Norway should improve incentives to encourage people to work longer, says OECD
Norway is better placed to cope with population ageing than most other countries. But it could still do more to improve incentives and opportunities for people to stay working longer which would help ensure the country’s long-term future, according to a new OECD report.
Ageing and Employment Policies: Norway 2013, Working Better with Age says that Norway has well-managed petroleum wealth, low unemployment and later retirement than in most other OECD countries. It also has the fourth-highest employment rate for the age group 55-64 in the OECD area, at 71% in 2012.
But Norway’s labour market has a large share of older people on disability benefit: 19.6% of those aged 55-59 in the first quarter of 2012, and 30.5% of those aged 60-64.
The 2011 pension reform allows flexible retirement between the ages of 62 and 75 and improves incentives to work. But only about 40% of all new pensioners are affected substantially by the new rules. Old age pensions for disabled people are to a large extent calculated as they were in the former pension system, and economic incentives to work are not much changed for public sector employees.
In addition, there is not enough consistency in the setting of age limits in the accrual of additional pension rights, employment protection legislation and other rules concerning mandatory retirement. Also, even if most older workers in Norway are in stable and high-quality jobs, they experience a very low hiring rate, one-third of the OECD average. Negative stereotypes still need to be actively tackled. Part-time work is more frequent among older workers in Norway than on average in OECD countries and, while it may give some workers more flexibility, it can also prove stressful and may represent an underutilisation of the labour force.
To address these challenges, the OECD recommends that Norway:
● Align second-pillar pension schemes for public sector employees with the main principles of the reformed national insurance scheme.
● Strengthen gate keeping to the disability scheme, in order to reduce inflows.
● Ensure greater age neutrality in employers’ personnel decisions, starting with the hiring process. An objective could be for the hiring rate of older workers in Norway to reach the OECD average.
● Simplify and co-ordinate age limit rules, with a view to removing age as a mandatory reason for retirement.
● Ensure that the legislative and organisational framework is neutral with regard to part-time and full-time jobs, and support initiatives to promote a “full-time culture”.
Source: Organization for Economic Co-operation and Development
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