Friday, June 21, 2013

Norway: OECD Issues First Country Report on Encouraging Labor Participation by Older Workers

The OECD, as part of its aging and employment policies program to review of policies to encourage greater labor market participation at an older age by fostering employability, job mobility, and labor demand, has issued its first country report. In "Ageing and Employment Policies: Norway 2013. Working Better with Age," the OECD finds that Norway is better placed to cope with population ageing than most other countries, but that 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 the report, Norway has the fourth-highest employment rate for the age group 55-64 in the OECD area, at 71% in 2012, but Norway’s labor 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. Among other things, (1) 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, (2) 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, and (3) 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.

The report 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: OECD Press Release (June 21, 2013)

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