"In 2040, those over the age 65 will represent more than 45% of the working population aged 15-64 in the EU27"
Demographic issues continue to constitute a serious challenge to strong economic growth and the European social model. The current recession has aggravated these problems, pushing people out of the labour market and further increasing the dependency ratio. Eurofound’s research on ‘Restructuring in recession and labour force participation’ explored the age management practices of companies in light of restructuring undergone during recession. The study looked at policy in relation to the retention of older workers (aged 50+) in employment at national and establishment levels in 9 European Union (EU) Member States: Austria, Belgium, the Czech Republic, Hungary, Latvia. The Netherlands, Spain, Sweden and the United Kingdom. Being interviewed is Chris van Stolk, researcher of the ‘Impact of the recession on age management polices’. “In 2040, those over the age of 65 will represent more than 45% of the working age population aged 15-64 in the EU27. The reality is that people will have to work longer in the future, regardless of whether they want to or not. It’s inescapable.”
About Chris van Stolk
“I work for an organisation called RAND Europe and am responsible for a research area which focuses on workforce and employment issues. RAND Europe is an independent institute that helps to improve policy and decision-making through research and analysis. Basically the business we’re in provides evidence-based research for policymakers.” The European Foundation’s (Eurofound) research fits into their age management work stream and also their particular focus on restructuring the workforce. This year in particular active age management is the main topic for the EU and Eurofound asked van Stolk to look into what happens to active age management in light of restructuring work especially in a time of economic crisis.
Member States are not working together systematically on age management policies
The policy area of active ageing is one in which the EU has particularly little power to decide what happens in Member States individually. There are few legislative tools to bring Member States together on this issue so it’s very much each to their own. “But the EU tries to promote collaboration through softer mechanisms, such as advice, guidance and information. Of course there is also the open method of coordination. Intrinsically, however, information exchange and the exchange of best practices does take place. Having said that, in this research we were unable to find examples in which there was a real exchange of information or best practices with regards to employment and active age management amongst the Member States. This is not to say that exchange is not taking place in a bilateral basis but it’s not taking place systematically.”
The statutory retirement age differs in the 9 Member States which you’ve researched in the Impact of the Recession on Age Management Policies. In 3 of those 9 countries the retirement age for women is earlier than for men. What is the reason to have this age difference in Austria, Czech Republic and the UK? And in a Europe where we strive for equality between men and women (in salary, in workload, in level of professional growth) is it fair or necessary to have an age difference for female and male workers?
The reason probably why Austria, the Czech Republic and the UK
still have this age difference between men and women is probably
because of tradition. In most countries however the age difference
has narrowed quite substantially. It’s a legacy issue
predominantly. “I think the challenge in terms of an ageing
population will be greater for women than for men in the sense that
it will affect them more. You will see that the age difference will
narrow even more in the future meaning that women have to work
longer [as long as the men] and thus this has a direct implication
for them on the employment market. There are also other issues
which should be kept into consideration, like the fact that women
more often work part-time in comparison to men. All these factors
have t implications for women, and could therefore make the working
life for women harder. This should be kept into account by
policymakers, because the last thing you should want as a
policymaker is to discourage women from participating in the labour
market. Their increased participation has been the great success
story in Europe on the labour market in the past 20-30 years.”
Some studies have shown that when the retirement age was changed in particular Member States, women would use the transition period to the measure to retire as soon as they could. Given the fact that retirement age will continue to rise, policymakers should bear in mind that this could affect women disproportionately and discourage them from remaining in the labour force. The key point to remember is that retirement ages will continue to rise for both men and women. It’s not feasible to retire at 61 (or go into early retirement at an even younger age) when your population is ageing as much as it is in Europe today.
Early retirement is a problem
Early retirement is of course the option to leave the labour market at an earlier age. This is often around the age of 55 years. There are two things that happen during an economic crisis: one, all employment and social policy is being re-evaluated and it becomes clear that the costs of early retirement are high within national policies. On the other hand, employers are looking at their work pool and see early retirement as a tool to reduce their workforce at a time of crisis. So you have two factors at opposite sides: the costs of early retirement on the one hand and the will of employers to reduce the work force in times of crisis on the other hand. This is an interesting dynamic in times of crisis. The countries that were most successful in terms of actually getting this balance right were the countries which recently reformed the pension age but also looked at early retirement options by limiting these.
The effect of prolonging the retirement age on youth unemployment
The current economic crisis has disproportionately affected youth employment. . Of course if you’re successful at getting people to work longer then the only place were employers can make cuts is in hiring young employees. This partially explains the situation which we have with youth unemployment in Europe. Many countries therefore have used partial retirement models for workers facing tough working conditions. Here people are gradually transitioned into retirement. However there are two negative outcomes with early retirement in this field for the employer as well as for the economy in general. First, there is no handover over knowledge and skills from older, experienced workers to young, new employees. Many companies in Europe have started to work with an intergenerational knowledge transfer system, which basically comes down to having all their older employees mentor the younger ones during their working lives so as not to lose that knowledge once the older employees retire. The second point is to gradually transition workers into retirement rather than to have them stop their work at 55 years. In this model the older employee works 2-3 days a week, while the younger works the other days. This way the workload is shared equally, the company still needs to hire a new, younger employee, and the knowledge is not lost at once.
Employability sees to happier employees
Employability means in essence: to put arrangements in place that make the place of work attractive to the employees. So adjusting policies so it becomes more attractive for employees to work. A good example is to provide child- and healthcare for employees. Typically people are looking for flexibility and autonomy in their work. This means that employees would like to plan their work as well as their working hours. Another aspect of employability is professional development. It’s pretty clear from the literature that companies that engage with their employees and build the skills of the employees tend to have higher satisfaction and higher motivation rates. In particular most workers tend to react well to these types of stimuli, which could prolong the career of their older workers.
How do you think the workforce will look 50 years from now?
“That depends on what our economy will look like in 50 years from now. But I guess it’s safe to say that there will be more older workers in the labour market. For example the average age of employees at my organisation is about 35 years old. I don’t expect to see such an organisation anymore in 50 years from now. At least not with a majority of young employees. Many people will work into their early 70s. This is part of the challenge which we’ve tried to address and anticipate on in this report. But it all depends on the demand for labour.”
EUKN, Elizabeth Winkel