The demand for labour in the Norwegian Health and Long-Term-Care sector towards 2060

This report asses the input of labour required to satisfy the demand for Health and (health related) Care (HC) services in Norway towards 2060. We also project the demand for sheltered housing. Realistic projections of these variables are important for planning of the capacity in the HC sector, which is mainly a government responsibility in Norway. Thus, HC projections are also of key relevance in long run assessments of government finances. The projections are based on a methodology that is quite standard. It emphasizes the importance of age dependency in the demand for different HC services. The population is divided into groups defined by gender and age. The demand for each service from each population group is computed as the product of i) the ratio of man years per user (reflecting service quality and productivity); ii) the ratio of users per person; iii) number of persons. The ratios in (i) and (ii) are estimated on individual data from administrative registers. We rely on the official population forecasts published by Statistics Norway in 2018 when projecting the number of persons in each population group.

We calculate several scenarios of the demand for each specified HC service, depending on assumptions on the following driving forces: i) health status of the elderly; ii) the quality of the services; iii) productivity; iv) unpaid care supplied by family members and friends. Our base line scenario combines the main alternative in the population projections with declining user ratios due to health improvements in tandem with the projected fall in mortality among the elderly, as well as quality and productivity improvements corresponding to a 0,5 percent growth in labour/user ratio each year. In the base line the HC employment increases from 310 000 man years (13 percent of total employment) in 2017 to 415 000 and 618 000 man years in 2035 and 2060, respectively. Compared with assessments of total labour supply till 2060 (external to this report), the HC sector will absorb 15 percent of all man years in 2035 and 22 percent in 2060. If the estimated employment effects of the pension reform of 2011 are neutralized by other effects, these labour shares rise to, respectively, 18 and 29 percent.

The required HC employment may be substantially higher if health improvements among the elderly do not reduce the HC demand, if the difference between quality improvements and labour saving productivity growth increases, if the number of elderly grows faster and/or unpaid care grows more slowly than in the base line.

The base line assumptions imply that the number of persons living in all kinds of sheltered housing will grow from nearly 45 000 in 2017 to 58 000 in 2035 and to 81 000 in 2060. A fraction of these, corresponding to 23 000 in 2017, 30 000 in 2035 and 42 000 in 2060, will have full time manning.

The projections are quite sensitive to the driving forces listed above, the development of which are quite uncertain. Still, we think that they provide support for the view that it is rather unlikely that the quite certain and strong growth in the number of elderly, combined with demands for more and better HC services, will not cause substantial growth in the demand for HC employment, also relatively to the total employment. Realization of this demand faces two potential problems: i) a much larger share of the labour force than today will have to choose the HC sector as their working place; ii) Together with growth in other government expenditures, tax financing of the projected demands for HC may require tax rates that are politically unacceptable.