FRANCE The

Trends
Denmark
1. Introduction
The challenges from an ageing workforce are high on the Danish
political agenda. Reforms of tax, labour market, integration and
immigration policy are all discussed with reference to long-term
demographic projections showing that the age structure of both the
population and the workforce is changing.
One important consequence is a reduction in the share of persons of
working age relative to the entire population. Thus the share of
persons aged 18-59 years in the total population is expected to fall
from approximately 59% in 2002 to 52% in 2030 (Finansministeriet
2002, p. 20). The number of persons above the official retirement
age of 65 years will increase from approximately 800,000 persons in
2002 to 1,100,000 persons in 2030 thus putting a heavy strain of the
provisions of the welfare state with respect to pensions, healthcare
etc. (Regeringen, 2002, p. 4).
Both the previous and the present government have set a target of
an increase in total employment of approximately 85,000 persons
over the years 2000-2010 as a cornerstone of their economic
strategies. This target is put into perspective by the observation that
the demographic development in itself will cause a reduction in the
workforce of about 66,000 persons by 2010. However, reaching the
employment target is a precondition for an acceptable growth in
public consumption and a lower tax on earned income
(Finansministeriet 2002, p. 22-24).
Thus the discussion about the labour market situation of older
workers must be seen in this broader context of a strong focus on the
need to face up to the challenges from demographic trends.
Furthermore, the development in the workforce has not been of a
purely demographic nature. While the participation rate of older
workers is rather high in Denmark compared to other EU countries,
the Voluntary Early Retirement Pay for persons aged 60-67 years
(introduced in 1979) has contributed to a fall in the average
retirement age. Thus the average actual age of retirement had
declined from 63 years in 1980 to 62 years in 2000 (Finansmisteriet,
2002, p. 87). There are several possible explanations for this fall in
the actual retirement age apart from the special programmes to
support early retirement. One should also mention the high level of
unemployment prevalent until the mid-1990s, the expansion of taxsubsidised
private pensions schemes and the increased economic
freedom of elderly house owners, who have repaid their mortgages.
2. The labour market situation of older workers
In general, employment rates are high in Denmark. As shown in
Table 1, this also goes for older workers, where the employment rate
in 2001 is 58% compared to an EU average of 39%. The employment
rate is lower for women. This is the case for all age groups but, for
the older age group, the relative difference is somewhat larger. This
observation mainly reflects a generation effect in the sense that the
convergence in employment rates between men and women is larger
for younger than for older cohorts.
Table 1: Employment rates (percentage), 1990-2001
1990 1995 2000 2001
Age 15-64, all 74.8 73.4 76.3 76.2
Age 15-64, women 70.2 66.7 71.6 72
Age 55-64, all 54.0 49.8 55.7 58
Age 55-64, women 41.5 35.9 46.6 49.7
Source: Data provided by the Commission
However, the averages calculated for the whole age group of 55-64
years hide an important difference within the group, which has been
highlighted in a recent study. If one only looks at the participation
rate for persons aged 55-59%, the rate is 77%, which can be
compared to an average for the OECD of 60%. In Denmark the
participation rate, however, drops steeply after the age of 60. For the
age group 60-64 years, the Danish participation rate falls to 34%,
lower than the OECD average of 38%. (Dansk Arbejdsgiverforening,
2002). The effect of the Voluntary Early Retirement Pay,
which provides an attractive economic alternative to work after the
age of 60, is significant.
Table 2: Unemployment rates (percentage), 1990-2001
1990 1995 2000 2001
Age 15 and above, all 8.3 7 4.5 4.2
Age 15 and above, women 8.9 8.6 5 4.8
Age 55-64, all 6.1 8 4 4
Age 55-64, women 7.5 9.8 4.2 4
Source: Data provided by the Commission
Table 2 shows the unemployment rates for all workers and for older
workers. The main observation is that unemployment tends to be
lower for older workers than for all age groups. On the other hand,
this general picture again hides an important difference within the
group of older workers. Thus, in 2002 the registered average
unemployment was 8.6% for older workers aged 55-59 years, but
only 5.7% for workers aged 60-64 years. One should note that these
data from the unemployment register are not fully comparable to
the data in Table 2 taken from the labour force surveys. However, the
possibility to retire from the age of 60 years is clearly reflected in the
data.
Concerning flows into unemployment for different age groups,
available information indicates that the risk of becoming
unemployed is not significantly higher for older workers than for
others. But once older workers have become unemployed, their
chances of returning to work are much lower than for the younger
age groups (DA, 1997, p. 44). Thus, for the unemployed of less than
25 years of age, more than two out of three return to employment
within two years. For the unemployed over 50 years of age, only one
in four become re-employed (Ingerslev & Pedersen, 1997, p. 18).
68 Spring 2003 | European Employment Observatory Review