Employment Policies for the 50+: Denmark (2016)
Denmark is among the nations in which people retire at a fairly high age. In 2014, 63 % of the population aged 55-64 years were in employment. This is the fourth highest in EU-28, where the average is 52 % (Jensen & Madsen 2015:40). In this age group, the proportion of the employed has indeed increased from 2000 to 2014 by 7 percentage points, up from 56 %. The increase was larger for women, from 47 % to 58 %, than for men (64 % to 68 %). Jensen and Madsen (2015) argue that the increase is a result of both a generational and an educational effect, with single-income households as a phenomenon being in decline and high female educational attainment, also among women in the upper working ages.
Discussions on the ageing population and the consequences for the level and expenditure on welfare have been ongoing since the mid-1990s. Debates were initiated with a report from the Danish Ministry of Finance on the pension system and the future support burden (Ministry of Finance 1995, Jensen & Rostgaard 2015). The level of debate increased during the early 2000s. During this decade, the debate concentrated on benefits (e.g. early retirement benefit and pension), whereas the services of the welfare state were debated during 2010s, with a focus on the contents and structuring of home care services (Jensen & Rostgaard 2015:10).
During these debates, numerous committees and commissions were established to make recommendations on the organisation of the pension system in order to meet the challenges, and the evaluation of the consequences seems to have intensified over time. The Welfare Commission, established by the Ministry of Finance, made its recommendations in the mid-2000s, stating that the financial consequences of demographic change would erode the welfare system, thus calling for a radical change of the entire welfare state (Jensen & Rostgaard 2015).
At the same time, the so-called 'Alternative Commission of Welfare', established by the Danish Council of Social Welfare (Socialpolitisk Forening), argued that a number of solutions would present themselves, even if nothing were done (Jensen & Rostgaard 2015). Thus, they argued that the underlying principles guiding the work of the Welfare Commission were wrong. They argued 1) that with increasing levels of education, better health in older age, more interesting jobs, etc., people are more likely to stay in their jobs, 2) that increasing life expectancy does not per definition mean a need for care; we get older because we get healthier, and 3) that the State Pension will lose its significance, while pensions based on collective agreements become ever more important (Jensen & Rostgaard 2015:10). In spite of this, major reforms were implemented in 2006, 2011, and 2013, with significant changes to the early retirement scheme, the State Pension, and the pension benefit system. The changes to the Danish system are among the most far-reaching pension reforms in Europe (Jensen & Rostggard 2015:9-11).
Concurrent with discussion on pensions and services, debates regarding disability pensions were ongoing. Here, focus was primarily on access to disability pensions, especially for people under the age of 40, but reforms affected men and women over 40 as well. Further, a special Senior Disability Pension was introduced. Reforms were implemented in 2003 and 2013, the latter primarily affecting people under age 40.
In the 2003 reform, the idea was to create an inclusive labour market in order for people with disabilities to stay in the workforce. The definition of flexijobs was expanded so that the arrangement could be used for people with an extremely limited ability to work. A flexijob could be done by people with the ability to work as little as two hours a week (Nørup 2014). Second, the reform stresses that the ability to work is verified prior to granting the pension. Last, changes were made to the amount of the benefit, etc. (Nørup 2014:57-63). The overall aim was to limit the number of people permanently excluded from the work force.
In the 2013 reform, the allocation and coordination of the vocational rehabilitation programme was ceded to cross-disciplinary teams in the municipalities. The organisation of teams and which professionals to include are governed by policies at the municipal level (Nørup 2014:64-65).
As of 1 January 2014, a Senior Disability Pension was implemented. The purpose is to ensure that people who are worn down or who have serious health problems at the end of their working life have easy and simplified access to the disability pension and thus a quicker clarification of their future. The Senior Disability Pension can be granted to people who are not more than five years under than state pension age and who have had a prolonged and current attachment to the labour market, with full-time work and at least 25 years in the labour market. The ability to work must be limited to such a degree that all possibilities of self-providing have been attempted, including a flexijob (Act of the Senior Disability Pension, 2013). General conditions regarding citizenship and time of residence apply (Act of Law on Social Pension, 2015).
Early retirement policies
During debates in the late 1990s and through the 2000s, the eldest members of the workforce were spoken of as 'the grey gold', emphasising their positive contribution to the labour market and being conducive to the view that they have much to offer to the workplace. The idea was that the labour market worked to exclude the older members of the workforce on the one hand, and on the other that the Pension System worked as a pull factor, making the transition to retirement attractive due to fairly good terms and level of benefits (Jensen & Madsen 2015:41). The main focus in the subsequent reforms was thus on initiatives that could make those retiring before pension age stay in the workforce longer. Reforms of the Early Retirement System were implemented in 1998, 2006, and 2011.
The reform of 1998 (implemented 1 January 1999) changed two things in particular: it was made financially attractive to postpone early retirement until at least the age of 62 (as opposed to at age 60) and an Early Retirement Payment was implemented. In order to have the right to early retirement, one should pay the fee. The decision to opt out of early retirement was made particularly by those most in need: individuals with low education and low salaries. The fee was approximately 670€ per year (Jensen & Madsen 2015).
The 2006 reform was signed by all major political parties and followed the work of the Welfare Commission, a commission established by the liberal government in 2003, whose task was to make suggestions on how to meet the future challenges. They suggested an abolition of early retirement, but the agreements in the Welfare Settlement 2006 were not quite as radical. The reform meant a postponement of early retirement until age 62 and an increase in the state pension age to 67, with a gradual increase.
In 2011, the government (the Liberal Party of Denmark and the Conservative People’s Party), with the Danish People’s Party and the Social-Liberal Party, signed an agreement with three main elements: The implementation of the 2006 reform was sped up by five years, meaning that the reform will be implemented in 2023. The Early Retirement Scheme was reduced from five to three years and the early retirement age was thus set at 64. The Senior Disability Pension was introduced (described elsewhere) (Jensen & Madsen 2015:46). Last, the agreement meant a deduction in other pension income or wealth in the amount granted, which in reality means an abolishment of the Early Retirement Scheme (Jensen & Madsen 2015:46).
Authors – Contributors
- Andersen, J. G. “Det danskse pensionssystem [The Danish Pension System]”. In Jensen, P.H., & Rostgaard, T. “Det aldrende samfund [The ageing society]”. Frydenlund Academic (2015).
- Danish Ministry of Children, Gender Equality, Integration and Social Affairs. “Bekendtgørelse om seniorførtidspension, BEK no. 1555 of 18/12/2013 [Act of the Senior Disability Pension]“. 2013.
- Danish Ministry of Children, Gender Equality, Integration and Social Affairs. “Bekendtgørelse af lov om social pension, LBK no. 10 of 12/01/2015 [Act of the Law on Social Pension]“. 2015.
- Jensen, P. H., & Madsen, P.T. “Seniorerne og arbejdsmarkedet: beskæftigelsesmønstre, politiske initiative og effekter [The Seniors and the labour marked]”. In
- Jensen, P.H., & Rostgaard, T. “Det aldrende samfund [The ageing society]”. Frydenlund Academic (2015).
- Jensen, P.H., & Rostgaard, T. “Det aldrende samfund [The ageing society]”. Jensen, P.H., & Rostgaard, T. “Det aldrende samfund [The ageing society]”. Frydenlund Academic (2015).
- Nørup, I. “Arbejde og Sygdom - og om at være en del af fællesskabet [Work, Disability and Social Participation]”. PhD thesis. Department of Political Science, Aalborg University (2014).