in jobs through either wage subsidies or traineeships, the corresponding
figure for older participants was just slightly more than one-third.
Table 5.1.
Participation in ALMPs by age and type of programme in Norway, 2001
< 25
Wage subsidies
Traineeships
Labour market courses
Job creation
Total
Wage subsidies
Traineeships
Labour market courses
Job creation
Total
25-49
50+ 50-59
60+
Total
Number
355
1401
203
167
36
1959
1806
938
58
54
4
2802
984
3840
465
423
42
5288
2
12
3
2
1
15
3147
6191
728
645
83 10066
Percentages of total participants in each age group
11.3
22.6
27.9
25.9
43.4
19.5
57.4
15.2
8.0
8.4
4.8
27.8
31.3
62.0
63.9
65.6
50.6
52.5
0.1
0.2
0.4
0.3
1.2
0.1
100.0
100.0
100.0
100.0
100.0
100.0
Source: Administrative data from Aetat (Norwegian public employment service).
A much larger number of older people are participating in labour market
measures for disabled job seekers. In theory, vocational rehabilitation is
supposed to be considered before a disability pension is granted. And, in
comparison with other OECD countries, Norway does indeed provide extensive
vocational rehabilitation services for the disabled.23 Further, all disabled persons
embarking on a rehabilitation programme should have an individual action plan
developed in co-operation with the public employment service (PES). Services
offered by the PES, range from information, guidance and placement assistance
to schemes specifically designed for disabled job seekers.
Overall, some 70% of registered disabled job seekers in 2002 participated
in some form of labour market measure. In the first half of 2003, the number of
older registered disabled job seekers was just over 12 000. However, compared
to the age-profile of the labour force, older people appear to be underrepresented among registered disabled job seekers. Whereas older people
accounted for around 27% of the labour force in 2002 they accounted for only
around 16% of all registered disabled job seekers in the first half of 2003.
23.
See OECD (2003a), Chart 5.1, p. 111.
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112 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Moreover, older people also appear to be under-represented in terms of the
number undergoing some form of vocational rehabilitation relative to either the
number of employees on sick leave or inflows into disability (Figure 5.6). In the
first half of 2003, the proportion of older people (50 and over) accounted for
less than one-quarter of all participants in vocational rehabilitation but for over
one-third of all employees on sick leave and almost two thirds of total inflows
into disability benefits.
Figure 5.6.
Age profile of vocational rehabilitation participants, employees on
a
sick leave and disability benefit inflows, first half of 2003
Percentages of the total for each category
R ehabilitation
Sick leave
D isability inflow s
45
40
35
30
25
20
15
10
5
0
<25
25-29
30-39
40-49
50-59
60-66
a) Employees on sick leave refer only to employees whose sick leave has been certified with a
doctor's certificate.
Source: Administrative data from Statistics Norway and Norwegian Social Security Institute.
B.
Impact of ALMPs and vocational rehabilitation
The impact of labour market measures for ordinary job seekers and the
vocationally disabled in terms of employment outcomes has been evaluated by
Statistics Norway over the period 1996–1999 (Statistics Norway, www.ssb.no).
Outcomes for ALMPs
For ordinary job seekers the net increase in the likelihood of getting a job
is estimated by comparing their labour market status at a point in time with their
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 113
situation six months earlier. Those who have participated in active labour
market programmes are compared with non-participants. The net effect of the
measures is found by controlling for a broad range of variables. The results
suggest that participation in labour market measures increases the likelihood of
being in a job by between 11 and 15 percentage points compared with the
control group. The net impact is even stronger for the long-term unemployed.
The predicted net effects also vary substantially between the different labour
market measures. However, it appears that programmes which involve direct
work experience have proven to be the most effective.
The evaluation by Statistics Norway also suggests that active labour
market measures are particularly effective for older participants. Whereas the
predicted increase in likelihood of being in a job is a moderate 2-3 percentage
points for the under-20 years group, this rose to 17 percentage points for
participants aged 60 and over.
