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Insight

Nordic seniors want longer working lives

| Text: Berit Kvam

Nordic women and men work for longer than their European colleagues, and the retirement age is increasing. But there are also differences between the Nordic countries. In later years Denmark has considered Sweden and Norway to be good examples when it comes to employment among the older generation. So why the differences, and why do more people want to work for longer?

Seniors in working life was the theme when Norway, which holds the Presidency of the Nordic Council of Minsters, organised a Nordic conference under the auspices of the Centre for Senior Policy (CSP) on 26 September. Since 2001 the Norwegian government has worked with the social partners on the Agreement on a More Inclusive Working Life (the IA agreement/2001). One of three main goals of this tri-partite agreement is to increase the retirement age. The Centre for Senior Policy (CSP) which organised the conference has been established to gather and spread knowledge about seniors in working life.

Jan-Erik Støstad, State Secretary at Norways Minstry of Labour, posed one main question in his opening address at the conference: How do we get more seniors to work for longer?

He pointed out that the Nordic welfare model with equal distribution of goods is a major success, yet the welfare model is under pressure. Demographic changes represent a challenge when the number of older people increases and the older live for even longer.

“This could undermine the Nordic welfare model unless we tackle this challenge in time,” he said, and asked the conference:

“What influences the way seniors act? The first thing that springs to my mind is economic incentives, but we also know many other things mean something. Norms and attitudes are also important,” said Jan-Erik Støstad.

Norway’s age limits up for debate

As a politician he was keen to fight the stereotyping of seniors and to make sure they have a choice; a worn out cleaner might not have the same desire to keep working for as long as an active academic. Norway’s pension reform which came into force in 2011 opens up for a more flexible retirement from working life after the age of 62. The general retirement age is 67, but workers can agree with employers to stay on and work until they are 70. The government has announced it will look at the age limit in the wake of the pension reform. 

While the law allows individuals to earn retirement points until they are 75, the final age limit for employing someone in a private or public company is 70. The general age limit and specially agreed limits within for instance the police force and defence is currently being assessed and debated.

“If our average life expectancy continues to increase and our working health improves, it is natural to change the 70 year age limit, but our focus now should remain on the 67 year age limit: to secure the right for all to work until they are 67,” said State Secretary Jan-Erik Støstad.

Why do Swedes work longer than Danes?

On an international scale, there are many older people who are in work in Denmark, said Per H. Jensen, Professor at Aalborg University. He delivered a lecture on retirement patterns in Denmark: in 2011 59.9 percent of people between 55 and 64 were working, compared to the EU average of 47.8 percent, while the numbers for Norway and Sweden were 69.6 and 72.3 percent.

“Reaching Swedish and Norwegian employment rates is Denmark’s desired goal,” said Per Jensen, and added:

The last Danish government (2011) thought Denmark’s lower employment rate for people between 60 and 64 had to be seen in the light of the country’s favourable early retirement scheme.

But the picture is more complicated than the economists claim, he said:

“The Retirement and pension system is only one out of several factors which influence employment, but because economists have been allowed to lead the debate this idea of the importance of incentives has been allowed to dominate.”

When Professor Per H. Jensen uses the comparison between Sweden and Denmark as the starting point for his analysis, it turns out the differences go beyond retirement systems:

•    People in Sweden live longer and are healthier

•    Working environment regulations are more comprehensive in Sweden than in Denmark.

•    The level of education among 55 to 64 year olds is higher in Sweden than in Denmark.

•    There is more flexibility in Sweden when it comes to accommodating vulnerable groups of people into the labour market

•    Dismissal protection is far weaker in Denmark than in Sweden, where the principle of last in, first out is largely the rule. This protects older workers and people with seniority. A survey asking whether they find it hard or easy to fire people showed 59 percent of Swedish employers find it hard or very hard, while in Denmark 26.5 percent of employers feel it is hard or very hard to fire people. 

•    Structural economic issues play a part too. While Danish businesses are on average small, in Sweden they are mainly large.  

Which factors drive development?

Beyond the factors mentioned above, Professor Per H. Jensen also thinks employers’ attitudes are enormously important, along with the general public debate:

“If employers say ‘we cannot do this without you, we need your experience and your social skills,’ and if they can also adapt people’s working conditions, I believe more people will stay on,” said Per H. Jensen. Using the introduction of the early retirement scheme as an example, he illustrated the importance of social debate:

“When the early retirement scheme was introduced in Denmark in 1979 older people were considered to be altruistic if they retired. At that time youth unemployment was high. When the older workers retired they were doing society a favour, people said, because it would leave jobs open for younger people. Today the public debate has changed: early retirement is damaging to society. It is hard to prove but I am sure these kinds of debates do have an impact on whether people retire early or late,” said Professor Jensen.

He also underlined that these processes will take time:

The way people act does not suddenly change as a result of some adjustments being done here and there.

Perhaps it is also not necessary to put so much effort into keeping people in work, he suggested, because when people’s health improves and the level of education increases, then people do stay in work for longer.

So there is no simple answer to the question of what influences the way seniors act. What we need is a many-faceted effort, Professor Per H. Jensen concluded.

High road or low road ?

There are others who paint a similarly many-faceted picture. In conclusion to her talk, Ingrid Esser, researcher at the Swedish Institute for Social Research at Stockholm University, said that economic incentives tend to influence the timing of people’s retirement much more in countries with less generous welfare states. In the Nordic countries the picture is far more complex.

Non-economic issues play a very important role, especially people’s health. But at which stage people choose to retire will depend on their entire working life, said Ingrid Esser. Gender, education and social class all play a crucial part, and not least our investments in human capital and the organisation of the workplace. A high working life quality creates a high life quality.

“The Nordic countries are at a crossroads. Do we take the low road or the high road to higher employment; do you only create more low-salaried jobs with less control over working conditions and lower working life qualities, or do you go for the high road with demands for skills and good working conditions. This has a major effect on job motivation and retirement,” said Ingrid Esser from Stockholm University.

 

Shorter life expectancy but the same number of years in retirement

Danish workers retire earlier and their life expectancy is lower compared to Swedish workers. Yet Danes can still enjoy their retirement as long as the Swedes can:

Average retirement age:

Denmark: men 63.2 years; women 61.4 years

Sweden: men 64.7 years; women 64.0 years

Based on the expected remaining lifespan at 60, Danish men can enjoy their retirement for 17.4 years while Swedish men can enjoy theirs for 17.7 years.

The duration of Danish and Swedish women’s retirement is 22.2 years for Danish women and 21.5 years for Swedish women.

 Source: Professor Per H. Jensen, Aalborg University

 

Seniors in the Nordic region

 

■ The labour force participation rate in the Nordic region is high and stable and shows little sign of changing as a result of the economic crisis

■ There are no signs of a ‘replacement policy’ of seniors to the benefit of young people in the labour market

■ The retirement age is relatively high and rising slightly

■ Retirements increase as people turn 60

■ Early retirement/retirement due to ill health/incapacity retirement is the main way out for people in their 50s

■ Early and flexible old age retirement is the main way out for people in their 60s

■ A sustainable economy, welfare and generational balance are overarching goals

■ Pension reforms are central

■ Non-discrimination, information and influencing attitudes

Source: Bjørn Halvorsen, Nordic Centre for Welfare and Social Issues

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