Nordic measures for sustainable working life

The employment rate must be sufficiently high to meet productivity requirements, but also to reduce the escalating cost of increasing ill-health, invalidity pensions and early retirements.
This is not a new problem, but it is now higher on the Nordic countries’ agenda than ever before.

The Econ Centre for Economic Analysis, in Norway, recently presented a report entitled An Inclusive Labour Market in the Nordic Countries, a survey of the problems and the efforts being made to address them in all the Nordic countries. The survey, which was commissioned by the Nordic Council of Ministers, was discussed during a Nordic symposium in Oslo.

The objective is clear in all the Nordic countries. More people must work, and they must stay at work until they are older. A labour shortage will follow in the wake of the anticipated large-scale retirements, and the shrinking workforce will have to support more people. Unlike other European countries, the rate of employment among both men and women is already high in the Nordic countries and there is simply no margin of reserve.

It will be necessary to bring in all those who are excluded from the labour market – the long-term unemployed, immigrants and disabled people – and make sure that those who are already at work are able to continue working. The world of work is now the focus of attention: it is responsible for much of the growing ill-health, but it is also the arena where many of these problems can be solved.

Two key problems

There are two key problems: the sharp increase in sick leave and early retirements.

Sick leave rates have increased, especially in Sweden and Norway, despite the fact that life expectancy in these countries is longer than ever before. The sick leave rate in Sweden doubled between 1997 and 2001 and is now thought to represent the equivalent of 800,000 full-time jobs. The cost of ill-health is increasing by SEK 25 million a day, and the sickness insurance costs for 2001 are expected to total SEK 108 billion. In Norway, sick leave increased by almost 60 per cent between 1994 and 2001 and is now a major drain on the budget.

A major problem in Finland and Danmark is early retirement. In Finland, for example, the average employment rate of the population between the ages of 55 and 64 is 42.3 per cent, which is scarcely more than half the rate for the age bracket 45-55. The situation is slightly better in Denmark, but there too the number of people at work falls dramatically during the last years of their working lives.

Grey Gold

There are several reasons for the increase in sick leave and early retirement, and most of them have to do with the work situation. It is often suggested that many employees retire before the statutory retirement age because several countries have introduced generous pension conditions as a result of recessions and company closures. In Finland, for example, many employees consider it perfectly natural to retire at the age of 55, writes Eva Ekelöf, a journalist, in her book Grey Gold – Nine Nordic Workplaces that Make the Most of their Most Experienced Workers.

Employers are not required to provide rehabilitation for staff after the age of 55 and often offer them a pension as an alternative. The implication is that older people are expendable.

The workplace is also assumed to be the cause of the high and increasing rates of sick leave. Jan Rydh, a special investigator whose study of ill-health in Sweden is presented in the report Action Plan for Improved Health at Work, has no doubts.

- One’s first impression is that it is a general crisis, but this view is mistaken. The main reason for the increase in ill-health is the relationship between the individual and the workplace, he says.

No sudden epidemic

There is no other explanation, no epidemics, no sudden increase in broken legs. Apart from anything else, there is too much variation in the pattern of sick leave, even between comparable sectors. For instance, the number of people on the sick list in one municipality may be seven times as high as in another municipality, and this cannot be because the population of one of the municipalities is healthier than the other, says Jan Rydh. Sick leave rates are only rising in certain sectors, in particular the health and care services, where the staff are in close contact with patients and which experienced extensive cutbacks in the 1990s.

Another reason for the increase in ill-health and early retirement is that the workforce is ageing, but workplaces have not adjusted to this trend. On the contrary, study after study has shown that the pace of work is ever faster and more and more work has to be done under pressure. Older workers run a greater risk of emotional exhaustion. There is now also a greater need of flexibility and skills enhancement, and this too makes it more difficult for many employees to keep up.

Happy to continue working

According to a Swedish study carried out by Pensions Forum, a Swedish think-tank, 28 per cent of respondents would be happy to go on working for longer if the work situation was different.

The Econ report describes three kinds of measures to prevent exclusion and promote inclusion, i.e. legislation, economic incentives and communication.

- The effect is greatest where there is interaction between measures to prevent exclusion, said Björn Hvinden, a professor at the Norwegian University of Science and Technology in Trondheim and one of the speakers at the Norwegian symposium in Oslo.

Incentives – a communicative method – work best together with economic measures. For example, Danish enterprises that document their efforts to improve the work environment were until recently eligible for a work environment certificate, which meant that they were exempt from the work environment charge, at the same time as it increased the enterprise’s goodwill. The work environment charge has now been abolished, and according to Bjørn Hvinden this is likely to weaken the ‘incentive effect’.

Obviously, there are differences between the Nordic countries both when it comes to the problems, the measures selected to address them and the extent to which the various players in the labour market are involved. Nevertheless, according to the Econ report there are great similarities.

One reason for this is that the objective and challenge are the same in all these countries: how to keep more people at work. The similarities between the Nordic countries are most striking when you compare their policies on exclusion. In all these countries the authorities are largely responsible for preventing exclusion. On the other hand, the social partners have a key role when it comes to policy formulation. Another feature they have in common is that the voluntary sector has not been assigned any role in these policies.

There is also another common denominator. They all subscribe to the work-first principle. i.e. the principle that employment is generally preferable to unemployment, which has been an integral element of employment policy in the Nordic countries for many years. They all have a tradition of pursuing an active employment policy that encourages people to return to work, regardless of whether their exclusion from the labour market is due to unemployment or sickness. Even greater emphasis is given to the principle that it must pay to work, and this is currently the subject of debate in the Nordic countries, both with reference to unemployment, sickness and retirement age.

Taking action

The historically generous attitude to retirement is now being discussed in all the Nordic countries. Sweden has already introduced a new pension system that encourages people to retire later and has introduced a statutory right to remain at work until the age of 67. Norway is currently reviewing its pension system, and the appropriate level for sickness insurance is being discussed in all the countries. Attitudes and a work environment that is adjusted to ageing workers are other subjects of discussion.

Projects have been launched, inquiries set up and national programmes adopted in all the Nordic countries, and one of their objectives is to establish an attitude to work that focuses on what people can do, rather than the opposite.

Many older people are taking action themselves to ensure that they are respected as full citizens, both at work and in private. The Danish Senior Citizens’ Action Association (Foreningen Ældresaken) has recruited over 430,000 members during the 15 years of its existence. Several Norwegian celebrities recently announced that they had started a similar association (Foreningen Seniorsaken). This proved to be a burning issue and attracted a great deal of attention. In only two weeks following the announcement, 5,500 new members have joined.

Obviously, it is not only the young and healthy who want to play their part in society and working life. The question is: on whose terms?