Outcomes for vocational rehabilitation
Statistics Norway has also evaluated the effect of labour market measures
for the vocationally disabled. Since those who are registered as vocationally
disabled by definition either take part in a labour market measure or are
considered unfit for participation, it was not possible to establish a control
group. For this reason, Statistics Norway did not measure the net effect, but
mapped the current labour market status of people registered as vocationally
disabled and who participated in a labour market measure six months earlier.
The sample included some groups of vocationally disabled where the
percentage of returns to the labour market is expected to be very low.
The study showed that, overall 39% of the participants were either
employed or self-employed six months later whereas 13% of the participants
were on a disability pension. There is a large degree of variation of outcomes
with respect to the various measures. This is to be expected since the population
of participants has different characteristics from measure to measure.
Unfortunately, it was not possible to isolate variations in the net effect of the
measures from variations in the other variables such as the participant’s age and
diagnosis. Thus, it is not clear whether labour market measures for the
vocationally disabled are more or less effective for older participants than for
younger participants, as appears to be the case in programmes for “ordinary”
job seekers.
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114 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Implications for policy
Given that participation in active labour market programmes appears to
have especially favourable outcomes for older job seekers, it is important to
investigate the reasons why older people are under-represented in measures
designed to help the unemployed and disabled job seekers back into
employment. Ensuring that older people have full access to the range of
employment services, and that they take up these opportunities, should be seen
as a mutual obligation on the part of the administration in exchange for reforms
that effectively restrict existing pathways to early retirement.
Introducing a new job agency
Until recently, the government had attached little priority to providing
specially-designed employment services for older job seekers, given the
generally favourable employment situation of older people in Norway.
Nonetheless, in December 2002 the government presented a White Paper to the
Parliament on better co-ordination of the Public Employment Service (PES), the
National Insurance Authorities and the social service of the municipalities. The
White Paper proposes to merge the PES and part of the National Insurance
Authorities in order to create a new job agency on the local level. The
Parliament has asked the government to review both a model with a new state
agency and a model based on local government responsibility. The goal of the
new agency is to promote simpler and better services for people with work
ability such that those who are able to work are given better help to return to the
labour market. A key issue for the new Job Agency should be to give priority to
placing older job seekers in jobs and to helping older workers remain longer at
work. The Parliament has asked for additional information and deliberation
before taking any decision and an expert committee will deliver a report to the
government in the summer of 2004.
4.
Work environment and job satisfaction
The shift away from the production of goods to the production of services
in Norway, as in other OECD countries, has tended to decrease the number of
jobs with unpleasant working conditions such as jobs requiring heavy lifting
and exposure to impurities in the air. However, many women work in the care
sector, where heavy lifting and uncomfortable working positions are still part of
the daily work. In the care sector, far fewer improvements concerning the work
environment seem to have taken place than in the industry sector. This may also
be one of the explanations for the higher sickness rate among women.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
A.
– 115
Working conditions in Norway are relatively good
According to the 2000 European Survey on Working Conditions, workers
generally report more positive figures concerning unpleasant working
conditions in Norway than on average across the European Union. As an
example, Norwegian workers are more likely to state that they have some
control over how to organise their tasks and the pace of their work and that they
have a say in work methods. They report less exhaustion and less backache, and
are in general more satisfied with their working conditions. Furthermore,
Norwegians seem to be less exposed to physically demanding work (Table 5.2).
In particular, work tasks appear to be much less monotonous and work positions
less harmful than on average in the European Union. However, they do report
more stress and more muscular pains.
This is, of course, partly an effect of the comparably lower percentage of
Norwegian workers employed in industry. However, other factors that could be
of importance are, for example, the relatively low share of older workers in
temporary jobs, and the relatively high share of older workers in part-time jobs
(see Chapter 2).
Table 5.2.
Incidence of selected working conditions in Norway and the EU
a
As a percent of all employees
Handling dangerous substances
Painful positions
Heavy loads
Noise
Repetitive movements
Norway
2
6
7
8
16
EU average
5
18
12
11
31
a) Percentage of individuals reporting exposure to each working condition most of the time.
Source: European Survey on Working Conditions 2000.
