Tal
Le Puy-en-Velay, Frankrike 24 november 2008
Sven Otto Littorin, Arbetsmarknadsminister

Anförande på seminarium i Frankrike om äldre på arbetsmarknaden

DET TALADE ORDET GÄLLER

It is an honour to be here today in this picturesque town of Le Puy-en-Velay and present to you the Swedish national experience on older workers.

Before I start, I would like to give my special thanks to Mr. Wauquiez for having invited me to come and speak on such an important and timely topic; employing older people within the European Union. Today we are all facing a demographic challenge. We need to take this into consideration when we formulate our policies.

Seven years ago, in Stockholm, an important target was set by the European Council: the employment rate of older workers should reach 50 percent by 2010.

Sweden has the highest labour force participation amongst older workers aged 55-64 years in the EU. In 2007 our labour force participation for people aged 55-64 years old reached 70 percent. This can be compared to the EU-average of 45 percent.

Unfortunately, these figures do not mean that we have reached our goal and that we can just sit back, and tell others how we have been successful. We have been successful but our commitment doesn't end today. Our population is ageing and we need to meet this challenge. We need to be aware of the demographic change that is taking place and we need to take necessary measures. The amount of people in Sweden over 65 in relation to the population between 15 and 64 is expected to increase from 26 percent in 2004 to 39 percent in 2050. This will have an impact on the public finances.

A lower employment will lead to weaker public finances and make it harder to finance the welfare system. The government has worked intensely to increase the labour force participation, reduce sick leave and prolong the working life. These issues need to be addressed in order to ensure the welfare of future generations.

I don't think I need to say anything more about why employing older people is so important, I am sure you are all very aware of that. What I would like to tell you more about is our policies in Sweden. What we have done, and continue to do, in our efforts to maintain a high employment level for older workers.

In September 2006 a new government was elected in Sweden. Our focus to fight against exclusion on the labour market was an important question in the election campaign. Today our focus concerning the labour market is to increase employment, reduce social exclusion, improve the functioning of the labour market, permanently raise employment levels in the long term and prioritise those who are most detached from the labour market.

The demographic challenge of an ageing population calls for measures that make people want to work longer. Increasing labour supply and demand, by strengthening the economic incentives to work, not the least for older workers, has been a high priority during these last two years. The Swedish government has generally focused on three main issues;
1. increasing the supply of labour
2. increasing the demand for labour
3. matching jobseekers and employers

We have created economic incentives that encourage companies to employ older workers and keep older workers on the labour market. This has been achieved by new measures such as new start jobs, in-work tax credit and the abolishment of the special employer's contribution that previously was payable by the employer on reimbursements to employees over the age of 65. We have also reformed the pension system, thereby postponing the retirement age.

I would first like to discuss our measures to increase the labour supply of older workers.

In order to increase the supply of labour we have introduced an in-work tax credit. The in-work tax credit means that everyone with an income gets to keep more of their salary. People who are 65 years or older get a larger tax credit. Our purpose is to increase the economic incentives to remain on the labour market, even after a possible retirement.

In Sweden we have an active labour market policy. To a certain extent, this has contributed to an increased supply of older workers and a higher employment rate amongst the same age group. An active labour market policy enables older people to work longer. Our work and activation programs are available to people who are in the greatest need of support. This includes older workers who often find it more difficult than younger people to find a new job if they lose their old one. The programmes enable people to improve present skills or find new ones. Thereby older people become better at adjusting to the changing demands on the labour market. However, the work and activation principle means that employment will always take precedence over programmes or the passive payment of unemployment benefits.

Another vital component of the Swedish system is the career transition agreements. These agreements provide active support for redundant workers, and help them find new jobs. The transition agreements in the Swedish labour market cover about half of the labour force. The employers finance the activity by paying a share of the total wage bill, at present between 0.15 and 0.3 per cent.

The career transition agreements consist of various measures; job-seeking, counselling, employment training, support to set up businesses. In 2007 roughly 20 percent of the people who were given these types of support were 55 years or older. The agreements are especially important for older workers who perhaps, for the first time in their lives, find themselves out of a job.

The career transition agreements are seen as a supplement to the public employment service. They contribute to improve the functioning of the labour market, enhance the security of employees, and promote geographic and professional mobility on the labour market.

