INTERNATIONAL PERSPECTIVE: ARE SENIOR CITIZENS WANTED ON THE LABOUR MARKET?

Conference on active ageing in Denmark SFI, Copenhagen, 21 October 2015

Anne SonnetSenior Economist Directorate for Employment, Labour and Social Affairs, OECD

2

1. The labour market situation of older workers in OECD countries

2. Key policy action

Outline of the presentation

THE OECD REVIEW ON AGEING AND EMPLOYMENT POLICIES

LIVE LONGER, WORK LONGER (2006)

WORKING BETTER WITH AGE (2016)

1. THE LABOUR MARKET SITUATION OF OLDER WORKERS IN OECD COUNTRIES

Source: OECD estimates based on national labour force surveys.

Opportunities to work at an older age vary considerably across OECD countries

5

Employment rates for people aged 55-59, 60-64 and 65-69, OECD countries, 2014

As a percentage of the age group

SVNHUN

SVKLUX

AUTBEL

GRCFRA

POLTUR ITA

CZEESP

EU21PRT IRL FIN

DNKNLD

MEXGBR

CANAUS

DEUEST

USACHL

KOR ISRCHE

JPN

NORSWE

NZL ISL

0

10

20

30

40

50

60

70

80

90

55-59 60-64 65-69 OECD 55-59 OECD 60-64 OECD 65-69

6

The cross-country difference in employment rates of older workers is driven more by job retention than by job mobility

Retention and hiring rates by age group, selected countries, 2014a

Percentages

a) The retention rate is the ratio of all employees currently aged 60-64 with job tenure of five years or more to all employees aged 55-59 five years previously. The hiring rate is the ratio of all employees aged 55-64 with job tenure of less than one year to the total number of employees.

Source: OECD estimates based on national labour force surveys.

SVN GRC AUT HUN SVK LUX FRA CZE BEL POL DNK Average ESP PRT GBR ITA FIN CAN IRL AUS CHE EST DEU NLD SWE NOR ISL0

10

20

30

40

50

60

70

80

Retention rate Hiring rate

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The older unemployed face a higher risk of long-term unemployment than those aged 25-54

Incidence of long-term unemploymenta by age groups, OECD countries, 2014

As a percentage of unemployed by age

0 10 20 30 40 50 60 70 800

10

20

30

40

50

60

70

80

31.9

50.6

71.7

18.8

48.4

41.8

60.0

44.1

61.962.5 63.0

19.3

74.2

22.4

67.8

38.0

57.9

3.5

59.6

29.5

24.9

46.0

78.874.1

68.970.5

30.1

34.7

47.2

32.9

48.9

60.0

8

There is still a perception of age discrimination in the labour market

Age discrimination in the workplace, European countries, 2011

Percentages

Source: Eurobarometer 2012.

IRL

LUX

PRTNOR

BELDEU

GBRFRA EU

GRCESP ITA

FINSW

ESVN

ESTPOL

AUTDNK

NLD ISL

SVKTUR

CZEHUN

0

5

10

15

20

25

30

35

40

45

Personally discriminated Have witnessed discrimination

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There are significant differences across countries in quality of life at work for older workers:

Finland leads the way

On a scale from 1 to 10, how would you rate your quality of life at work?

% scores 8-10, 2015

Source: EDENRED-IPSOS Barometer: 13 600 employees including 2 000 employees aged 55 and over surveyed in January 2015 in 14 countries. Data are not available for Turkey.

Spain

Italy

Franc

e

Belgium

Czech

Rep

ublic

Poland

Nether

lands

Roman

ia

United

King

dom

German

y

Austri

a

Sweden

Finlan

d0

10

20

30

40

50

60

70

55 and over National average

10

Older workers reporting supervisors are concerned about their well-being ranges

from 39% in France to 67% in the UKWould you say that your line manager genuinely cares about employee well-being?

% strongly agree and agree

Source: EDENRED-IPSOS Barometer: 13 600 employees including 2 000 employees aged 55 and over surveyed in January 2015 in 14 countries. Data are not available for Turkey.

