EUROPEAN PAPERS ON THE NEW WELFARE

Towards the Improvement in Working Conditions for Older Workers: Empirical Evidence from Maltese Companies

Abstract

As in most of the 27 European Union member states, and stimulated by recent community policies, Malta is also a country currently in the throes of a political and normative process, whose objective is to extend the professional life of workers, mainly by deferring retirement age.
However, in pursuing this objective, Malta starts from a rather unique position, which could be defined as disadvantaged with respect to most other European countries, due to the peculiar characteristics of its workforce, which is the youngest of the 12 new member states (only 16% of Maltese workers are over 50, whereas 23% are aged 15-24 — Mandl, Dorr and Oberholzner 2006: 14). Average retirement age is increasing, but is nonetheless one of the lowest of the 27 European countries (in 2005 it was 58.8 years, as in France, and higher only than that recorded in Slovenia); it is in the second-last place, ahead only of Poland, in terms of employment rate, both in general terms and for older workers (the latter reached 30.0% in 2006), but the rate drops to last position, however, when only older women are considered (11.2%) (Eurostat 2007). The considerable gender gap in the employment rates and the low number of older workers (also distinguished by lower qualifications — Gonzi and Diamantopoulus 2001: 11) overall in the Maltese workforce, can actually be seen as the chief causes of a generally low level of employment in the country. The female employment rate is particularly low in the 45-54 and 55-64 age groups, both because older women leave the employment market more frequently than men (Technical Team to the Pensions Working Group 2005a: 7-9), and because most younger women leave work to have children and tend not to resume their professional lives, except for brief periods (Schwarz, Musalem and Bogomolova 2004:4).
The picture causes some concern because Malta is not free from the demographic ageing process (Pensions Working Group 2004a: 5) which affects the whole European Union (Employment Taskforce 2003: 12). Therefore, even starting from a less favourable position, for the reasons explained above, the European objective1 to activate strategies aimed at raising the general employment rate and implementing social security systems, beginning with pension system reforms (Principi, Gianelli and Lamura 2007: 122), is a priority also in Malta.
One of the solutions identified in Europe and in Malta is to extend the workers’ professional life (Employment Taskforce 2003:11, European Commission 2002, European Commission 2004, OECD 2005: 6, Gonzi and Diamantopoulus 2001: 7 and 22, Ministry for the Family and Social Solidarity 2007a: 30). To be more specific, the two main objectives towards which the Maltese Government is currently working are those of raising the employment rate of older workers, as well as that of women in general (Technical Team to the Pensions Working Group 2005a: 7-8, Technical Team to the Pensions Working Group 2005b: 8, Ministry for the Family and Social Solidarity 2004: 9), through pension system reform and a series of job placement schemes for the unemployed, coordinated by the Governmental Employment and Training Corporation organization.

1. The Reform Of The Maltese Pension System

Malta has recently reformed its pension system (the law in question became effective from 1st January 2007: Social Security — Amendment 2 — Act 2006), raising both the retirement age (from 60 for women and 61 for men, to 65 years of age for both genders) and the number of years of contributions required to become entitled to a pension (from 30 to 40). The process will be implemented gradually, in that the rise in retirement age to 65 years will only be finalized in 2027, which is when today’s 45-year-olds will reach their 65th year of age (Table 1).

Table 1: Gradual raising of retirement age

principi-tab1.gif

Women are given the possibility of working up till the age of 61.
Source: Principi and Lamura 2007a.

With regard to gradually raising years of contributions from 30 to 40 years for entitlement to a pension, if we take 2007 as a reference, no changes are foreseen for those who are 56 or over (i.e. 30 years contributions are sufficient); 35 years contributions are needed for people aged between 46 and 55; and finally, 40 years of contributions are needed for those who are under 45 (Fairbairn 2006).
The law is the result of a long debate amongst all the social partners, which became more concrete in 2004, when a working group was appointed with the aim of drawing up a White Paper on pension reform, to contain proposals and recommendations that were to be submitted for feedback from all the social partners of the country (Pensions Working Group 2004a, Pensions Working Group 2004b, Technical Team to the Pensions Working Group 2005c). The act is certainly a step forward in a much hoped-for increase in the employment rate for older Maltese workers, but there is also friction in the country between the social partners, as well as other contradictions. For example, the Union Haddiema Maghqudin (Workers’ General Union) was opposed to raising the retirement age to 65 and did not want it changed, suggesting that any decision to stay at work should be left to the worker (Technical Team to the Pensions Working Group 2005d: 11). Perhaps the most obvious contradiction looming on the horizon concerns precisely this decision, which remains totally in the hands of employers, who, at the moment, can legally decide to dismiss employees when they reach retirement age (Employment and Industrial Relations Act 2002:22). The above mentioned working group included a recommendation in the White Paper (regarding precisely the possibility of workers being able to choose to continue to work even after reaching the new retirement age) to eliminate this item, which obviously contradicts the recent guidelines provided by European policies (i.e. Employment Taskforce 2003:8; European Commission 2004: 15;OECD 20006: 137), but this was not included in this act. Essentially, therefore, on one hand steps are being taken to raise the employment rate of older workers, and on the other, they continue to be discriminated against because they are not allowed to decide for themselves whether or not to extend their working lives.
The question of age discrimination at work is actually dealt with directly by Maltese law (Fortuny, Nesporova and Popova 2003: 26), but the act also includes a series of exceptions which limit its scope. For example, the act states that differences in employment terms and conditions based on age do not constitute discrimination when they are “objectively and reasonably justified by a legitimate aim’, what this actually means is not made clear by the law, or in the event that a maximum age limit offering employment is determined by the company’s need to train the worker for the tasks they will perform, or having to employ a newly-recruited worker “for a reasonable period of employment before retirement” (Equal treatment in employment regulations 2004: 4).

