Newsletter

Subscribe to the latest news from the Nordic Labour Journal by e-mail. The newsletter is issued 9 times a year. Subscription is free of charge.

(Required)
You are here: Home i In Focus i In focus 2004 i Theme: Preparing for a future labour market i Norwegians hard to convince they need to work after 62
tema

Norwegians hard to convince they need to work after 62

| Text: Björn Lindahl

To avoid a future total collapse in the Norwegian retirement system, more people have to work for longer. That is the main message from the Norwegian Pension Commission. But how realistic is it to expect those between 62 and 66 to continue working? And do employers really want them?

Norway’s official retirement age is 67. But almost all employees have negotiated a settlement which allows them to retire early through the so-called agreement based early retirement (AFP). It allows people to retire at 62 and still receive the pension of a 67 year-old. If you count those who retire due to ill health, the real retirement age in Norway is 61. 

In their report “Modernising the National Insurance Scheme – Sustainable Pensions for the Future”, the government-appointed Pension Commission has suggested to change the rules and grant people who choose to work until they are 67 a larger pension. 

That has angered blue collar unions. They say it's not your age, but how long you have been in employment that counts. 

“Take me for instance. I started full-time work when I finished elementary school in 1960. I was 14. I could leave work with a voluntary early retirement pension when I’m 62 in 2008. At that stage I will have been working full-time for 48 years”, says Frank Holm, deputy leader at the Norwegian Transport Workers’ Union. 

“You didn’t need to read much of the Pension Commission’s report to understand it will be our members who will loose out – drivers, storage workers and those working on the docks. These are people who are pretty much worn out by the time they’re 67.” 

The reaction has been as hostile from trade unions representing low-income female workers. As in most other European countries, Norway has an ageing population. The baby boomers from the post-world war two era are reaching retirement, while fewer and fewer young people are replacing them. 

Today, nine per cent of the country’s gross national product (GNP) goes to pay pensions. Without a change in the system, this will more than double to almost 20 per cent of GNP by 2050. The increased costs stem from people living longer, retiring earlier while at the same time having earned the right to a higher pension. In the transport business 52 per cent of all members between 62 and 67 have already retired. That has also been a priority for the Transport Workers’ Union.

 “The agreement-based early retirement (AFP) was introduced so that those who have the most physically challenging occupations should have the possibility to quit professional life in a dignified way. It happened after negotiations between unions, trade and industry and the authorities, when workers gave up pay rises to help the older members", Frank Holm points out. 

He feels the Commission is living in its own theoretical world. “The commission is on a collision course with itself when its proposals are tested in reality. If you design a system where those who work longer are rewarded, you’re presuming that the employers actually want to keep that age group.

“Today it is always the older workers who loose out whenever a company closes down parts of its business – fusions or fissions or whatever they call it. If we want the older workers to work longer, we need a law banning employers from sacking older workers when they need to scale down their business.” 

There also doesn’t seem to be much desire to work longer among the “younger older” workers – a term for the 62-66 year-olds coined by Statistics Norway. 

“The amount of time that this group spends working, including the commute to and from work, has decreased by 40 per cent over the past 30 years”, says Odd Frank Vaage. 

He’s been responsible for the comprehensive time-survey which Statistics Norway performs every 10 years. The largest change came during the 20 years between 1971 and 1991. After that, the downward trend for the whole group has stabilised. Today 52 per cent of people between 60 and 64 are in work. That is not a particularly low number compared to other European countries. Only Iceland has a higher rate of active workers than Norway. 83 per cent of Icelanders between 60 and 64 are in work, a number far above the rest of Europe. 

But even within the Nordic countries there are large differences. The numbers are 53 per cent in Sweden, 34 per cent in Denmark and 27 per cent in Finland. Norway does have a gender difference in the number of active workers. In the age group 60-64, 56 per cent of women are employed. The average for EU countries is 33 per cent for men and 16 per cent for women, according to Eurostat. 

Using the argument that pensions are higher the longer you work, might not be the carrot it was meant to be. When 50-61 year-olds in Norway were asked their main reason to retire early, they answered that their “own economy permits it”. Then came health reasons and that work was physically challenging. People with higher education, and women, are those who are most likely to work longer. 

“While Norwegian men and women were equally reducing their working activities until 1991, the women have since started increasing the time they spend in paid employment to 65 per cent. Working women among the younger older workers spend almost as much time at work as young women do."

h
This is themeComment