Older Workers, Employer Behaviour and Public Policy

Transcription

1 The Geneva Papers on Risk and Insurance Vol. 28 No. 4 (October 2003) Older Workers, Employer Behaviour and Public Policy by Philip Taylor This special issue of The Geneva Papers focuses on employer behaviour towards older workers and the interface between paid employment and public policies affecting this group. The following articles from France, Germany, Japan, the U.K., Canada, the U.S. and Switzerland consider the changing position of older workers in internal labour markets and review trends in public policy affecting this group, as there is an increasing recognition that working lives will need to be prolonged, that is, people will have to work to a later age, in order to counter problems associated with population ageing. Over almost three decades, labour force participation rates among older workers have declined markedly in most of these countries (a notable exception being Japan) as documented in Table 1. Since the 1970s, economic, structural and technological changes have had a major impact on both public and private sector activities. The decline of traditional industries such as manufacturing and mining have impacted the ability of older people to sustain their position in the labour force, while the growth of the service sector and the evolution of new areas, such as financial services, has led to the demand for new sets of attributes, skills and abilities, which older workers may not possess. In the public sector, factors such as the privatization of utilities, the tightening of public expenditure and value for money approaches, and in the private sector, globalization of markets and intensive competition between domestic producers and overseas providers have effectively changed the complexion and shape of employment. The drive by organizations for increased productivity and efficiency savings has taken the form of workforce reduction exercises, the de-layering of organizational hierarchies, and the outsourcing of some functions and activities, which have had a disproportionate impact on older workers who had been targeted for early retirement or redundancy. In some countries, for example France and Germany, public policy has been explicitly targeted at removing older workers from the labour force in favour of younger workers, and there has been support for employers wishing to undertake downsizing exercises targeting this group. Elsewhere, such a relationship is less clearly discernible. In most countries, the support of trade unions has usually been readily forthcoming and sometimes older workers themselves have been willing participants if the compensation has been generous. The impact of social security on labour force participation has been the subject of debate among researchers (Guillemard and Rein, 1993). Gruber and Wise (1999a, b) argue that social security provisions in many countries have sometimes offered an enormous incentive to early retirement and may account for a significant part of the long-term decline in economic activity rates among older males. In continental Europe, disability and unemployment programmes have often provided generous early retirement benefits well before the official retirement age. Executive Director, Cambridge Interdisciplinary Research Centre on Ageing, University of Cambridge. Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK.

2 Table 1: Change in employment activity rate for the age group between 1971 and 2001 Men Var% Germany France U.K Japan Canada U.S E.U Women Var % Germany France U.K Japan Canada U.S E.U Reunified from Source: Labour Force Statistics OECD (except Eurostat for E.U.) and our own calculations. Extracted from A.M. Guillemard, L âge de l emploi, Paris, A. Colin, 2003, page TAYLOR

3 OLDER WORKERS, EMPLOYER BEHAVIOUR AND PUBLIC POLICY 555 There is now an increasing realization that, against a backdrop of population ageing and threats of labour shortages in the future, there is an urgent need to end policies that encourage early exit and move instead to those based on integration and retention. In recent years, official and expert reports from leading think-tanks in some countries (e.g. the U.K., the U.S. 1 )have sought to alert public policymakers and business leaders to the challenges that lie ahead, while the European Commission in a recent report to the Stockholm European Council stated that: For older workers, despite various policy initiatives by the MS [Member States] (as reported in NAPs [National Action Plans]) there is little evidence that these have resulted in significant increases in labour market participation among older workers. To a large extent this reflects a deep-rooted early retirement culture and the persistence of early retirement schemes (often co-existing with schemes aiming at extending older workers working life) and negative attitudes which remain not only among employers but also among trade unions and policymakers (Increasing labour force participation and promoting active ageing, Commission of the European Communities, January 2001, p. 23). The European Commission (Employment and Social Affairs, European Commission 1999) has set out its vision for promoting active ageing with the following list of requirements: improving the skills, motivation and mobility of older workers; promoting and disseminating good practice in lifelong learning; adapting workplaces to workforce ageing to reduce the erosion of work-ability and to extend working lives; facilitating access to more suitable and flexible forms of working for ageing workers; removing age-discriminatory attitudes and practices. A crisis rhetoric, as evidenced by frequent references to the predicted demographic time-bomb characterizes much of the debate on the likely impact of population ageing, but this has been firmly rejected by most commentators recently, who have argued, for example, against demographic determinism, a tendency to rely excessively on a very poor indicator, the dependency ratio, and the crisis mentality it engenders (Marshall, 2002). On the other hand, a commonly promulgated view that market and social forces will inevitably result in readjustments to accommodate increasing numbers of older workers in the labour market is also unlikely to be correct. At least in countries most deeply rooted in early exit culture, most researchers agree that the market alone will not be able to reverse the trend towards early exit. Many employers may prefer to chase the dwindling numbers of labour market entrants, substitute technology for labour, focus their efforts on importing labour from other countries, or outsource functions to countries where labour is cheaper. Negative attitudes towards ageing and the old are deeply engrained in society and will be slow to change. Therefore, population ageing will bring with it both challenges and opportunities for business and government in coming decades. In fact, a recent report concluded that the most effective and plausible social, and policy, response to an ageing population is to increase the employment rate of the over 50s (Working Group on the Implications of Demographic Change, 2002). Therefore, this set of articles is timely. With the exception of the Swiss article, they are the culmination of a programme of research led by Anne-Marie Guillemard of the Sorbonne that has been carried over the last 1 Committee for Economic Development, New Opportunities for Older Workers, New York, Washington, 1999; Performance and Innovation Unit, Winning the Generation Game: Improving Opportunities for People Aged in Work and Community Activity, London, The Stationery Office, 2000.

