RETIREMENT Differences in State of Affairs and legacies across the EU28 EC/OECD Workshop on delivering longer working lives and higher retirement ages Brussels, 12-13 November 2014 Fritz von Nordheim European Commission DG EMPL D3
Differences in State of Affairs and legacies across the EU28 Scene setter alerting us to Complexity of EU28 Explanations in demographics & policy legacies Not just Differences but Divides Not just Divides but continuing Divergences Not just one but several Narratives of Ageing Challenges differ in timing & speed as well as size Not just challenges but also perceptions differ In sum: Need for diversified EU policy responses
The power of longer working lives EU-27 old-age dependency ratios, 2010-2060, under four exit assumptions (working ages from 20 to 59 through 69) 0.9 20 to 59 / 60+ 20 to 63 / 64+ 20 to 66 / 67+ 20 to 69 / 70+ 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2010 2020 2030 2040 2050 2060
Economic vs. Demographic dependency burden EU-27 / 2010 demographic dependency ratio: 26% Economic dependency ratio: 65% EU-27 / 2050 ( EU 2020plus scenario ) demographic dependency ratio: 50% economic dependency ratio: 79%
Current State of Affairs and Recent developments across EU28
Employment rates 55-64, 2013
Employment rates 55-64, 2000-2013 2000 Source: Eurostat, LFS
Employment rates 55-64, 2000-2013 2005 Source: Eurostat, LFS
Employment rates 55-64, 2000-2013 2010 Source: Eurostat, LFS
Employment rates 55-64, 2000-2013 2013 Source: Eurostat, LFS
Employment rates 55-64 rising - even in crisis 2013 2007 90 80 70 60 50 40 30 20 10 0 Source: Eurostat, labour force survey
Employment rates 65-69, 2000 Source: Eurostat, LFS
Employment rates 65-69, 2013 Source: Eurostat, LFS
N/W->S/E gender bias in OW Empl rates
Employment rates decreasing with age, EU28, 2013 men women 90 80 70 60 50 40 30 20 10 0 40-44 45-49 50-54 55-59 60-64 65-69 70-74 Source: Eurostat, labour force survey
Women employment rate, DK and IT Denmark Italy 100 80 60 40 20 0 45-49 50-54 55-59 60-64 65-69 Source: Eurostat, LFS
10y N->S Gradient in Working Life Duration
Average duration of a working life 2000 AWL N/A 25-30 30-32 32-34 34-36 36-38 38-40 40-42 42-44 44-46 46+ Source: Eurostat, labour force survey
Average duration of a working life 2005 AWL N/A 25-30 30-32 32-34 34-36 36-38 38-40 40-42 42-44 44-46 46+ Source: Eurostat, labour force survey
Average duration of a working life 2010 AWL N/A 25-30 30-32 32-34 34-36 36-38 38-40 40-42 42-44 44-46 46+ Source: Eurostat, labour force survey
Average duration of a working life 2012 AWL N/A 25-30 30-32 32-34 34-36 36-38 38-40 40-42 42-44 44-46 46+ Source: Eurostat, labour force survey
Underlying Demographics
Diverging growth in life expectancy Life expectancy (at age 65) for males, average for selected countries in regions, 1950-52 to 2010-12 Courtesy of Richard Willets
Diverging growth in life expectancy Life expectancy (at age 65) for males, average for selected countries in regions, 1950-52 to 2010-12 Courtesy of Richard Willets
Diverging growth in life expectancy Life expectancy (at age 65) for males, average for selected countries in regions, 1950-52 to 2010-12 Courtesy of Richard Willets
Life expectancy at 65 (LE-65) by country group years Source: Eurostat, population statistics and labour force survey Courtesy of Richard Willets
Differences in Baby-booms Eastern Europe: 1 st ends late 1950's 2 nd in 1980's Northern Europe: 1 st ends mid-1960's Western Europe: 1 st ends late 1960's Southern Europe: 1 st ends mid 1970's
N/W-> S/E Divide in Recent Fertility Average fertility rates, 2000-2010 TFR 2000-2010 N/A 1.-1.3 1.3-1.5 1.5-1.7 1.7-2 2+ Source: World bank, Health statistics
Tail end of the baby-booms Fertility rates, in children per woman, 1960-2012 3.5 UK IT PL EU 3 2.5 2 1.5 1 0.5 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: World Bank
