1 Live Longer, Work Longer: A geing and employment policies Patrik Andersson Employment, Labour and Social Affairs, OECD Thessaloniki, October, 2006

2 Population ageing is occurring in all OECD countries Ratio of the population aged 65+ to the working age population (20-64)

3 If nothing is done, population ageing may result in a falling labour force, leading to labour shortages and slower economic growth Projected change in labour force, * Index (2000 = 100) * Assuming participation rates by age and gender remain unchanged at their current levels

4 In addition, age-related public spending is projected to rise from already high levels

5 Key conclusion: Meeting these challenges will require mobilising more fully the labour resources of older people Percentage of the population who are employed, 2004

6 OECD has carried out a major study of Ageing and Employment Policies consisting of: r 21 separate country reports l Identifying work disincentives and barriers to employment of older people l Setting out policy recommendations r A synthesis report, Live Longer, Work Longer Key policy response: Living longer must mean working longer

7  Incentives facing older workers to continue working  Employer reluctance to hire and retain older workers  Helping older workers to remain in jobs or find new jobs Key issues to working at an older age

8 Low work incentives mean early retirement Effective and official retirement age for men, * *The effective age of retirement is the average age at which workers over the age of 40 withdrew from the labour force over the period

9 Strict EPL may reduce hiring of older workers The relation between employment protection and hiring of older workers

10 Older workers participate less in training Percentage of workers who participated job-related training, 2002

11 Key policy directions to encourage work at an older age Tackle age discrimination Align labour costs with productivity Protect employment opportunities not jobs GOVERNMENT EMPLOYERS UNIONS NGOs Reward work Change employer practices Improve employability Pension reform to cut implicit tax on working Restrict other early retirement pathways Better options for phased retirement Suitable training opportunities at all ages Better help for older jobseekers Flexible, safe & healthy working conditions

12  Ensure greater neutrality in work-retirement decisions  Moving towards actuarial neutrality  Taking account of rising life expectancy  Make it possible to combine work and pensions 1. Reward work  Reduce early retirement options  Phasing out formal early retirement schemes  Ensuring that other welfare benefits are not used as early retirement pathways  Beyond neutrality – actively promote participation ?  Increasing pension rights with age  Subsidise part-time pensions

13 r Tackle negative employer attitudes  Through strict age discrimination legislation  And through information campaigns and guidelines r Align labour costs closer to productivity  Link earnings more closely to individual performance not age  Avoid wage subsidies that are simply targeted by age r Strengthen employability of older workers rather than on job protection  Reassess the impact of job protection rules on labour mobility and hiring of older workers 2. Change employer practices

14  Ensure that older unemployed are actively seeking work in exchange for better employment services  General exemptions from looking for work should be abolished  Programmes should be better targetted to individuals  Encourage greater take-up of training  Do not exclude older workers from participation in training  More flexible courses  Better targeting to individual needs and the job  Better opportunities for lifelong learning  Improve the work environment  Greater flexibility in working hours  Adapting working conditions 3. Improve employability

15 THE BOTTOM LINE r Population ageing is both a challenge and an opportunity r It will put upward pressure on public expenditures while dragging down economic growth r Seizing this opportunity will require the co-operation of government, employers, trade unions and civil society