Overall, Norwegian workers above the age of 55 report better work
environments than their prime-age or younger colleagues. Generally, older
workers seem to occupy more independent jobs and value the social aspects of
their jobs higher. However, it also appears that they are more protected from
daily difficulties, challenges and reorganisations (Solem, 2002). This is also
verified by the Survey of Living Conditions and Working Environment
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
116 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
(Statistics Norway).24 Based on these results, the only categories concerning the
work environment where older workers report higher complaints are inadequate
lighting and the way they have to bend forward without leaning on their arms.
Of course, depending on whether older workers with unpleasant working
conditions tend to retire earlier than workers with better working conditions,
these results might be downward biased.
Obviously, the more workers are unsatisfied with their work environment
or work arrangements, the more likely they would report wanting to quit their
job. Thus, an alternative way to look at the work situation is to study the
willingness to switch to another job (Table 5.3). The results for Norway reveal
that only 6% of older workers want to switch to another job – as compared to
16% for prime-age workers. However, for those reporting an interest in
switching jobs almost 50% for both age groups say it is because they want
better working conditions. Nevertheless, this means that, on average, less than
3% of older workers report that their working conditions is a reason for wanting
to switch jobs. This, in addition to what was reported above, indicates that the
working conditions for older people in Norway are relatively good.
Table 5.3.
Wish to switch job by reason in Norway, 2001
In percent
Wish to switch job
No
Yes, of which by reason :
Better working conditions
Higher income
Present job is temporary
Risk losing present job
Want an additional job
Other
25-49
83.9
16.1
48.6
10.8
10.7
5.2
1.7
23.1
50-64
94.1
5.9
48.7
8.6
8.9
5.7
2.0
26.1
Source: Norwegian Labour Force Survey.
24.
The age breakdown in this comparison is 16-24, 25-44 and 45-66. For more
information, see Table 251 in the Statistical Yearbook 2002, Statistics Norway.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
CHAPTER 6. MOBILISING LABOUR SUPPLY MORE GENERALLY
– 117
Chapter 6
MOBILISING LABOUR SUPPLY MORE GENERALLY
As already stressed, if the Norwegian economy is to cope successfully with
the demographic and economic challenges ahead, an overall increase in the
utilisation of potential labour supply is needed. This can be achieved by several
routes: increasing employment rates; actual average hours of work; or the
average number of years spent in the labour market. Other potential solutions
could include raising immigration rates and encouraging higher fertility rates.
1.
Increasing hours of work
Raising actual working hours will not prevent economic dependency ratios
from rising. However, it would boost output and help to alleviate the effects of
labour shortages or general cut backs in welfare systems in the future.
Currently, an increasing number of people are on sickness benefits and a
large percentage of the workforce, especially women, is working part-time. The
age group 60-64, in particular, not only has a low labour force participation rate,
but also a high incidence of part-time employment (see Chapter 2).25 Moreover,
a non-negligible number of part-timers want to increase their hours of work:
15% of older workers and 24% of prime-age workers. Obviously, this share is
highest for those that presently work fewer hours and vice versa (Table 6.1).
There is also quite a large difference both between sexes and age groups. On
average, around 17% of older low part-time workers would prefer an increase in
working hours, compared to around 30% for the same group of prime-age
workers. Thus, apart from high absence rates, the quite large share of
involuntarily part-time workers indicates a potential scope to increase actual
hours of work.
25.
In the age group 60-64, 17% of men and 59% of women are working part-time.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
118 – CHAPTER 6. MOBILISING LABOUR SUPPLY MORE GENERALLY
Table 6.1.
Wish to increase hours of work by present hours of work
in Norway, 2001
As percentage in each group of working hours
Current working hours
< 30
30-34
35-39
Men
25-49
30.8
19.4
10.0
Women
50-64
16.4
15.4
0.0
25-49
27.0
13.1
21.0
50-64
17.5
6.0
8.7
Source: Norwegian Labour Force Survey.
2.
Alternative ways to boost labour supply
A.
In the short-term: Increasing immigration
An increase in immigration has sometimes been put forward as a way to
help solve the ageing problem. By providing an immediate increase in the
working-age population (20-64), it could help to alleviate labour shortages.
