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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
3. Recent trends in policies As already mentioned, the trends in labour market attachment of older workers have spurred political debate and proposed changes in strategy (Arbejdsministeriet, 1996; The Government, 2002; Ministry of Social Affairs, 2002). There are three main elements in this discussion: • The increased demands on the Danish welfare state stemming from the expected growth in the older age-groups whose need for caring and health services is higher than average; • The changes in the distribution of income and consumption between the productive and non-productive parts of the population leading to discussions about reforms in the public and private pension systems and the role of the taxation system in providing incentives to early retirement; • Concerns about the consequences of the stagnating or falling supply of labour, both in the short and the longer run. The shortrun concerns for the supply of labour have, of course, been fuelled by the strong economic upswing and fall of unemployment on the Danish labour market since 1994. The remainder of this article will focus on the last of the abovementioned points concerning the more direct relation between the ageing of the population and changes on the labour market and in labour market policies. Given the wide range of potential or perceived consequences of the ageing population, ideas about “active ageing” have been developed in a number of different policy areas. In relation to consequences for the welfare state, “active ageing” of course implies strategies to keep older persons healthy, selfsupporting and living in their own homes for as long as possible. With respect to the labour market, “active ageing” has led to considerations concerning: • the economic incentives to early or flexible retirement; • increased emphasis to upgrade the qualifications of the older parts of the workforce (including the elderly unemployed); • concerns about how to change the attitudes of employers towards the older persons in the workforce. In the following section a more detailed survey is given of the recent trends in policies to influence the situation of older workers on the labour market. Spring 2003 | European Employment Observatory Review 69 Trends 3.1 Policies concerning the retirement age and early exit Since 1970, all persons above 67 years of age have been eligible for the public old-age pension, though the amount paid depends on whether the recipient has supplementary work-income. From 1999 the retirement age has gradually been reduced to 65 years. The change will be fully effective by 2004. Retirement at 65 is not compulsory, but marks the age from which one qualifies for the old-age pension. In the public sector the maximum retirement age is 70 years. In the private sector there is no general formal retirement age; in many private firms the compulsory retirement age is 67 years. Most private or collective pension schemes permit retirement from the age of 60 years. For a number of reasons the actual average retirement age in Denmark is significantly below 65 years of age (cf. section 1). This is caused by a number of factors including the existence of several schemes allowing for early retirement from work. The most important of these schemes is the so-called Voluntary Early Retirement Pay (in Danish: “Efterløn”), which was introduced in 1979 as a response to the high and rising level of unemployment in the 1970s. This scheme meant that members of an unemployment insurance fund aged 60 to 66 years could choose to retire and receive a public pension defined as a share of the unemployment benefits. The share was 100% of benefits for the first 21 /2 years and then gradually reduced. It was not a condition that the person was actually unemployed at the time of retirement, but membership of the unemployment insurance fund should have lasted for 10 years within the last 15 years. The scheme proved very popular – and costly to the state budget – and it was tightened on a number of occasions in the 80s and 90s. The rationale behind the Voluntary Early Retirement Pay was both to allow older unemployed workers to retire in a period of labour surplus, but also to create job openings for younger persons, when employed older workers decided to take the opportunity of the early retirement benefit instead of staying in the job until official pension age. In 1987 a part-time pension was introduced which was intended to allow both wage earners and self-employed persons aged 60-66 Figure 1: Annual growth rate in the number of persons receiving Voluntary Early Retirement Pay, 1990-2001 percentage 10 9 8 7 6 5 4 3 2 1 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Source: Statistics Denmark
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Employment & European Social Fund E
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European Employment Observatory Rev
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Table of Contents Policies Overall
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AUSTRIA The programme of the Austri
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FINLAND Essential changes to legisl
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At least one quarter of the members
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in the event of a third and subsequ
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of active labour-market policy, as
Page 17 and 18: Training Networks Programme The Tra
Page 19 and 20: Subsequently, the provisions concer
Page 21 and 22: a strengthening and revitalisation
Page 23 and 24: workers into the labour market as w
Page 25 and 26: This reinforced targeting and resul
Page 27 and 28: BELGIUM The Occupational Immersion
Page 29 and 30: Agreement on converting 10,000 subs
Page 31 and 32: outplacement procedure, its duratio
Page 33 and 34: Integration agreements Another impo
Page 35 and 36: and local job and volunteering oppo
Page 37 and 38: FINLAND Preliminary information on
Page 39 and 40: BELGIUM Harmonisation and simplific
Page 41 and 42: • Returning migrants Eligibility
Page 43 and 44: Playing the generation game: an ove
Page 45 and 46: workers, who have either exited the
Page 47 and 48: e) Finland’s comprehensive approa
Page 49 and 50: Compared with the figures for 1997,
Page 51 and 52: Table 4: Activity quotas by age and
Page 53 and 54: Table 6: Length of unemployment by
Page 55 and 56: 4Prospects In view of the demograph
Page 57 and 58: and is exempted from the obligation
Page 59 and 60: The Government is also addressing t
Page 61 and 62: permanente, 97-124 Desmet, R. and J
Page 63 and 64: Table 4: Breakdown by age of older
Page 65 and 66: Figure 1: Gender gap in the activit
Page 67: Figure 5: Effective and statutory r
Page 71 and 72: 3.3 Labour market programmes for el
Page 73 and 74: Figure 1: Population aged 15 and ov
Page 75 and 76: Table 3: Labour market transition r
Page 77 and 78: companies. One of these projects wa
Page 79 and 80: Table 2: Projection of the economic
Page 81 and 82: Table 8: Numbers entering Early Ret
Page 83 and 84: Figure 1: Rate of access to trainin
Page 85 and 86: Germany 1 Introduction As far back
Page 87 and 88: Figure 3: Potentially economically
Page 89 and 90: Figure 5: Take-up of early-retireme
Page 91 and 92: Figure 8: Average amounts paid unde
Page 93 and 94: 64.5% (Hain/Tautz 2001: 365) withou
Page 95 and 96: Table 6: Collectively agreed workin
Page 97 and 98: Strukturbruch und Arbeitsmark-tentw
Page 99 and 100: men (Figure 3). In clear contrast w
Page 101 and 102: Figure 5: Unemployment rates, males
Page 103 and 104: More recent data, provided by Euros
Page 105 and 106: pensions retracted to normal levels
Page 107 and 108: Ireland 1. Introduction This Paper
Page 109 and 110: Table 3: Labour force trends, 1991-
Page 111 and 112: Table 4: Employment by age across s
Page 113 and 114: Occupational pensions There are als
Page 115 and 116: Italy 1. Introduction The EU offici
Page 117 and 118: Table 7: Activity rates (age 55-64)
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Table 10: Forecasts of employment r
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should take the territorial imbalan
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2. Statistical Data 5 Number of pen
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4.2 Measures to encourage older wor
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6. Conclusions With regard to keepi
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level. No taxes and social premiums
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edundancy scheme by employers. The
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uittreding: early retirement) schem
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Figure 4: Dependency and ageing ind
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Figure 8: Percentage of working age
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Figure 11: Average age of workers l
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Figure 2: percentage change between
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Figure 4: Figure 5: 25 20 15 10 0 -
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100 90 80 70 60 50 40 30 20 10 Figu
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However, this measure does not cove
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Table 1(a): Employment rate, men, 5
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Figure 3(b): Main Source of income
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4. Policies to stimulate active age
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Appendix Table A1(a): Participation
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Venta • Salg • Verkauf • Pvl
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