Pension or Work? A Growing Dilemma in the Nordic Welfare States 1

Abstract

For over a decade, the number of recipients of premature pensions has been growing in the Nordic countries. This increase has been especially noticeable among older workers, 45 to 65 years of age. Among the newly qualified premature pensioners in this category, a consistent pattern has prevailed in nearly all Nordic countries: a moderate increase in the sixties, followed by a rapid increase until 1972, and thereafter a decline until 1974. The proportion of male recipients has also been consistently greater than the proportion of female recipients in all Nordic countries. Legislative changes such as wider eligibility for premature pensions and more liberal application of the law can partially account for these trends. Underlying these legal changes, however, have been socio-economic structural changes which have led to increased and more prolonged periods of unemployment. Structural changes have made it especially difficult for older workers to retain a job or to find a new one. Regional unemployment is also correlated with data on receipt of premature pensions. And the fact that post-industrial society has involved a shift from employment in agriculture (essentially male-dominated) to service occupations (increasingly recruiting females), has found its correlate in the greater proportion of men receiving premature pensions. The consequences of these trends for the recipients include lowered income and, because of the resultant economic dependency and social isolation, lessened self-esteem. Society is burdened with increased costs and the possibility of a ‘welfare backlash’, especially if the current recession leads to still further increases in the number of recipients. The state should support a policy which leads to more jobs rather than more pensions.