EUROPEAN PAPERS ON THE NEW WELFARE

Active Ageing and Pension Policies in the Context of the European Employment Strategy

5.1 Where Are We in 2007?

As can be seen from Table 5 of the Employment report 2006 of the European Commission, the EU is far from achieving the original objectives set in Lisbon, Stockholm and Barcelona. In 2005 the overall employment rate in EU-25 was 63.8%; the female employment rate was 56.3%, while the employment rate among older members of the working-age population was 42.5%. Compared to the year 2000, the overall employment rate had increased by only 1.4% points, the female employment rate by 2.7% points and the older workers’ rate by 5.9% points.
Looking at the figures per country, remarkable differences in employment rates are observed: several countries have already reached the general employment target. These include Denmark (75.9%), The Netherlands (73.2%), Sweden (72.5%) and the UK (71.7%). Other countries are still far behind the target: Italy (57.6%), Poland (52.8%), Belgium (61.1%) and France (63.1%). Only Denmark, Sweden and the UK have achieved the three employment targets set in Lisbon and Stockholm.

Table 5: Evolution of theoretical replacement rates fromt 2005 to 2050
hutsebaut-tab7.gif
(click to enlarge)
Source: E.C., Employment in Europe 2006, Luxembourg, 2006

As to the employment rate of older workers, remarkable progress has been made over the period 2000-2005 in Latvia (+13.5% points), Finland (+11.1% points) and Hungary (+10.8% points). As to the average exit age from the labour force, progress towards the Barcelona objective (to increase the average by 5 years) is very limited in the EU-25 area: from 60.4 years in 2002 the figure in 2005 was 60.9 years.
This means only half a year of progress over 3 years! It is important here to observe the huge differences between European countries as to the effective exit age from the labour market: between e.g. France (58.8 years) and Sweden (63.7 years) there is a difference of almost 5 years! All these figures prove that progress towards the quantitative objectives of the European Employment Strategy is difficult but possible.


6. What to Do in Order to Reach the Employment Target of 50% for Older Workers Throughout the Eu?

A prerequisite for increasing the employment rate of workers in general and of older workers in particular is a high and sustained economic growth of our European economies and the creation of more quality employment. Therefore Europe needs to develop a new macroeconomic policy: the European Central Bank must become the guardian of price stability and growth and start to fulfil its double mandate.
The ETUC believes that in order to achieve active ageing an integrated approach is required involving a range of policies, instruments and players (including the social partners and the governments). Policies and partners should all work in the same direction.
The so-called substitution effect between older and younger workers is not that obvious: countries that were the most successful in increasing the employment rate of older workers (e.g. Finland) were also successful in increasing youth employment. “Old people will not damage job opportunities for the young” (V. Spidla, 2006).
A life-cycle approach is necessary: many of the measures and policies needed for active ageing should apply to all workers throughout their careers in order to be fully effective.
Incentives and disincentives deriving from the social security and taxation system are crucial for the success of active ageing. The main challenge for EU countries is to redesign their social security and taxation systems in such a way as to encourage older workers to remain in or to re-enter the labour market. Substantial tax and pension incentives can be convincing. ‘Carrot’ reforms seem to be more successful then ‘stick’-based reforms. Increasing the statutory retirement age does not seem to be the best way forward in tackling this problem: this measure could lead to ‘inactive’ ageing instead of ‘active’ ageing, especially if other pathways out of work are available. Older workers must be given the chance to opt for flexible and gradual retirement. For example, part-time retirement regimes, allowing for a combination of retirement and employment, are to be favoured.
Policies should be directed towards keeping workers ‘employable’ at all ages and preventing workers from getting ‘old’. Lifelong learning and vocational training are essential to keep up the employability of older workers. Skills need to be upgraded throughout the life course: starting training at age 50 will never compensate for the lack of training during the earlier years. Collective agreements have to make provisions for and invest in lifelong training for all workers.
Active labour market policies are of crucial importance too, especially in cases of restructuring and redundancies: instead of offering only passive financial support to unemployed people, part of the available budget should be used for active measures such as re-training, personal guidance and job creation schemes (e.g. in the social economy or through public employment programmes). Nor should the opportunities offered by the external labour market be overlooked.
Negative attitudes of employers towards older workers are often based on myths but can have far reaching consequences for older workers. M. Leibold and S. Voelpel, (Managing the Ageing Workforce. Challenges and Solutions, Wiley, 2006) analysed the myths and realities about older workers and found out that very often the myths do not correspond to the reality.
A recent worldwide research project of the service group Manpower, conducted in 25 countries and involving 28,000 companies, found that only 14% of the companies surveyed had a specific recruitment policy for workers over 50 years of age: for Germany and the United States this figure is 18%; for France only 6%. Manpower also found that only 21% of the surveyed companies have a retention policy for older workers: the figure for Japan is 83% against only 8% for France.
Good working conditions and flexible work organisation also contribute to keeping older workers longer at work. Ergonomic measures and health and safety policies are important; greater autonomy in work (organisation) combined with a reduction in working hours are also important in order to persuade workers to stay on board.
Policies to reconcile work and family life are relevant for all age groups. Different life-cycle leave arrangements such as sabbaticals, career breaks, parental leave, time credits, educational leave and care leave are important instruments which can contribute to keeping workers longer in employment.
What is often overlooked in this debate is the importance of available and affordable care provisions for children and the elderly. The ‘sandwich’ generation with grandchildren and older parents, both in need of care, is often confronted with the dilemma: to withdraw from or to stay in the labour market. The question for them is how to respond to the personal desire to continue work while at the same time providing the grandchildren or the parents with the necessary support. Formal care services or infrastructures can help to facilitate the choices facing this generation.

References

European Commission (2006): Employment in Europe 2006, p. 28

European Commission (2006): Report Adequate and Sustainable Pensions — Synthesis Report 2006, Luxembourg.

European Commission (2006): European Economy, Special Report No. 1/2006, The impact of ageing on public expenditure. Projections for EU-25 Member States on pensions and health care.

ETUI-REHS, Education (2007): “INVERCO-EFRP- GDP data — Eurostat Social Protection in Europe”, Guide for Eurotrainers, p. 99.

Jepsen, M., Foden, D. and Hutsebaut, M. (eds) (2003): A Lifelong Strategy for Active Ageing, ETUI, Brussel.


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