Employment among older people has been increasing over a long period of time. This is at least partly due to various political measures aimed to increase labour force participation among people in the age group 55-74 years and the demand for older workers. But according to a new Economic Commentary, there is still scope to increase employment and the number of hours worked among older people.
It is important to the Riksbank to understand the reasons for the increase in labour force participation and employment among older people. This development affects potential employment and the assessment of resource utilisation, which are both important to monetary policy.
The research literature usually highlights a decline in sickness absence as the most important reason. Increased educational levels, the pension reform at the start of the millennium and targeted tax cuts during the 2000s have probably also contributed. In recent years, the large shortage of labour has probably also led to more older workers remaining in the labour market.
Despite the high employment rate, there is still spare capacity in the labour force among older people. There are many people aged 55-64 who want to work more than they do now.
As life expectancy rises and the retirement age is increased, the labour force participation rate and the employment rate among older people are expected to continue to rise. As 55-74 year olds comprise around 30 per cent of the population aged between 15 and 74, older people’s labour force participation has relatively large significance for the total labour market development.