The Swedish pension system was reformed in 1999. The main reason for the reform was that the old system was insensitive to economic and demographic changes, and therefore had become underfinanced. Also, the old system was based on the income from the 15 best income years. This favoured people who had had an uneven income development or had been in employment for a shorter period of their lives. Two people with the same life-income could therefore receive very different pensions despite an equal contribution during their working life.

The new system is based on the principle of life-time earnings. Every contribution gives a corresponding pension right. The total size of the pension depends on the total amount that has been paid into the system. This principle of life-time earnings is fundamental since it encourages a longer working life. The system is fully financed by contributions, which are paid partly by the employer and partly by the employee.

There are other important changes in the new pension system. Today the retirement age is flexible. People have the right to stay at the workplace until the age of 67, instead of 65, which was previously the case. The system also allows the individual to combine pension and work and thus postpone the final retirement age. Partial retirement is possible from the age of 61. This not only encourages a longer working life but also facilitates a soft gradual transition into retirement.

The government has taken many measures to increase the demand of labour, this is especially relevant for the older work force.

Many older workers feel that their knowledge is not being made use of. Many also feel that, within their companies, they are not given the same possibilities to further their knowledge compared to younger employees.

Here we have an important task in making it more favourable to employ older workers. An example of what the government has done to increase the demand for older workers was to abolish the special employers contribution paid by the employer on reimbursements to employees over 65. This employer's contribution amounted to 16,16 percent on the reimbursements (24,26 percent on people born earlier than 1938).

An important component of the Swedish labour policy is the introduction of new start jobs. New start jobs mean that employers' contributions are completely waived for people who have been receiving unemployment benefit, activity support, sickness benefit, disability pension or social allowance for more than a year.

The economic contribution for workers over 55 is given for a period equivalent to twice as long as the individual has been absent from working life, though no more than 10 years. New start jobs have been available since 1 January 2007. Today volumes reach 17 000 people. Almost 25 percent are 55 years or older.

In 2008, "well-again jobs" were introduced. Employers get a tax relief that is equivalent to approximately the double amount of the employers'contributions. The "well-again jobs" apply to new employees who have received full compensation for a year or more in terms of sickness benefit, rehabilitation cash benefit, or sickness and activity compensation.

To a large extent, our high labour force participation amongst older workers is a consequence of a high participation rate of women in the labour market. In order for all countries to reach the goals that were set out in the Lisbon Strategy, it is imperative to increase the female employment rates on the labour market. In Sweden the high participation rate of older female workers was made possible by three significant reforms during the 1970's;
1. individual income taxation in 1971
2. a major development of public child care and elderly care facilities and, finally,
3. parental insurance which replaced maternity benefit in 1974.

The development of public child care and elderly care facilities meant that women, who traditionally took the main responsibility for the caring of children and elderly relatives at home, were able to go from unpaid domestic work to paid work on the labour market.

Rounding off my discussion I would like to stress that we need to promote employment at all ages. As concerns older people, we need to create incentives so that they want to remain active on the labour market. Older workers possess enormous knowledge that has accumulated over a whole working life. Their great advantage lies in their experiences of past trial and errors. It is important that younger people can benefit from this and that the older generation passes on what it knows to future generations. This transfer of knowledge is essential.

I believe attitudes play an important role in determining at what age it is suitable to retire. But it takes time to change attitudes. Fortunately, people born during the 1940's have better education and better health than previous generations. Therefore it is probable that they are more positive to working until an older age.

To sum up my main points, our policies in Sweden have focused on simultaneously increasing the supply and demand for older people on the labour market. Our policies make working more advantageous and this is essential in order to permanently increase employment. The future competitiveness of the EU depends on the employment of older people. And as I said at the beginning of this talk, the demographic change calls for a high priority in this area.

Thank you!

Additional information regarding elders' high employment rate in Sweden

Another reason for the relatively high employment rate for older people is the Swedish labour legislation; one of the guiding principles is that the employee who is hired last is the first to be dismissed. This has benefited older employees since they have generally been employed for a longer time.

To a large extent our high labour force participation amongst elder workers is a consequence of a high participation rate of women on the labour market. In 2007 the labour force participation for men aged 55-64 years old was 72 percent and for women it was 67 percent. In the EU he labour force participation was 54 percent for men and 36 percent for women.

Another example of specific policy measures recently taken by the Government is that we have reformed the public employment service. Effective matching is a complex task that demands an effective organisation. The new PES has been reformed so that it can offer better service to jobseekers and employers alike.