Sweden has one of the oldest populations of all OECD member countries. The number of older people is rising rapidly and, by 2030, almost one in four Swedes will be over the age of 65. There is a risk that this will generate large upward pressures on public expenditures, while at the same time provoking acute labour shortages and slower economic growth. There is no simple solution to reduce these risks, but one thing is clear: to maintain an adequate level of social protection without increasing taxes, the employment rate of older workers (i.e. individuals aged 50 and over) will have to increase. This means that the long-term trend to early retirement will have to be reversed...

Over the past three decades, the demographic position of Sweden has changed considerably. The Swedish population is ageing rapidly and as a result, has experienced a notable increase in the average age of the population. Key factors behind the transition include declining fertility rates and rising life expectancy...

Labour force participation rates have generally been rising for women and falling for men during several decades, bringing the two rates closer. Both the decrease for men and the increase for women are to a large extent the result of changes in the tax and welfare system during this period. The difference in overall participation rates between men and women in Sweden is currently 3.5 percentage points, but was as low as 0.9 percentage points in 1993. Currently, the overall labour force participation rate amounts to 78.4%, which is more or less the same as 30 years ago. In general, employment rates are high for most age groups and only start to decline above the age of 60...

Supply-side factors are important explanations for the actual retirement decisions of older people. Individual decisions to work depend highly on benefit levels and eligibility criteria in the public pension system and in other social security schemes, but also on tax rules for occupational and individual pension schemes. This chapter analyses the disincentives to continue working that may arise within the Swedish tax and welfare benefits system. However, it is important to bear in mind that the role of the welfare system is to support vulnerable groups and to cover both temporary and permanent losses of labour income...

Demand-side factors are the other side of the equation explaining lower employment rates for older people than for prime-age people. In general, employers’ willingness to hire older people depends on factors such as their perceptions about the adaptability and productivity of older people, and the wages they have to pay for older workers relative to younger ones. Moreover, institutional settings such as employment protection legislation may affect hiring and firing practices of employers with respect to older workers. Therefore, this chapter examines employers’ attitudes to older people and how these might reflect age discrimination or higher labour costs for older workers. It also discusses whether employment legislation aiming to protect older workers may in fact be a hindrance to their employment...

Employability can be defined as having the necessary skills and ability to either remain in a job, to switch easily between jobs or to find a new job in the case of job loss. More generally, it means ensuring that there is a good match between the type of jobs on offer and the types of jobs that are being sought. The degree of employability of each person depends crucially on his or her level of formal education, having up-to-date skills, and relevant work experience and on the types of jobs available. It will also depend on appropriate incentives being in place to take up job opportunities if unemployed. The public authorities have a responsibility to supply labour market programmes, employment services and education programmes that are suitable for older people. Firms also have a role in providing training opportunities for their employees and suitable working conditions and working-time arrangements. However, the responsibility also lies on individuals to seek to continuously upgrade their skills. This chapter analyses older people’s employability and how it could be enhanced...

To manage the demographic and economic challenge ahead an increase in the utilisation of potential labour supply is needed. This can be achieved by increasing employment rates; actual average hours of work; or the average number of years spent in the labour market. Other potential solutions could include raising immigration rates and, as a longer-term measure, encouraging higher fertility rates...