Franc

e

Belgium Ita

lySpa

in

Roman

ia

German

y

Czech

Rep

ublic

Austri

a

Poland

Sweden

Nether

lands

Finlan

d

United

King

dom

01020304050607080

55 and over National average

11

The seniority element in wages is more pronounced in some countries

Age-wage profilea in selected countries, 2012 Hourly wage at 25-29 = 100

a) The figures show the relationship between age and hourly wages, controlling for gender,immigration status of parents, industry, occupation, permanence of the contract, part-time work, yearsof job tenure, years of education and two different measures of skills.Source: OECD estimates based on PIAAC data.

25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-6490

95

100

105

110

115

120

125

130

135

140

DNK OECD FRA DEU

12

Participation in job-related training by older workers is lower than for workers aged 25-54

Job-related traininga by age group, selected countriesb, 2012

As a percentage of the employed in each age group

a) Job-related training refers to participation during the past twelve months.b) OECD refers to the unweighted average of the 22 OECD countries having participated in PIAAC. UK

refers to England and Northern Ireland; Belgium refers to Flanders.Source: OECD estimates, based on PIAAC data.

ITAAUT

FRAPOL

JPN

KORNOR

SVKBEL

SWE

ESPCAN

OECDDEU IR

LAUS

EST UKDNK

NLD CZEUSA

FIN0

10

20

30

40

50

60

70

55-64 25-54

The literacy skills of older people are low relative to the younger generation, except in the UK

Only England and Northern Ireland for the UK and only Flanders for Belgium.Source: OECD Adult Skills Survey (PIAAC).

Progress in literacy skills across two generations, 2012Score on the reading scale

Spain Ita

ly

Fran

ceKor

ea

Polan

d

Austr

ia

Irelan

d

Denmar

k

German

y

Belgium

Aver

age

Finlan

d

Canad

a

Eston

ia

Cypru

s

Nether

lands

Norway

Swed

en

Czech

Rep

ublic

Austr

alia

United

State

s

United

King

dom

Slova

k Rep

ublic

Japan

220

230

240

250

260

270

280

290

300

220

230

240

250

260

270

280

290

30016-24 55-65 Average 16-24 Average 55-65

The computer skills of older people are low relative to the younger generation,

except in the Nordic countries

Only England and Northern Ireland for the UK and only Flanders for Belgium.Source: OECD Adult Skills Survey (PIAAC).

Korea

Poland

Slovak

Repub

licJap

anAust

riaIre

land

Estonia

Czech R

epub

lic

German

y

Belgium

Canad

a

United K

ingdo

mFinla

nd

Austral

ia

United S

tates

Netherl

ands

Norway

Denmark

Sweden

30

40

50

60

70

80

90

100

30

40

50

60

70

80

90

10016-24 55-65 Average 16-24 Average 55-65

Progress in the use of computers across two generations, 2012Prior computer experience and passed the ICT core test (% of persons)

2. KEY POLICY ACTION

OECD’s policy agenda to promote longer working lives

Address age discrimination, mandatory retirement, mechanisms linking pay and working conditions to age or length of service

Take a balanced approach to employment protection

Good practice in managing an age-diverse workforce

GOVERNMENT EMPLOYERS

UNIONSCIVIL SOCIETY

1. Rewarding work and later retirement

2. Encouraging employers to retain and hire older workers

Pension reform

Flexibility in work-retirement decisions

No publicly-funded early retirement schemes

No welfare benefits towards early retirement

Enhance participation in training by workers

Provide effective employment assistance to jobseekers

Improve working conditions through a broad-based strategy to improve job quality for workers at all ages

3. Sustaining employability throughout working lives

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1. Strengthen incentives for workers to build up longer careers and to continue working at an older age

2. Encourage employers to retain and hire older workers

3. Promote the employability of workers throughout their working lives with a view to strengthen employment opportunities at an older age

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Heavy policy focus on the first area relative to the second and third areas

Policy action in the second (employers’ barriers) and third (employability) areas has been much less frequent and sometimes only at the margin

Source: Sonnet, Olsen and Manfredi (2014), “Towards More Inclusive Ageing and Employment Policies: The Lessons from France, The Netherlands, Norway and Switzerland “, De Economist, Vol. 162, Issue 4.

