We take a closer look at Finland and Norway to see how these countries are dealing with demographic change and trying to make the most of their ageing populations.
Within ten years, the number of people aged over 60 will number more than 1 billion. At the same time, the rate of growth of 'working age' populations is now declining around the world, with Europe's working-age population already starting to shrink. These changes will necessitate significant changes. And one of the simplest, and probably fairest, solutions is to increase the number of older people in work. Over the past decade, both Finland and Norway have undertaken action to address this issue.
The Finnish approach
The Finnish National Programme on Ageing Workers (FINPAW) aimed to address exactly the same issues that companies across Europe and beyond are now facing today. The programme focused on helping ageing workers to perform their work better and, at the same time, on promoting more favourable attitudes at companies to employing older workers.
By addressing the obstructions to employing older workers and by providing positive solutions to enable and encourage the employment of older workers, the FINPAW programme prepared the way for the Finnish 2005 pension reform that delayed the age of retirement and adjusted the pension system to increasing longevity rates.
Although the age of retirement in Finland is presently set at 65, it is now possible to defer receipt of pension past this age. It is also possible to work and receive a pension at the same time (while accruing extra pension) until the age of 68.
Flexible retirement in Norway
Norway has also followed a similar path. Since the early 1980s, the workforce participation of older workers in Norway started to decline, with employment participation rates of 64-66 year-old men falling from 66% to 40% from 1980 to 1997. It was clear that Norway, like Finland was losing prematurely an increasingly valuable part of its workforce. At the same time, it was also apparent that it would become more and more difficult to pay for the growing number of longer-lived retirees.
Norway introduced the Flexible Retirement Act (Ny Fleksibel Alderspensjon) enabling the flexible retirement of workers between the ages of 62 and 75 (with the retirement age for public pensions presently set at 67). Norwegians can – and do – continue working past the age of 67 and defer their pension, or continue to work while receiving their pension. In addition, the Norwegian retirement system is now automatically adjusted to accommodate future increases in longevity. Workers can then choose either to work longer or to receive a lower pension in retirement.
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