EUROPEAN PAPERS ON THE NEW WELFARE

Active Ageing: a core policy priority for the European Union

11. Will there be a helping hand?

In the current decade, the combination of small cohorts of labour market entrants and the first large cohorts of baby-boomers becoming older workers will amount to a marked ageing of the labour force. In the second decade of the 21st century, when the baby-boomers begin to retire, and the labour force will also begin to shrink at an increasing rate. Thus, it seems safe to assume that demographics will produce a positive context for policies aimed at improving employment opportunities and at enabling and motivating older workers to seize them. If a sufficient labour supply is to be sustained in the face of the shrinking of the prime age labour force, older workers must again become well-represented among the active and employed in the EU.
Given the ageing context, it is important to ask, firstly, whether the demographically-determined trends in labour supply will create a market more conducive to the employment of older workers. In other words, will demand for older workers automatically increase and employment opportunities develop as younger workers become scarce and the competition for them fiercer? Or will employers simply outbid each other for the young until it becomes cheaper to resort to capital substitution — and thus continue to shun older workers? Obviously, these scenarios are not mutually exclusive and possibly we will experience some of both.
One could furthermore ask if changes in attitudes and expectations will be self-reinforcing once they get started? This is speculative of course, but it could be argued that the shock of sudden ageing in combination with the cumulative effect of campaigns could have that effect.
What is already clear is that several EU15 Member States have experienced a structural trend towards higher employment rates for older workers. Some of this trend is caught in the figure below.

Fig. 1: Share of the 55-64 age goup in the overall annual employment growth, EU15 1997-2003
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Source: Eurostat Spring LFS.

12. Will better educated workers be more willing to adapt and able to work longer?

Efforts to extend working lives have come up against barriers in the skill levels, attitudes and expectations of past and present cohorts of older workers. A second crucial question to ask, then, is whether structural developments in the characteristics of the labour force — such as rising average levels of educational achievement — are likely to make it easier to reach the EU goals. We can expect average education levels to grow with each successive cohort. Indeed, as the proportion of low-skilled among people aged 55-64 drops significantly in this decade, measures to enable and motivate future cohorts of older workers to remain in the labour market may be markedly more successful than in the past.
Equally important, there are reasons to expect that the average workability and employability will be improving with successive cohorts of older workers, particularly since health and safety aspects of working conditions, health status and employability are positively correlated with skill levels.

Fig. 2: EU15 – 55-64 age group: distribution of the labour force per educational level 1996-2002 and Geo Labour Projection for 2020
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Source: Eurostat LFS 1996-2002. Geo labour Projection for 2020.

13. Conclusions

Europe’s endeavours to develop better employment opportunities for older workers, and enable and motivate them to take advantage of these, will need multi-pronged approaches and integrated strategies. Likewise, there will be a need for the involvement and close co-operation of all stakeholders. The social partners must collaborate on devising better practices of age management while getting constructive support from government policies. Some experts argue that policy makers should expect the raising of the average exit age to be a slow and gradual process, which will require massive awareness-raising campaigns and co-ordinated efforts from all stakeholders. They also suggest authorities should formulate their success criteria accordingly. In that perspective current European results are possibly even encouraging.
Yet, the present ageing, and the forthcoming shrinking, of the workforce does not leave Member States much time to improve their practices on age management. If the time-schedule of EU targets seems ambitious and present assessments impatient, it is largely because these reflect the urgency of the changes that are needed.
Structural changes in the skill composition of cohorts of older workers and market forces are likely to lend a helping hand. But as always it will be the will to seize the opportunity which will determine the outcome. Returning to older workers their rightful share in the employed workforce will not be easy. Without determined and intense efforts from a partnership of policymakers and the social partners, the necessary change in age management will come too late and be too small. Then again there is no doubt Europe can succeed if everybody commits themselves. Even if targets may not be fully met within the deadline, major improvements in the employment and retirement patterns of older workers can certainly be achieved over the next decade.

References
All public documents pertaining to the policy developments covered in this article can be consulted and downloaded at the homepages of the European Commission. The address for documents produced by DG Employment is:
europa.eu.int/comm/employment_social/index_en.htm


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