Activation of the elderly: increasing participation, enforcing employability and working age until the age of 67

The Dutch Ministry of Social Affairs and Employment hosted a Peer Review in The Hague that brought together ministry officials and independent experts from 13countries (Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Germany, Greece, Finland, France, Romania, Serbia, Slovenia and the UK), as well as representatives from DG Employment, Social Affairs and Equal Opportunities at the European Commission.Demographic change and the greying of the workforce contribute to the need for increasing levels of participation by older workers in the labour market and the postponement of the age of retirement across the EU. During the past decade successive Dutch governments have introduced policy measures which have resulted in an increased level of participation by the 55-64 cohort in the workforce. These measures included the abolition of schemes for early retirement, improving incentives and promoting changes in attitude of people and firms. New measures now address the long-term employability of those who, if current proposals are accepted, will have to work to 67, involving: the introduction of new forms of funding to encourage individual workers to participate in education and training throughout the life course; incentives for employers to develop age-aware human resource management policies; and the implementation of instruments, such as the Work Ability Index, which will facilitate the preventive diagnosis of the ability to continue working.

The discussions focus on measures and policies to improve the employment prospects of older workers, drawing on the lessons learned by the participating countries. The main conclusions of the discussions are summarised under the following headings:

The impact of the policy framework (‘Carrot vs. Stick’): Employability and workability considerations are important but it seems that the main influence on participation rates lies with the wider policy framework. So far it seems that the emphasis has been on the ‘stick’ approach, foreclosing early exit pathways and reforming pension systems. Other potential exit routes, other than the pension system, have also been restricted in many countries, for example by applying for stringent criteria to incapacity benefits and ensuring that unemployment benefits do not provide pathways to early exit.

Wage formation also plays an important role in the provision of employment opportunities for older workers. Countries with flatter wage structures are more likely to encourage job-to-job mobility among older workers. However, the reform of seniority based wage systems is clearly a difficult matter largely for social partners (although this can also be linked to pension systems and pension benefits). Furthermore, in a system of flatter wage structures the question of valuing experience as well as respect for market factors would have to be addressed.

Reforms are being made to pensions systems and the statutory retirement age. Some countries are introducing regular reviews of the retirement age in line with indexes of healthy life expectancy and more flexible retirement ages linked to incentives for staying longer could also offer a way forward.  Crucially, it is important to ensure that unemployment, incapacity and other welfare benefits do not remain as alternative pathways to early exit from the labour market, thus creating perverse incentives and policy incoherence.

The Dutch example clearly highlights the importance of a holistic approach combining “stick” with “carrot” approaches, designed to stimulate the development of age sensitive human resource management policies, improving employability across the life cycle and enhancing work ability.

Changing employer attitudes: In general, in many countries there is still reluctance by employers to recruit and retain older workers due to concerns over productivity, health status and return on investment. Raising awareness through information campaigns, incentives and age-discrimination legislation can help change employer attitudes and making them more aware of the business benefits of retaining or recruiting older workers. As the Dutch experience shows the stimulation of age-aware policies in the workplace can lead to positive changes in the culture of organisations, resulting on a better recognition of the value of an age-diverse workforce and adjustments to the working practices which enable all workers to better sustain their work ability.  It is tangible proof of the business benefits of such measures which is most likely to sustain adherence to their principles even during difficult economic times. However, there are other objectives factors that can influence employer attitudes towards older workers such as seniority wages or employment protection legislation. These aspects require changing attitudes of the trade unions and older workers themselves and need to be addressed through constructive social dialogue.

Fostering employability: Current evidence shows that in many countries, older workers have a lower and often outdated education and skills profile which renders their adhesion to the labour market more problematic. While some active labour market policy measures have focussed on extending training opportunities to older workers, it is now widely recognised that such an approach targets the problem too late. There is therefore an increasing emphasis on lifelong learning and offering education, training and development opportunities throughout the life course. While among the Peer Countries only France had so far introduced a legal requirement for human resource development among older workers (alongside a general obligation to set a share of the wage bill aside for training), other countries also emphasise ongoing workforce training through the establishment of mutual funds, often at sectoral level. However, where evidence is available from the evaluation of such funds, they show that investment tends to be focussed rather narrowly, for example on the annual review of skill requirement, or lack a clear link with advice and guidance to ensure that any training provided is not only effective and efficient, but also future orientated. The tendency remains to consider lifelong learning as a panacea when more emphasis clearly needs to be placed on the medium to longer term effectiveness of such provision. Another important question which needs to be answered is who should pay for that training, the state, the social partners or the individual and what the mix of responsibilities in this area should be.

Ensuring work ability: Health problems are often mentioned as one of the main reasons why workers withdraw from the labour market. There is a clear business case to improve the working conditions. There is increasing evidence that a broader, more integrated approach to employee health can result in cost savings, higher levels of productivity, improved morale and lower turnover amongst employees. Facilitating flexible working arrangements can assist transitions from work to retirement.

All employers are required by law to carry out regular risk assessment and to reduce the detrimental impact of the working environment on employee health and safety. In addition, a number of Member States have introduced measures to implement the Work Ability Index (WAI), which is intended to measure the “work ability” of employees defined in terms of the ability to perform the physical and psychological demands of their current jobs. This was considered to be a very useful tool at the mirco, meso and marco level as a guide to introduce measures which will improve the performance and productivity of individuals, business and sectors in the longer term. However concerns were also over privacy issues relating to the WAI and the potential of the use of the index to shift responsibility to the individual.

It is worth noting the case of older workers who have spent many years doing strenuous jobs or working under difficult conditions who might not be able to carry on in the current jobs. In this case there is an identified challenge to define “heavy” work and how to treat it (e.g. redeployment vs. ergonomics). In this regard, the WAI or similar measures could be used as tools to identify relevant sectors and occupation and to target investment on product and process improvements to reduce the impact of such tasks on individual workers.

Promoting effective social partnerships: It is clear that to address the challenge of an ageing workforce a coordinated and comprehensive package of measures and policies is needed, and should be developed and jointly implemented by the state, employers, trade unions and the society as a whole.