The Economic Contribution of Older Workers

Transcription

1 Organisation for Economic Co-operation and Development The Economic Contribution of Older Workers Mark Keese Employment, Labour and Social Affairs, OECD CARDI seminar on Living Longer Working Longer in conjunction with TAEN, Belfast, 10 November, 2010

2 Outline The economic contribution of older workers today They will make a potentially bigger contribution in the future Ensuring this potential is realised 2

3 The economic contribution of older workers today Older workers make up a substantial proportion of the paid (and unpaid) workforce Especially in agriculture, real estate, public administration, education and health Employment share of older workers (50+) in the EU by industry, Source: Eurostat.

4 The economic contribution of older workers today And are over-represented in high-skilled jobs but also in agricultural and elementary occupations Employment share of older workers (50+) in the EU by occupation, 2009 Source: Eurostat. 4

5 The economic contribution of older workers today And more older people are working today than in the past, but with large differences across countries Employment rates for population aged 50-64, 1999 and 2009 (%) 5 Source: OECD.

6 Population ageing: the role of older workers Rapid population ageing is projected in most OECD countries in response to lower fertility and rising life expectancy Share of population aged 65 and over, 2009 and 2050 (%) Source: OECD based on Eurostat and national population estimates and projections.

7 Population ageing: the role of older workers Consequently, social expenditures will come under strain Age-related public expenditure as a % of GDP, 2007 and European Commission, European Economy No. 2/2009 The 2009 Ageing Report : Economic and budgetary projections for the EU-27 Member States ( ).

8 Population ageing: the role of older workers The solution must be to encourage work at an older age! 8

9 Population ageing: the role of older workers This would boost labour force growth and ease the downwards pressure on economic growth Projected labour force growth, Index 2009 = 100) US (max) US EU (max) EU Japan Japan (max) 9 Source: OECD projections based on Eurostat /national population projections and assuming unchanged labour force entry and exit behaviour.

10 Population ageing: the role of older workers And would limit the rise in the number of retired persons relative to the number of workers and hence ease upwards pressures on social expenditures Ratio of retired or inactive older people to the labour force, 2009 and 2050* (%) (max) * Ratio of all non-employed persons aged 50 and over to the total labour force. Source: OECD estimates assuming unchanged labour force entry and exit behaviour.

11 Realising the potential of older workers But there are many disincentives and barriers to working at an older age which must be tackled 11

12 Barriers to work: disincentives Pension systems and other welfare benefits may discourage or penalise work for older people Effective and official age of retirement for men, Source: OECD.

13 Barriers to work: employer hiring and firing practices Some evidence of negative attitudes by employers towards older workers Seniority wages and hiring Hiring rate of men (%)* 14 But there are objective factors driving employer decisions such as labour costs or hiring and firing rules In a number of countries, seniority wages may be an obstacle to the retention of older workers Even in US, also an issue as some non-wage labour costs rise steeply with age such as health insurance Strict employment protection rules can put a brake on hiring of older workers and may encourage early retirement AUS GBR USA DNK CAN KOR FIN ESP HUN CZE SWE DEU NOR IRL CHE FRA ITA JPN AUT BEL NLD LUX Ratio of male earnings 55-59/25-29** * Ratio of employees with less than one year of tenure to all employees. The data refer to ** For full-time workers and various years over the period

14 Barriers to work: lack of employability The employability of older workers is affected by their working conditions, access to job search assistance and training Training declines with age and in some countries is low for adults of all ages Participation in training by age, 2007 % of adults who participated in non-formal education or training during the previous 12 months 14 Source: European Adult Education Survey.

