Working in old age
OECD study examines policy initiatives to increase labour participation rate for older people.
CH – 01/2020
The general population is aging and this trend will continue. The average age of the population
will increase from 40 to 45 by 2050. The old-age dependency ratio will also increase significantly from 26% to 43%. This has major implications for
future economic growth and public finances.
Over the last ten years there has been a significant
increase in the labour force
participation rate of older people (workers aged 55-64), which now stands
at 64% on
average in the OECD area. However, this increase
is not enough to continue raising living
standards in the face of an ageing population. All
sources of potential labour must be better mobilised, including the employment of women, the
low-skilled and migrants. Nevertheless,
employment of older people plays a crucial role.
The OECD study identified three key areas to take action and made specific recommendations for
each of them. These are:
work and later retirement;
employers to retain and hire older workers;
the employability of workers over the course of the working lives.
Incentives in pension systems
In terms of
the first action area, incentives should be created for people to work longer. Pension systems should encourage later retirement. Important
factors here are the statutory retirement age and the replacement rate. Possibilities to retire early can encourage workers to leave the
labour force while they are still healthy and able to work and should therefore be limited. Mandatory retirement for workers (whether through collective agreements or other arrangements) should also be
abolished. Other social benefits (such as sickness or unemployment benefits)
should be designed in a way
that they are not used as a route to early retirement.
As regards the second point, age discrimination and prejudice against older workers is
still a serious issue and
there needs to be greater awareness of the problem. There must be adequate enforcement of existing legislation and, where necessary, appropriate legislation needs to be adopted.
Wages and salaries should be based more on performance than on age. Special
age-related regulations on employment
protection and unemployment benefits should be eliminated. Good practice should be encouraged through public and
private initiatives, e.g. on work organisation, training, prevention/health
measures and even
working time. This should
reflect the changing capacities
of workers and their family needs over the course of their life.
to lifelong learning is crucial for the third action area, especially
for low-skilled and older workers. There needs to be better recognition of skills and abilities
acquired throughout a person’s
working life. Good health is a prerequisite for actually being able to work longer; therefore, improving working conditions as well as the health and
well-being of workers is very important. Tailored career support can limit the impact of job loss and help workers stay in the
labour market, so that it does not become a pathway to early