EUROPEAN PAPERS ON THE NEW WELFARE

Active Ageing: a core policy priority for the European Union

8. The challenges as defined by the Stockholm and Barcelona targets?

Raising the average exit age by 5 years in the remaining 8 years before 2010 is an ambitious goal. To some observers, the target agreed in Stockholm — of raising the employment rate of older workers from the EU average of 38.8% to 50% in 9 years — had already appeared quite daring. They were therefore apprehensive when the Spring European Council in Barcelona went substantially further. Other commentators, however, appreciated the emphasis of European leaders on enabling older workers to continue working in labour markets, which had, up to now, demonstrated a marked tendency to squeeze them out.
Table 2 ranks EU-15 countries according to their performance in relation to the average exit age and the employment activity and unemployment rate. The EU average exit age stood at 59.9 years in 2001: 60.5 years for men and 59.1 years for women. Thus, the Barcelona agreement commits the Union to lift the average effective exit age to about 65 years by 2010. The ranking in relation to the exit age and the employment rate differs somewhat. But there are also important elements of stability. Sweden, Denmark, the UK and Portugal are among the 5 top performers for exit ages as well as for employment and activity rates.

Table 2: Exit ages & labour market outcomes 2001 (descending order)
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Source: DG EMPL and Eurostat.

When we move to unemployment rates, the picture is more complex, since low unemployment rates may result from low activity and low exit ages as well as from high employment rates. Thus, there are important differences between the Barcelona and Stockholm measurements that need to be highlighted.
(1) The Stockholm target is about increasing the employment of those aged 55-64. This requires reductions in unemployment and inactivity and progress is monitored through the employment rate. The Barcelona target is about delaying the age at which individuals withdraw from the labour force into inactivity and it is monitored by changes in the activity rate. As the latter is calculated only among those who are active, countries with low participation rates may have relatively high exit ages. This, for example, is the case in the Netherlands.
(2) The average exit age also takes the unemployed into account — presently amounting to 7% of the 55-64 year-old labour force in EU15.
(3) Generally, men exit the labour force at a later age than women. Yet, in Italy or Spain exit ages of men and women are broadly similar although the gender gaps in the participation of older workers are among the highest in the EU.
(4) The Stockholm target refers to those aged 55-64. The Barcelona target does not set any specific age threshold. When monitoring the average age of withdrawal from the labour force the age-span must be broader — and it has been defined as 50 to 70+ years. The age class 50-54 needs to be included because participation falls significantly from the age of 50. Those above 65 years in the labour force are also included. Arriving at an average exit age of 65 will imply that a substantial number of people continue to work into their late 60’s and early 70’s5.
Meeting the Stockholm target would imply securing employment for an additional 5 million older workers. As for the Barcelona goal, a simple simulation shows that about two thirds of those workers presently aged 46-55 years would have to remain in the labour force by 2010. In other words, 24-26 million of the 38.4 million people aged 46-55 in 2001 would need to be active in 2010, an equivalent increase of 7-9 million. In the comparable cohort of 1991 only half were still active at the age of 55-64 in 2001.

9. Assessment of progress towards the Stockholm and Barcelona targets

Every year progress is assessed in the Joint Employment Report. In 2000 this report highlighted that: “Most Member States have started to implement or are planning to introduce soon measures encouraging older people to stay longer in employment, by raising the retirement age or by introducing or strengthening disincentives to early retirement”.
After the adoption and monitoring of the Stockholm and Barcelona targets, the tone was much less optimistic. Thus, the 2002 Joint Report stated laconically:

“With regard to older workers it is evident that… the combination of low employment rate plus moderate employment rate growth… seriously questions the ability of the EU to reach the target set for this group.”
Clearly, the employment rates of older workers will have to improve much faster if targets are to be met by 2010. A number of Member States are presently taking steps to improve incentives in tax/benefit systems. The majority are still working towards the introduction of policy measures designed to improve employment opportunities and the employability of older workers. Such initiatives are hampered by the current slowdown in growth and the rise in unemployment. Yet, it is still quite conceivable that these changes in employment and pension policies will produce a significant increase in older workers’ employment, particularly if supported by the social partners. Indeed, the tone of the Joint Employment Report is by no means defeatist. It merely sounds a serious warning that much more needs to and indeed can be done.
In fact the rise in employment rates and the average exit age from 2002 to 2003 were quite encouraging. Employment rates rose 1.5 percentage points and the exit age by half a year. The forces at work were not at all clear but if a similar advance were to occur every year until 2010 the targets would not be out of reach.

5 The average age of withdrawal from the labour force is to be distinguished from the calculation of the effective retirement age. The Labour Force Survey includes people receiving a pension as long as they are at work (e.g. part-time) or actively seeking a job.


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