In many respects, the Norwegian labour market is in fine form: unemployment is low; participation rates, notably of old-aged workers and women, are above OECD averages; and the labour force is rising. Yet, the labour market faces challenges. Private sector employment has grown modestly over the past 15 years, hours worked per employee are the lowest among OECD countries and the expected retirement age is 7½ years less than the formal age of retirement. Above all, Norway faces one of the highest shares of persons on disability and sickness absence benefits among OECD countries. Tightening eligibility criteria and reducing the generosity of sickness absence and temporary disability schemes seems necessary. For instance, reducing the number of days lost due to sickness absence to the EU average level would boost hours worked in Norway by 3%.