The top priority in the countries reviewed so far has been to “Strengthen financial incentives

to carry on working”

Encourage employers to retain and hire older workersProgress and what still needs to be done

• Address age discrimination in employment -- banned by law in many countries (except in Switzerland). Even if many countries have launched a number of ad hoc initiatives, more could be done to change negative attitudes of employers to hire older workers. The Netherlands has launched very concrete measures towards age

discrimination, such as the screening of vacancy announcements.

In France, the PES (Pôle emploi) has developed the “simulation” recruitment method enabling new hires to be selected through aptitude tests without regard to age or previously held jobs.

• Seek to discourage or further restrict mandatory retirement, still in place informally and in some collective labour agreements. More could be done to reach all sectors. In Denmark, the mandatory retirement age of 70 for civil servants was

abolished in 2008 but mandatory retirement ages are still in place in the private sector.

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Encourage employers to retain and hire older workersProgress and what still needs to be done (cont.)

• Encourage the social partners to identify mechanisms to facilitate the retention and hiring of all older workers, including reviewing their practices in setting pay to reflect productivity and experience, not age. More could be done. The social partners have not reviewed extensively pay practices based on age or length of service. Public authorities could give an example by introducing performance pay and limiting automatic rises in salary with tenure for public-sector employees.

• Take a balanced approach to employment protection. Countries tend to adopt age-neutral measures on employment protection.

One exception is Poland where workers with less than four years until retirement are protected from layoffs.

• Provide employers with guidance on good practice in managing an age-diverse workforce. More could be done.

The Centre for Senior Policy in Norway aims to raise awareness on older workers among all parties.

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Promote the employability of workers throughout their working lives

Progress and what still needs to be done• Enhance participation in training by ensuring that it is adjusted

to reflect the experience and learning needs of older workers. More could be done to make training more attractive to low-skilled workers and encourage enterprises to keep training them until retirement.

In the Netherlands and Switzerland, the use of the instrument to validate skills acquired on the job is increasing.

In Poland, a National Training Fund was established in 2014 with a short-term priority to reach workers over the age of 45.

• Provide effective employment assistance to jobseekers, irrespective if their age, but targeted at those groups most at risk of long-term joblessness.

In Switzerland, high activation of older unemployed by the PES to help them back to work based on early intervention, intensified coaching and individual targeting.

In Denmark, the Senior Network is an innovative practice receiving financing from the public budget to promote participation in teams to find jobs.

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Promote the employability of workers throughout their working lives

Progress and what still needs to be done (cont.)• Improve working conditions through a broad-based strategy to improve

job quality for workers of all ages. Countries aim to reduce the effects of poor working conditions in a preventative way but more could be done to reach more firms: In Norway, anticipating and reducing sickness-related absenteeism

more effectively is one of the three goals of the “Inclusive Workplace Agreement” introduced in 2001 and by 2012 covering 60% of workers.

The networking initiative developed in the Netherlands among volunteer “pioneer” firms aims to promote sustainable employability and better health for their workers.

In France, as a headline measure of the 2013 pension reform, the personal account for preventing strenuous work exposure came partly into force in January 2015 for private-sector workers.

In Denmark, “prevention self-help kits” , including a specific “senior starter kit”, offer subsidies to enterprises to improve health and safety conditions.

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Many OECD countries have carried out a series of (pension) reforms to encourage longer working lives.

Promoting the employability of workers throughout their working lives remains crucial.

Governments, workers, the social partners and NGOs have to face these challenges together.

A more comprehensive set of reforms is necessary to improve current practices in firms to upskill, retain and hire older workers in a technology-rich work environment.

More should be done to ensure that senior citizens are wanted on the labour market.

Conclusion: More should be done !

For further information:Anne Sonnet (anne.sonnet@oecd.org) the review Working Better with Age www.oecd.org/els/employment/olderworkers

Thank you!