Ageing and employment policies. Norway

126 Pages·2004·0.876 MB·English

by  OECD

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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
(28thApril1964), Finland (28thJanuary 1969), Australia (7th June 1971), New Zealand
(29thMay1973), Mexico (18th May 1994), the Czech Republic (21stDecember1995),
Hungary (7th May 1996), Poland (22ndNovember1996), Korea (12th December 1996)
and the Slovak Republic (14th December2000). The Commission of the European
Communities takes part in the work of the OECD (Article 13 of the OECD Convention).
© OECD 2004
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FOREWORD

FOREWORD
Older people offer tremendous potential value to businesses, the economy
and society. Unfortunately, they often represent an untapped and discriminated-
against 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
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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
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TABLE OF CONTENTS

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. The demographic challenge..........................................................35
2. Potential economic and social impacts..........................................38
Chapter 2. THE CURRENT LABOUR MARKET SITUATION
OF OLDER WORKERS.......................................................43
1. Labour market participation.........................................................43
A. 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
Chapter 3. PROTECTING PEOPLE WHILE ENHANCING
WORK INCENTIVES..........................................................57
1. Welfare schemes – a way out of the labour market?.....................57
2. Old-age pensions..........................................................................59
A. Trends in public expenditures on old-age pensions.................59
B. The current public pension system..........................................60
C. Reforming the public pension system......................................64
D. Developing the occupational pension system further...............66
3. Alternative pathways to early retirement......................................67
A. The contractual early retirement scheme (AFP).......................70
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B. Sickness and disability pensions..............................................72
C. Few older people on unemployment benefits..........................77
D. Combating early retirement in Norway...................................78
Chapter 4. ENCOURAGING EMPLOYERS TO RETAIN AND
HIRE OLDER PEOPLE........................................................83
1. Employment policies and older workers.......................................83
A. Attitudes towards older people................................................83
B. The presence of age discrimination.........................................85
2. Labour costs.................................................................................86
A. The impact of high relative wages for older workers...............86
B. Social security contributions for older workers.......................88
3. Employment protection — obstacle or security?...........................89
A. The role of employment protection legislation........................90
4. Subsidising labour costs for older workers...................................92
A. Wage subsidies to employers..................................................93
B. Reducing social security contributions....................................93
5. Measures taken by social partners................................................94
A. Achieving a more inclusive workplace....................................94
B. Encouraging older people to remain in work longer................97
C. Developments at the individual firm level...............................97
Chapter 5. STRENGTHENING EMPLOYABILITY.................................99
1. Education attainment and labour market status.............................99
A A key to higher participation rates...........................................99
B. New skills – a way to strengthen employability....................101
2. Training of older workers...........................................................104
A. Incidence of training declines with age.................................104
B. The role of collective agreements..........................................105
C. The Norwegian Competence Reform....................................106
D. Effectiveness of training.......................................................109
3. Active labour market programmes and vocational rehabilitation 109
A. Older people are under-represented.......................................110
B. Impact of ALMPs and vocational rehabilitation....................112
4. Work environment and job satisfaction......................................114
A. Working conditions in Norway are relatively good...............115
Chapter 6. MOBILISING LABOUR SUPPLY MORE GENERALLY....117
1. Increasing hours of work............................................................117
2. Alternative ways to boost labour supply.....................................118
AGEING AND EMPLOYMENT POLICIES: NORWAY– ISBN-92-64-02045-4 © OECD 2004
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A. In the short-term: Increasing immigration.............................118
B. In the long term: Raising fertility rates..................................119
3. Policy coherence........................................................................119
4. Maintaining the momentum........................................................120

BIBLIOGRAPHY....................................................................................121

List of Boxes

Box 3.1. The Swedish flexible old-age pension system ........................65
Box 4.1. Laying off older workers in Norway: the case
of Norsk Hydro.......................................................................84
Box 4.2. Employment subsidy schemes for older workers in
selected OECD countries........................................................92
Box 4.3. The tripartite agreement on a more inclusive workplace..........95
Box 4.4. Good practice at the firm level in Norway: the case
of Linjegods............................................................................97