2. The Role Of The Employment And Training Corporation

The Maltese Government has entrusted the Employment and Training Corporation (ETC) with implementation of the various occupational support measures in favour of older workers. It is a national public agency for employment, responsible, among other things, for organizing schemes at central level, with the objective of raising the country’s employment rate, through job placement programmes for specific categories of unemployed workers, including women and older workers (Ministry for the Family and Social Solidarity 2006a: 93). In Malta, at ‘institutional’ level, the latter was always taken to mean those over 40, an age limit that was not only lower than the 45 generally adopted, for instance in Italy, (Senate of the Republic 2005: 25, ATDAL 2003: 30, Bombelli and Finzi 2006), but more importantly below the ‘official’ limit of 55 indicated by the European Council of Stockholm in 2001. This Maltese peculiarity is justified since in the experience of ETC operators, it is from this age that workers in the country of suffered the greatest expulsion from the employment scenario, and problems of professional reintegration. As a direct consequence, from the year of its foundation (1990), the organization has launched various projects to safeguard the category of unemployed over-40s, with the objective of favouring their return to the employment market2. Out of all the whole programmes organized by the ETC, the most significant so far developed for older unemployed workers was the Training and Employment Exposure Scheme (TEES), which began in 2005 and ended in 2006. This job placement scheme was dedicated to unemployed workers aged over 40, who had been looking for work for over six months, and was co-financed by the European Social Fund, which guaranteed the participants a salary higher than the minimum wage for a year (of which six months were spent in classroom training organized by the ETC, followed by six months in-house on-the-job training), with the possibility of being offered permanent employment by the company at the end of the scheme.
This programme, in which the on-the-job training period varies, according to the requirements of the companies, was well received by unemployed workers and welcomed by employers due to the economic advantages associated with it (the worker’s on-the-job training period is partly financed by the Government), as well as to the opportunity to be able to consider the training period as a ‘trial’ with the possibility of deciding at a later stage whether to hire the worker permanently. Around 460 unemployed over-40s took part in the scheme (about 25% were female), of whom only 24% were still registered as unemployed at the end of the scheme. The majority were employed by the companies where they trained, or used the experience to find employment for themselves (Employment and Training Corporation 2006: 32).
As for the future perspectives, and in order to come closer to the ‘European’ definition of ‘older workers’, the ETC is modifying the reference range (raising it by 10 years) for ‘labelling’ older workers. The next project (the Employment Aid Scheme), will be aimed, among other ‘clusters’ of beneficiaries3, at over-50s who are unemployed or about to become so (Employment and Training Corporation 2007).
However, in anticipation of the results of this programme and in the light of recent pension reform, it is crucial to examine the older worker sector closely and also to analyze the situation at another level, i.e. corporate. What schemes have been set up by Maltese companies to deal with an ageing workforce? A recent contribution in this direction was made by the “Employment Initiatives for the Ageing Workforce in the European Union” study, undertaken on Maltese territory from the end of 2006 till early 2007, which made it possible to gather some of the first empirical evidence regarding the existence and the characteristics of company schemes adopted to support the ageing workforce. The main contents and results are shown below.

Andrea Principi: Italian National Research Centre on Ageing (I.N.R.C.A.), Department of Gerontological Research, Ancona, Italy.
Giovanni Lamura: Italian National Research Centre on Ageing (I.N.R.C.A.), Department of Gerontological Research, Ancona, Italy.
1 In the context of European policies on the subject, European Council resolutions in Lisbon in 2000 (raising the employment rate from 61% to 70% by 2010), in Stockholm in 2001 (raising the employment rate of older workers to 50% – for those aged 55-64 — by 2010) and Barcelona in 2002 (gradually increase retirement age by about five years by 2010), are considered milestones.
2 The organization has also dedicated a section of its internet site to the unemployed over 40 years of age: www.etc.gov.mt/site/page.aspx?pageid=2150 [access: 7th January 2008]
3 Including, among others, also ‘disabled’ persons, ‘unemployed for over five years’, ‘single parents with children under 18’, ‘persons with few qualifications and who have recently been dismissed’, etc.


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