15 Key policy directions OECD countries are taking to encourage longer working lives Rewarding work Pension reform to cut implicit tax on working Closing other early retirement pathways Giving better options for phased retirement Changing employer practices Legislation and information campaigns to promote age diversity Aligning labour costs with productivity Protecting employment opportunities not jobs GOVERNMENT EMPLOYERS UNIONS CIVIL SOCIETY Improving employability Providing suitable training opportunities at all ages Giving better help for older jobseekers Improving the work environment 15

16 Rewarding work Pension reform has been widespread and some common features can be distinguished: Higher pension eligibility age for men and women (e.g. Australia, Denmark, France, Germany, Ireland, Italy, UK) Improved incentives to delay retirement (e.g. France, Germany, Italy, UK) Tighter qualifying conditions for retirement (e.g. France, Italy) Links to life expectancy or financial sustainability in earnings-related schemes (e.g. Germany) in qualifying conditions (e.g. France) through notional accounts (e.g. Italy, Poland, Sweden) through defined-contribution schemes (e.g. Hungary, Poland, Slovakia, Sweden) Direct cuts in generosity lower accrual rates or changes in indexation (e.g. Austria) 16

17 Rewarding work Other early-retirement pathways have been tackled: Access to formal early-retirement schemes restricted or closed (e.g. Austria, Belgium, France) Tighter qualifying conditions for other pathways such as disability benefits (e.g. Denmark, Netherlands, UK) and unemployment benefits (e.g. Austria, Finland, Netherlands) Experience of OECD countries shows that, unless reform is comprehensive, risk of substitution between early-retirement pathways Phasing out of formal early-retirement schemes in Belgium and France has been offset by a rise in the number of older unemployed exempt from active job search Disability benefits still a major early-retirement pathway in many OECD countries 17

18 Changing employer practices An age-diverse workforce makes good business sense Hiring and firing practices should not be driven solely by age-based criteria Many larger companies have good age-management practices But the challenge is to reach smaller companies Public policies must be supportive and not create perverse incentives. This means: Providing advice on good practice Removing disincentives to hire or retain younger and older workers Playing an active role, together with employers, in ensuring that workers facing job loss get appropriate help, and training if necessary, to find another job 18

19 Changing employer practices Anti-age discrimination legislation is now widespread But no panacea employers also need to be given advice on managing age diversity % of people who think that in their country people over 50 are often considered as being no longer capable of working efficiently Several countries (e.g. UK, FIN, FRA and NLD) have carried out major information campaigns But close co-operation with employers, unions, NGOs is required to be effective Employers Forum on Age and TAEN in the UK provide good examples Source: Eurobarometer, January

20 Improving employability Measures to encourage training More flexible courses (e.g. use of modular courses and recognition of prior learning in France) Better opportunities for lifelong learning (e.g. Norwegian competence reform, right to skills audit and training leave in France) More resources to help older job seekers Special programs such as New Deal 50+ in NI (and formerly in other parts of UK) Wage subsidies (e.g. in Austria, Spain) and employment subsidies (e.g. UK) but not always well-targeted Improvements in the work environment Campaigns to improve occupational health and safety and to adapt working conditions to older workers (e.g. VETO program in Finland) Greater incentives for phased retirement (e.g. Belgium) but subsidies for part-time may be counter-productive 20

21 Policies to help older workers retain or find jobs during the recession and the upturn Several countries are considering different forms of employment subsidies Belgium, France, Japan, Portugal, United States have all introduced or reinforced subsidies for hiring older workers Most OECD countries have introduced or expanded short-term working schemes that benefit older workers In the Netherlands social security contributions are reduced for hiring or retaining older workers Will this be enough to encourage hiring of older workers? Can these subsidies be unwound once the recovery begins? 21

22 Policies to help older workers retain or find jobs during the recession and the upturn Greater resources are also being channelled towards active labour market policies: Canada and Belgium: greater resources for job search assistance and counselling; Spain: funds for starting new business or self-employment for older workers (45+) Japan: extension of trial period for older workers 22

23 Avoiding past mistakes Above all, employers, trade unions and governments should avoid resorting to early retirement schemes or targeting lay-offs solely on the basis of age. These practices have proved to be costly mistakes in terms of lost expertise for firms and a hefty welfare bill for governments Moreover, fewer jobs for older workers do not mean more jobs for younger workers Change in employment rates by age group (% points)

24 Conclusions Older workers make a major contribution to economic growth and improvements in well-being Their contribution will become even more vital in the future to cope with population ageing But a number of barriers to working at an older age need to be tackled if this potential is to be realised In response, many countries have begun to implement a new agenda of age-friendly employment policies 24

25 For further information: