Three clear trends at social level are creating the conditions for the care industry and Ambea over the next 10-year period. These are largely due to demographic shifts and will put pressure on municipalities across Scandinavia – but also create opportunities for Ambea to offer assistance and ease the burden. We refer to these trends as: The major welfare challenge.
The population of Scandinavia is growing and the oldest age groups are growing fastest percentually. Due to longer life expectancy and a baby boom in the 1940s, the number of people aged 80+ is projected to increase by about 50 per cent between 2020 and 2030. This trend will lead to an increased need for social care, since the number of individuals with dementia and other age-related illnesses will increase.
To meet this growing need, the supply of elderly care services will have to be expanded – both nursing homes and home care services. In addition, some of the municipal care facilities that were built 30–50 years ago are now in poor condition. In many cases, refurbishing these facilities is not financially viable. In Sweden alone, 560 new nursing homes will need to be built by 2026, according to the Swedish Ministry of Finance.
This capacity growth is a challenge for municipalities. The situation varies from place to place, however. The demographic need is often minor in smaller municipalities, where there is usually available capacity already today. There may also be a surplus of placements in large municipalities where private care providers have been active for some time. Moreover, the calculation of total needs should be treated with caution. Long-range forecasts are always associated with a degree of uncertainty. Since 2000, Swedish municipalities have been granting residential care to an increasingly lower number of people in the 80+ age group. The consumption of home care services has grown slightly, but not to a corresponding degree.
The number of people with disabilities is growing due to population growth. This group is also growing due to greater social acceptance of disability diagnoses and the fact that support is now more readily granted. According to the Swedish Board of Housing Building and Planning, more than half of Swedish municipalities say they currently lack any form of housing for this group
Unfortunately, mental health problems are continuing to rise in Scandinavia, particularly among young people. 6 per cent of all Swedes and 13 per cent of people aged 16–29 suffer from severe anxiety, stress and worry according to the Public Health Agency of Sweden. As diagnosis rates rise, the right to support and pressure on effective therapies also grow.
AMBEA’S SOLUTION: We are now building new residential care facilities at a rapid pace to increase capacity for both the elderly and other groups so that more can receive the social care they need and are entitled to. At the same time, we are relieving municipalities from the substantial
financial burden of investing in new residential facilities. At year-end, Ambea had 50 residential facilities in planning, design or construction phase.
In the years ahead, the proportion of older people in the population will grow, but also children and young people. This trend means that relatively fewer people of working age (20–64) will have to finance welfare services via their taxes. This is a recurring pattern across all of Scandinavia, and particularly clear in Denmark.
At the same time, care costs are rising due to a growing need. If the current level of service is maintained without any productivity improvements, the annual cost of elderly care in Scandinavia will rise 39–48 per cent by 2030, according to Ambea’s estimates. According to the Swedish Ministry of Finance, Swedish municipalities and regions will lose SEK 90 billion by 2026 if they continue to deliver care with the same staff density as today (all other things being equal). In Norway, the estimated deficit is NOK 95 billion by 2040.
AMBEA’S SOLUTION: Higher taxes and government grants will not be sufficient to meet future financing requirements. New solutions to improve productivity and efficiency in care will also be required. Ambea and other private providers have a key role to play here.
Care delivery is highly labour-intensive. There is already a shortage of qualified employees and the problem will increase, since many of today’s employees (born in the 1950s and 60s) will soon retire and needs are growing faster than the workforce. According to the Swedish the Ministry of Finance, 48,000 more care workers will be needed in 2026 compared with 2018. This forecast is based on unchanged staff density. The Swedish Association of Local Authorities and Regions (SKR) estimates that 60 per cent of employment growth by 2025 will need to be in welfare – compared with an historical average of 27 per cent. The situation is similar across all of Scandinavia. For example, the Norwegian Ministry of Health and Care Services estimates that 50 per cent of employment growth by 2040 will need to be in social care.
To manage the staff shortage, the productivity of care services must be improved. For example, Statistics Norway (SSB) estimates that annual productivity growth of 0.5 per cent would reduce the need for employees by 18 per cent by 2040.
AMBEA’S SOLUTION: Ambea believes that working smart is the best way to increase productivity, for example, new work roles and a more efficient organisation. At the same time, the company must continue to be an attractive employer by investing in our employees and offering good working conditions and opportunities for development and training.