However, immigrants often lack suitable qualifications and consequently suffer
from problems of joblessness and under-employment. Moreover, future labour
shortages are expected to be most evident in the care sector (e.g. nurses,
dentists, and pharmacists), for teachers (especially in science and technology)
and for high-skilled engineers. The magnitude of the impact that immigration
would have on the Norwegian labour market, therefore, depends critically upon
the skill composition of immigrants. Moreover, even if immigration can play a
complementary role to help solve the situation ahead, “it cannot be expected to
have more than a marginal impact on the projected disequilibria in the age
structure” (OECD, 2001a). In part, this is because fertility and death rates of
immigrants and their descendants are likely to converge to the levels of the
non-immigrant population.
Norway recently introduced several amendments to the immigration
legislation in order to speed up the processing of applications of work permits
for skilled labour (e.g. specialists). These amendments entered into force in
January 2002, and include measures such as: the possibility to grant a visa for
specialists seeking employment in Norway; and giving work permits for
specialists within an annual quota, currently fixed at 5 000, without individual
screening of applications in relation to labour market needs. In 2003, it was
decided that employers should have the right to apply for a work permit on
behalf of the immigrant.
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CHAPTER 6. MOBILISING LABOUR SUPPLY MORE GENERALLY
– 119
However, to date there has not been a great demand from Norwegian
employers to hire immigrant workers. A recent survey of employers showed
that, on average, only 9% of employers are open to recruiting foreign workers
while 75% answered no and 15% of employers were unsure. Further, recent
figures from Statistics Norway reveal that 45% of Norwegians feel that
immigrants are a source of insecurity and 53% think it should be more difficult
to gain a residence permit in Norway than is currently the case. In fact, only 5%
are in favour of a relaxation of the country’s immigration policy. Finally, 41%
believe that most immigrants are “fleecing” the country’s social security system
(information from the government and the ministries, www.odin.dep.no/odin).
Thus, while raising immigration rates is a potential route, it seems as if there is
little enthusiasm as yet in Norwegian society and the business sector to expand
reliance on it in terms of expanding labour supply.
B.
In the long term: Raising fertility rates
Another possibility for boosting future labour supply would be to
encourage higher fertility rates. Since the beginning of 1960s, the total fertility
rate has fallen from almost 3 children per woman to 1.85 in 2000. However, in
contrast to the development in most other OECD countries, the fertility rate has
increased since the mid-1970s. Fertility rates are projected to stabilise at 1.8 for
the coming decades – the fifth highest level in OECD. While higher fertility
rates would eventually lead to an increase in labour supply, this would only
begin to have an impact on labour supply after 2025. Moreover, increasing the
number of children would initially raise public expenditures and increase the
pressure on public finances further.
3.
Policy coherence
Employment rates could also be raised by strengthening overall incentives
to work but this needs to be done in a coherent way. Reforming the pension
system is an important example of a policy approach that can strengthen
incentives to work. However, as discussed in Chapter 3, it is not enough to
reform the old-age pension system if other avenues to early retirement such as
the AFP, disability pension and long-term sickness are not reformed as well,
with the express intention of encouraging Norwegians to work longer.
It is also important that policy makers dismantle demand-side barriers as
well as those on the supply side, i.e. by emphasising the integration of workers
and by closing pathways out of the labour market. At the same time, older
workers need to be given more freedom in how they work. Thus, close
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
120 – CHAPTER 6. MOBILISING LABOUR SUPPLY MORE GENERALLY
co-operation between the social partners and government bodies should be
encouraged.
4.
Maintaining the momentum
Norway has already taken important measures to address the major
challenges ahead. Although these achievements should be acknowledged, there
is still room to improve employment prospects for older workers further. The
ongoing reform of the pension system is an important and necessary measure,
but it will not be sufficient to deal with future challenges. Hence, a
comprehensive reform strategy is needed. This should encompass not only
measures to enhance work incentives that are embedded in the welfare system,
but also action on the demand-side. The current momentum for reform should
be maintained but, as suggested in this report, it needs to be strengthened in
several areas, notably in terms of restricting existing pathways to early
retirement, improving the employability of older workers and changing the
attitudes of employers, the unions and older workers themselves.
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
BIBLIOGRAPHY
– 121
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