Echoes of the baby-boom (2) Renewal rate of the labour force Share of population turning 25, IT, PL and UK, base EU28=100 120 Italy Poland United Kingdom 100 80 2013 2018 2023 2028 2033 2038 2043 2048 2053 2058 2063 2068 2073 2078 Source: Eurostat, 2013 population projections
Echoes of the baby-boom (3) Cohorts that retire Share of population turning 65, IT, PL and UK, base EU28=100 140 Italy Poland United Kingdom 120 100 80 2013 2018 2023 2028 2033 2038 2043 2048 2053 2058 2063 2068 2073 2078 Source: Eurostat, 2013 population projections
Decrease in the working age population (%) (20-64), 2013-> 2030 and 2050 2013-2030 2013-2050 Source: Eurostat, 2013 population projections
Change in life expectancy at 65 (LE-65) and average duration of working life (AWL ), 2000-2012 LE-65 increase AWL increase 5 4 years 3 2 1 0-1 BE BG CZ DK DE EE IE EL ES FR HR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK -2-3 -4-5 Source: Eurostat, population statistics and labour force survey
Underlying Policy Legacies
Differences in Prior Pensionable Ages Eastern Europe: 60 or below, women 5 years lower Northern Europe: 67-65 for women and men Western Europe: 65 - some with 60 for women Southern Europe: 65/60 or 60/55 EU 55-64 as 'older workers' does not fit too well
Average exit age from the labour market 70 2009 2001 65 years 60 55 50 EU27 SK HU FR IT MT CZ FI DE DK ES EE CY UK NO NL CH SE IS Source: Eurostat
Importance of Early Retirement 2005 Eastern Europe: Bulk of retirement as early exit Northern Europe: Not in SE & NO but in DK & FI Western Europe: Not UK, but most other MS Southern Europe: Big share as early exit Less clear-cut divide -
Exiting the labour market before Standard Pensionable Age 4 3 2 1 years 0-1 -2 LU FI BE PL DE IT DK ES HU FR PT CY SI SK IE HR AT NL LT EL SE MT CZ UK EE LV BG RO -3-4 -5-6 Source: Eurostat (exit ages) and Member States (standard pensionable ages)
Restricting Early Retirement 2014 Eastern Europe: Yes but maintained in many MS Northern Europe: Absent or phasing out Western Europe: Much more restricted Southern Europe: Sudden roll back, pockets remain Divide though less clear-cut
Male length of Retirement without exit before 65 Eastern Europe: 13-15 years Northern Europe: 17,5-18,5 years Western Europe: 18-19 Southern Europe: 18,3-19,2 Divide and ignificant differences -
Average duration of retirement women Life expectancy at age 65 pension before age 65 35 30 years 25 20 15 10 5 0 Source: Eurostat
Average duration of retirement men Life expectancy at age 65 pension before age 65 30 25 years 20 15 10 5 0 Source: Eurostat
Increasing standard pensionable age women 2009 2030 2020 2009 68 age 63 58 RO CZ SK BG EL HR LT MT AT PL UK IT EE SI LV HU FR BE DK DE ES CY LU NL PT SE FI IE Source: Member States
Gender differences in pensionable age gender in standard pension ages non-eu: no data equal pension age by 2009 equal pension age by 2020 equal pension age by 2030 not planned or after 2030 Source: Member States
Divide in 55+ Access to Active LM Measures 2008 Eastern Europe: Little to none Northern Europe: Access though not equal Western Europe: Some MS with some without Southern Europe: Little to none Older worker rarely seen as part of work force
Summary (1) Dependency to rise with ageing in all countries But with depressed fertility levels much faster In fertility: two Europes, half > 1.7, half < 1.5 Economic divergence accentuates demographic Out-migration aggravates ageing in East & South migration towards W-MS with higher fertility Countries in the East will age later (2030->) but faster and more deeply
Summary (2) Working longer is happening, even above age 65 Working lives are extending, notably for women Pension ages rising, especially for women But those needing most to extend/rise behind Divides & Divergences require diversified EU approach European Semester not necessarily targeting the laggards, impact more on the already improved
Thank you for your attention