4 556 TAYLOR decade as a follow-up to the groundbreaking Time for Retirement (Kohli, Rein, Guillemard and Van Gunsteren, 1991). While this volume focused primarily on the process of early exit through the identification and exploration of (early) retirement pathways, the intention with the follow-up programme was to focus much more on the behaviour of firms and, where they were emerging, more integrative policies towards older workers and how these were being shaped by public policy. As these articles show, the shift away from early retirement to more integrative strategies has been slow and at times faltering, yet the general trend is clear: full early retirement as a tool of public policy is now viewed as flawed, policymakers are becoming increasingly unwilling to fund it, and public policies are increasingly aimed at the extension of working life. Yet a significant number of challenges lie ahead, a theme that is taken up by Anne-Marie Guillemard in her concluding article. The special issue begins with two examples of early exit in continental Europe. Articles by Anne-Marie Guillemard (France) and Winfried Schmähl (Germany) describe cases where the instruments of public policy have been brought to bear on older workers employment in an attempt to facilitate their early labour force withdrawal. The German case has the added dimension of being a country in transition, where policymakers have seen an added imperative to reduce the supply of older workers. In both France and Germany reforms of the pension system and making retirement more flexible are being attempted, yet early retirement remains popular among the social partners and older workers themselves. These cases show how difficult it is to reverse the trend in countries where early retirement incentives have been widely used and have resulted in an entrenched early exit culture among all parties involved. Next are articles outlining the situation in two countries Japan and the U.K. which are perhaps doing most among the case countries at present to develop integrative employment policies targeting older workers. In Japan, which has one of the most rapidly ageing populations in the world, and already one of the highest labour force participation rates, public policy has been consistently focused on extending working life. Masato Oka and Takeshi Kimura draw upon data collected in Toyota to explore the key role age plays in shaping the careers of workers in a typical Japanese corporation. They also discuss policymakers attempts to support employers in extending working lives, drawing attention to the difficulties in achieving this caused by Japan s present economic difficulties. Alan Walker and I review recent studies of employers attitudes and practices towards older workers in the U.K. We conclude that while age discrimination affecting older workers is still undoubtedly present in U.K. firms, there is some limited evidence that employer attitudes may be changing. We also discuss the increasingly active attempts by policymakers to promote the business benefits of employing older workers, though we conclude that a major breakthrough in terms of the widespread adoption of company policies aimed at their integration and retention is still some way off. The articles by Victor Marshall and Joanne Marshall (Canada), and Jill Quadagno, Melissa Hardy and Lawrence Hazelrigg (U.S.) draw attention to the impact of corporate restructuring on the prospects of older workers. The authors show that, in contrast to Japan and the U.K., public policy targeting older workers is little developed in Canada, while in the U.S. explicit policymaking is largely confined to the Age Discrimination in Employment Act which, as Quadagno et al. show, appears to be readily circumvented by determined employers. The series of case articles concludes with David Dorn and Alfonso Sousa-Poza who consider why, unusually for Europe, Switzerland has managed to retain a high rate of employment among its older workers.

5 OLDER WORKERS, EMPLOYER BEHAVIOUR AND PUBLIC POLICY 557 REFERENCES EUROPEAN COMMISSION, EMPLOYMENT AND SOCIAL AFFAIRS, 1999, Active Ageing. Promoting a European Society for All Ages. Belgium: European Communities. GRUBER, J. and WISE, D. (eds.), 1999a, Social Security Systems Around the World. Chicago: University of Chicago Press. GRUBER, J. and WISE, D., 1999b, Social security, retirement incentives and retirement behaviour: An international perspective, Employee Benefit Research Institute Issue Brief, 209, EBRI. GUILLEMARD, A.-M. and REIN, M., 1993, Comparative patterns in retirement: recent trends in developed societies, Annual Review of Sociology, Vol. 19, pp KOHLI, M., REIN, M., GUILLEMARD, A.-M. and VAN GUNSTEREN, H. (eds.), 1991, Time for Retirement Comparative Studies of Early Exit from the Labor Force. Cambridge: Cambridge University Press. MARSHALL, V.W., 2002, Perspectives on aging, work and retirement, Panel Presentation at Gerontological Society of America Annual Meeting, Boston MA, November. WORKING GROUP ON THE IMPLICATIONS OF DEMOGRAPHIC CHANGE, 2002, The Challenge of Longer Life. Economic Burden or Social Opportunity? London: The Catalyst Forum.