List of Figures

Figure 1.1. Life expectancy at birth and total fertility rates
in Norway, 1960-2050.........................................................35
Figure 1.2. Demographic dependency ratios, 2000-2050.......................37
Figure 1.3. Projected population growth in Norway
by age group, 2000-2050.....................................................38
Figure 1.4. Labour force growth in Norway, 1950-2050.......................40
Figure 1.5. Labour force growth in OECD countries, 1950-2050..........41
Figure 2.1. Participation rates by gender and age in Norway,
1972-2002...........................................................................44
Figure 2.2. Participation rates by age and gender
in OECD countries, 2002....................................................45
Figure 2.3. Differences in Norwegian employment rates between
prime-age and older workers by gender, 1972-2002............46
Figure 2.4. Average actual weekly working hours in Norway
by gender and age, 1995-2001.............................................49
Figure 2.5. Unemployment rates in Norway by age groups,
1987-2002...........................................................................53
Figure 2.6. Inactivity by single year of age in Norway, 2001.................54
Figure 3.1. Retirement rate by age in Norway, 2001.............................58
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Figure 3.2. Reasons for leaving last job in Norway, 2000......................59
Figure 3.3. Public expenditure on old-age pensions in Norway and
other OECD countries, 2000-2050......................................60
Figure 3.4. Retirement incentives in Norway and other OECD countries....63
Figure 3.5. Average effective retirement age in Norway, 1960-2002.....68
Figure 3.6. Effective and official retirement ages
in OECD countries, 1997-2002...........................................69
Figure 3.7. Recipients under the AFP-scheme in Norway.....................71
Figure 3.8. Long-term sickness in Norway, 1992-2001.........................74
Figure 3.9. Lost working time in Norway because of sickness, 2002.....74
Figure 3.10. Inactivity because of illness or disability
in selected OECD countries, 2000.......................................75
Figure 3.11. Disability pension claimants in Norway, 2001....................76
Figure 4.1. Relative wages for older workers and effective
retirement age.....................................................................87
Figure 4.2. Age-earnings profiles in selected countries.........................88
Figure 5.1. Participation rates in Norway by age and
level of education, 2001....................................................100
Figure 5.2. Education levels in OECD countries, 2000........................102
Figure 5.3. Projected rise in education levels of
older workers, 2000-2025..................................................103
Figure 5.4. Incidence of job-related training for workers by age
in selected OECD countries, 1994-98................................105
Figure 5.5. Age profile of participants in ALMPs and
the registered unemployed in Norway, first half of 2003...110
Figure 5.6. 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. Projected growth in the Norwegian labour force
under different scenarios.....................................................40
Table 2.1. Norwegian older workers by selected
job characteristics, 2001......................................................48
Table 2.2. Employment-population rates for persons aged 50-64
before and after adjustment for hours worked, 2000............50
Table 2.3. Part-time work by age and gender, 2002.............................51
Table 2.4. Employees absent from work by reason in selected
OECD countries, 2002........................................................52
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Table 2.5. Inactivity status in Norway and on average
in OECD countries, 2001....................................................55
Table 4.1. Satisfaction with timing of early retirement
in Norway, 2001..................................................................85
Table 4.2. Employers’ social security contribution rate
in OECD countries, 2001....................................................89
Table 4.3. Strictness of employment protection for regular employment
in OECD countries in late 1990s.........................................91
Table 4.4. Wage subsidies for hiring the unemployed in Norway,
1998....................................................................................93
Table 5.1. Participation in ALMPs by age and type of programme
in Norway, 2001................................................................111
Table 5.2. Incidence of selected working conditions in Norway
and the EU........................................................................115
Table 5.3. Wish to switch job by reason in Norway, 2001.................116
Table 6.1. 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