Research Report

Incentives and Possibilities for a Longer Work Life

Politicians should pay attention to the 65–69 age cohort if they want to continue to increase labour market participation among the elderly. Letting sickness and unemployment insurance cover all workers until the age of 70 appears to be a logical means of lengthening working life. This is the recommendation given by four researchers in an SNS report.

The researchers describe how the demographics of the Swedish workforce have changed over the years and compare these changes to international standards. They also analyse the ways in which health, education, work environment, and public policies have affected workforce demographics. Their conclusion is that political developments have been of great importance.

‘The most important political change in this area for Sweden is that step-by-step early retirement has been converted into disability insurance coverage. This disability insurance has been streamlined to include only lost income due to declining health at the same time that medical requirements for qualifying as disabled have become stricter,’ says Mårten Palme, Professor of Economics at Stockholm University.

For men in the 60‒64 age cohort, the workforce participation rate increased from 55 percent at the end of the 1990s to 75 percent in 2017. For women in the same age cohort, the rate was 70 percent in 2017.

Among those who continue to work past the previous typical retirement age of 65 years, very little has changed during the past few decades. Participation rates among 65‒69-year-olds are still running at very modest levels – around 25 percent for men and just under 20 percent for women.

‘There is considerable potential to increase the employment rate for this age cohort. It would be good to let the unemployment and sickness benefits include everyone up to 70 years of age. This would contribute to a change in the norm for when one usually retires,’ says Lisa Laun, researcher at the Institute for Evaluation of Labour Market and Education Policy (IFAU).

The report also shows that the more stringent rules for disability benefits, which were introduced in the 2000s, explain a significant proportion of the loss of confidence in Försäkringskassan, the official agency charged with implementing them. In addition, the report shows that a tightening-up of the social insurance system may have played a part in a loss of confidence in the political parties behind the changes.

‘There is a risk that politicians – out of fear of losing voters – do not dare to correct apparent faults in the social insurance systems. It is therefore important to obtain broad agreements between the political parties and to let public agencies be independent in order to achieve a lasting insurance system,’ says Per Johansson, Professor of Statistics at Uppsala University.

Authors

Per Johansson, Professor of Statistics, Uppsala University and the Institute for Evaluation of Labour Market and Education Policy (IFAU)

Lisa Laun, Ph.D. in Economics and Researcher at the Institute for Evaluation of Labour Market and Education Policy (IFAU)

Mårten Palme, Professor of Economics, Stockholm University

Helena Olofsdotter Stensöta, Associate Professor and Senior Lecturer at the Department of Political Science, University of Gothenburg