Labour force participation among older persons after the Norwegian pension reform

There is a demand for analyses of changes in employment and how many who receive pensions after the Norwegian pension reform of 2011. This report describes change in the labour force participation among older persons. Data on who received pensions were not available when this report was written, but this aspect will be addressed in a future edition.

Since we wanted to use quarterly data with a short production time, this report will primarily give a descriptive analysis of the change, and will not try to explain the underlying causes. The pension reform can be one important explanation, but not the only cause for the changes in labour force participation among older persons. For instance are demographic changes in the population important. The descriptive analysis is however designed in such a way that it can indicate possible effects of the pension reform. Firstly, by including persons aged 60 and 61 who, in most cases, can not receive old-age pensions. Secondly, by distributing the older persons on different groups, this indicates how the different groups are adapting to the pension reform.

Change in employment is described by two indicators. One indicator is the change in share of the population who are employees. The second indicator is the share of the employees in a given year who are still employees one year after. This second indicator shows the share of the employees who keeps on working, which was one of the main goals of the pension reform.

For several years, even before the pension reform was implemented in 2011, the share of the population who are employees has had a certain growth for all one-year age groups from 60 year and above. But the change from 2011 to 2012 shows that all one-year age groups from age 62 and above have had a stronger growth in the participation rate, than persons aged 60 and 61. The growth has been particularly strong for those aged 62 and 63, and this applies for both women and men. Further, the growth has been particularly strong for those with secondary education as their highest level of education.

For the second indicator, the share of the employees in one year who are still employees one year after, we present figures for those who go from being 61 to 62 years of age. The results show that there was a stronger growth in the share of the employees who are still employees one year after, from 2011 to 2012 than in the previous three years. The growth was clearly stronger for persons with primary school and secondary school than for people with a higher level of education. Still, the persons with higher education have a higher level number of employees who kept on working.

Further on, the growth in the share of the employees who are still working one year after was stronger in the private sector than in the public sector from 2011 to 2012. The different arrangements for early retirement pensions in the private and the public sector, and different adjustments to the pension reform in the two sectors can be one cause for why the share of the employees that kept on working increased more in the private sector. Especially this applies when we compare persons who do not have a higher education. Since the private sector has a much greater share of employees without a higher education, this also explains much of the differences we find between the private and the public sector.