PREVENTING AGEING UNEQUALLY

Transcription

1 Evaluation of the Norwegian Pension Reform Conference Oslo 25 May 2018 OECD REPORT PREVENTING AGEING UNEQUALLY Manuel Flores Economist, Pensions and Population Ageing OECD

2 OECD Report PREVENTING AGEING UNEQUALLY It is part of the OECD s inclusive growth agenda It reviews ageing and inequality trends and assesses how they have been interacting within and across generations It shows that inequalities compound along the life course It puts forward a policy agenda to prevent, mitigate and cope with unequal ageing 2

3 Key findings Exit age from the labour market and life expectancy have increased (in Norway, along with healthy life expectancy), but a strong age-gradient in employment persists. Ageing is not an equal process. Inequalities compound over the life course across different areas. Ageing prospects for younger generations could be very different from the ones of their parents and grandparents.

4 EXIT AGE FROM THE LABOUR MARKET AND LIFE EXPECTANCY HAVE INCREASED, BUT A STRONG AGE-GRADIENT IN EMPLOYMENT PERSISTS.

5 Population ageing is slower in Norway than in most OECD countries Number of people older than 65 years per 100 people of working-age (20-64), Source: Source: OECD United (2017) Nations Pensions World Population at a Glance, Prospects: based on The United 2017 Nations Revision. World Population Prospects data.

6 Labour market exit age and life expectancy followed opposite trends during

7 The share of healthy life years in remaining life expectancy at age 50 has increased in Norway Life expectancy and healthy life years at age 50 in 2004 and 2014, Men Source: OECD (2017) - Preventing Ageing Unequally based on Eurostat data. 7

8 Employment among older workers is high but falls sharply after age 65 Employment rates of workers aged 55 to 59, 60 to 64 and 65 to 69 in 2016 Source: OECD Employment Database. Source: OECD (2017) Pensions at a Glance.

9 AGEING IS NOT AN EQUAL PROCESS. INEQUALITIES COMPOUND OVER THE LIFE COURSE ACROSS DIFFERENT AREAS.

10 The mechanics of working-age disadvantage: links between health and labour market outcomes Health worsens with age Share of people reporting bad health by age, gender, and education Source: OECD (2017) Preventing Ageing Unequally. 10

11 People in bad health work less and earn less at all ages Source: OECD (2017) Preventing Ageing Unequally. 11

12 Bad health reduces men s lifetime earnings substantially (and less so for women) Impact of health on lifetime labour earnings by education levels Average across countries, 100 = Lifetime earnings for a man in good health with a medium education level Source: OECD (2017) Preventing Ageing Unequally. 12

13 High-educated individuals live longer than their low-educated peers Life expectancy gaps between high- and low-educated groups at ages 25 and 65 are large By gender, around 2011, in years Source: OECD data and calculations. Source: OECD (2017) Preventing Ageing Unequally.

14 AGEING PROSPECTS FOR YOUNGER GENERATIONS COULD BE VERY DIFFERENT FROM THE ONES OF THEIR PARENTS AND GRANDPARENTS.

15 Poverty rate 40% 35% On average poverty risks have shifted from the old to the young in Norway Relative poverty rates by age group since the mid-1980s Mid-1980s 30% 25% 20% 15% 10% 5% 0% Under Over 75 Source: OECD (2017) Preventing Ageing Unequally. 15

16 On average poverty risks have shifted from the old to the young in Norway Relative poverty rates by age group since the mid-1980s Mid-1980s Mid-1990s Poverty rate 40% 35% 30% 25% 20% 15% 10% 5% 0% Under Over 75 Source: OECD (2017) Preventing Ageing Unequally. 16

17 Poverty rate 40% 35% On average poverty risks have shifted from the old to the young in Norway Relative poverty rates by age group since the mid-1980s Mid-1980s Mid-1990s % 25% 20% 15% 10% 5% 0% Under Over 75 Source: OECD (2017) Preventing Ageing Unequally. 17

18 Poverty rate 40% 35% On average poverty risks have shifted from the old to the young in Norway Relative poverty rates by age group since the mid-1980s Mid-1980s Mid-1990s or latest 30% 25% 20% 15% 10% 5% 0% Under Over 75 Source: OECD (2017) Preventing Ageing Unequally. 18

19 Overall, income gains across cohorts are losing steam while inequality has continued to rise, particularly at younger ages. ` v Source: OECD (2017) Preventing Ageing Unequally.

20 The story is similar in other Nordic countries (e.g. FIN) and very different in a few OECD countries (e.g. FRA) Source: OECD (2017) Preventing Ageing Unequally.

21 Lower impact of career breaks on pension entitlements in Norway than OECD, on average Gross pension entitlements of average earners who start at age 25 and experience ten years of unemployment (% of full-career entitlements, mandatory pensions only) Figures in brackets are the number of years more (than workers with unbroken careers) that labour-market latecomers with career gaps must work to qualify for a full pension. Source: OECD (2017) Preventing Ageing Unequally Fig. 4.17

22 Smaller pass-through from wage to pension inequality in Norway than OECD, on average Change in the Gini index of pensions for a 1 percentage point increase in the Gini index of wages Percentage points 1 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 Mandatory ( ) With voluntary Note. Simulations are based on a common earnings distribution across countries and a shift from a wage Gini of 0.35 to Source: OECD (2017) - Preventing Ageing Unequally based on OECD Pension model. 22

23 OECD Recommendations on Policies to Address Unequal Ageing Need for life-course policy packages based on 3 pillars PREVENT INEQUALITIES BEFORE THEY BUILD UP AND COMPOUND POLICIES TO ADDRESS UNEQUAL AGEING MITIGATE ENTRENCHED INEQUALITIES COPE WITH INEQUALITY AT OLDER AGES Source: OECD (2017) - Preventing Ageing Unequally 23

24 Summary (1) Exit from the labour market and healthy life expectancy have increased in Norway but employment rates continue to fall sharply after age 65. Risks of insufficient income and old-age inequality among future retirees are potential challenges. Population ageing will magnify these challenges in most OECD countries but less so in Norway. The pension system in Norway will help overcome these challenges (to some extent) as it is very redistributive and offers relatively good protection for low earners and for those with career breaks. 24

25 Summary (2) Inequalities start early in life and compound over the life course resulting in e.g. relatively high life expectancy gaps by education. A life-course approach to policy is needed to address unequal ageing. Policies must prevent inequalities before they build up, mitigate existing inequalities and cope with inequalities at older ages. 25

26 OECD REPORT PREVENTING AGEING UNEQUALLY 26

27 ADDITIONAL SLIDES

28 Source: OECD. Fertility rates in France and Nordic countries declined less since 1970 and remain higher than in most OECD countries

29 Employment rates are much lower for individuals in bad health, even though less so in Nordic countries Employment rates of year-old men by health in selected EU countries in 2015 or latest, % Source: OECD calculations based on data from European Union Statistics on Income and Living Conditions.

30 Variation in labour market exit age in Nordic countries is at about (FIN, SWE) or above (DNK) the EU average Mean, 25th % and 75th % percentiles of effective labour market exit ages of men, 2016 Age Source: OECD estimates based on national labour force surveys and the European Union Labour Force Survey. 30

31 Income inequality has been increasing between generations Changes in income Gini coefficients at the same age across birth cohorts in percentage points, average across age groups, cohort reference = 1920s s ( ) 1950s Source: United Nations World Population Prospects: The 2017 Revision. Source: OECD (2017) Preventing Ageing Unequally.

32 Limited income gains with rising inequality among younger cohorts also present in other Nordic countries Source: OECD (2017) Preventing Ageing Unequally.