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Live Longer, Work Longer: Ageing and Employment Policies

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Title: Live Longer, Work Longer: Ageing and Employment Policies


1
  • Live Longer, Work Longer Ageing and Employment
    Policies

Mark KEESE Employment, Labour and Social
Affairs, OECD

Presentation to the High-level OECD
Parliamentary Seminar on the Policy Implications
of Ageing Populations, 23 February 2006
2
If nothing is done, labour supply will grow more
slowly or contract leading to labour shortages,
slower economic growth and unsustainable rises in
public social expenditures

Projected change in labour force, 2000-2050
Index (2000 100)
Assuming participation rates by age and gender
remain unchanged at their current levels
3
  • Key conclusion Meeting these challenges will
    require mobilising more fully the labour
    resources of older people

Percentage of the population who are employed,
2004
4
Key policy directions to encourage work at an
older age
Reward work
Pension reform to cut implicit tax on working
Restrict other early retirement pathways
Better options for phased retirement
GOVERNMENT EMPLOYERSUNIONSNGOs
Improve employability
Change employer behaviour
Tackle age discriminationAlign labour costs
with productivity Protect employment
opportunities not jobs
Suitable training opportunities at all
agesBetter help for older jobseekersSafe
healthy working conditions
5
Population ageing is occurring in all OECD
countries
Ratio of the population aged 65 to the working
age population (20-64)
6
If nothing is done, labour supply will grow more
slowly or contract leading to labour shortages,
slower economic growth and unsustainable rises in
public social expenditures

Projected change in labour force, 2000-2050
Index (2000 100)
Assuming participation rates by age and gender
remain unchanged at their current levels
7
OECD work on ageing
  • General guidelines for reforms
  • Maintaining Prosperity in an Ageing Society
    (1998)
  • Overview of country reforms
  • Reforms for an Ageing Society (2000)
  • Link between pensions and other welfare benefits
    on participation
  • Burniaux et al. (2003), Coping with Ageing a
    Dynamic Approach to Quantify the Impact of
    Alternative Policy Options on Future Labour
    Supply in OECD Countries, OECD Economics
    Department Working Papers, No. 371.
  • Macroeconomic consequences of ageing
  • Oliveira Martins et al. (2005), The Impact of
    Ageing on Demand, Factor Markets and Growth,
    OECD Economics Department Working Papers No. 420.
  • International comparisons of pension systems
  • Pensions at a Glance (2005)

8
  • Key conclusion Meeting these challenges will
    require mobilising more fully the labour
    resources of older people

Percentage of the population who are employed,
2004
9
  • Key policy response Living longer must mean
    working longer
  • But how to achieve this?
  • OECD has carried out a major study of Ageing and
    Employment Policies consisting of
  • 21 separate country reports
  • Identifying work disincentives and barriers to
    employment of older people
  • Setting out policy recommendations
  • A synthesis report, Live Longer, Work Longer,
    which was presented to a High-Level Policy Forum
    in Brussels, 17-18 October 2005
  • www.oecd.org/olderworkersforum

10
Three key barriers to working at an older age
Financial disincentives
Public pension rules Formal informal early
retirement schemes Few options for phased
retirement
EARLY EXIT FROM LABOUR MARKET
Employer barriers
Weak employability
Negative attitudesHigh labour costs Strict
job protection rules
Obsolete skills Inadequate help for older
jobseekersUnsuitable work conditions poor
health
11
1. Work disincentives
  • Pension systems and other early retirement
    schemes penalise work at older ages
  • Effective age of retirement is below official age
    in most countries

Effective age of retirement and the official age,
1999-2004
12
Improving incentives to continue working
  • Ensure greater neutrality in work-retirement
    decisions
  • Moving towards actuarial neutrality
  • Taking account of rising life expectancy
  • Reduce early retirement options
  • Raising pension age
  • Phasing out formal early retirement schemes
  • Ensuring that other welfare benefits are not used
    as early retirement pathways
  • Beyond neutrality actively promote
    participation
  • Increasing pension rights with age
  • Part-time pensions
  • Combining work and pensions

13
Improving incentives to continue working
  • Key issues
  • Actuarial neutrality raises difficult issues
    concerning initial age, equity and adequacy of
    benefits.
  • Are measures to promote later retirement
    sufficiently targeted?
  • How to increase the flexibility of
    work-retirement decisions while discouraging
    early retirement?
  • How to deal with the stock of older people
    already on long-term benefits?

14
2. Employer barriers
  • Hiring and retention rates decline steeply after
    50, reflecting
  • Negative employer attitudes
  • Labour costs that rise with age faster than
    productivity
  • Strict Employment Protection Legislation (EPL)

15
Changing employer practices
  • Tackle negative employer attitudes
  • Through age discrimination legislation
  • And through information campaigns and guidelines
  • Align labour costs closer to productivity
  • Link earnings more closely to individual
    performance
  • Avoid wage subsidies that are simply targeted by
    age
  • Focus on enhancing employability of older workers
    rather than on job protection
  • Reassess impact of job protection rules on labour
    mobility and hiring of older workers

16
Changing employer practices
  • Key issues
  • Age discrimination legislation is no panacea.
  • Should wage subsidies go to employers or to older
    workers via an earnings top-up?
  • Important role for non-governmental
    organisations.
  • How can good practices be promoted among SMEs?

17
3. Weak employability
  • Inadequate employment services
  • Obsolete skills
  • Training declines sharply with age

Percentage of workers who participated in
education or training during the previous year
18
3. Weak employability
  • Many older workers report poor working conditions

Percentage of employees with unpleasant working
conditions
For between one-half to all of the time,
exposed in main job to at least one of the
following vibrations from hand tools or
machinery loud noise high or low temperatures
breathing in vapours, fumes, dust or dangerous
substances handling dangerous products and
radiation such as X rays, radioactive radiation,
welding light or laser beams.
19
Strengthening employability
  • Ensure older unemployed are actively seeking work
    in exchange for better employment services
  • General exemptions from looking for work should
    be abolished
  • More resources should be devoted to helping older
    job seekers
  • Encourage greater take-up of training
  • More flexible courses
  • Better opportunities for lifelong learning
  • Improve the work environment
  • Greater flexibility in work hours
  • Adapting working conditions

20
Strengthening employability
  • Key issues
  • For older workers, the returns to training may
    not be high, thus need to invest more in lifelong
    learning. But how to do this?
  • Who should pay for training and how can the more
    disadvantaged groups be encouraged to train?
  • How best to encourage public and private
    employment agencies to give more priority to
    helping older jobseekers find jobs?
  • How can employers especially SMEs be
    encouraged to improve working conditions for both
    younger and older workers?

21
THE BOTTOM LINE
  • Population ageing is both a challenge and an
    opportunity
  • It will put upward pressure on public
    expenditures while dragging down economic growth
  • But it is also a tremendous opportunity for all
    of us to spend more rewarding years at work and
    in retirement.
  • Seizing this opportunity will require the
    co-operation of government, employers, trade
    unions and civil society
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