Impact of the Recession on Age Management Policies
Demographic issues constitute a serious challenge to strong economic growth and the European social model, and the current recession has aggravated these problems, pushing people out of the labour market and further increasing the number of individuals dependent on social services. In particular, the old-age dependency ratio is rising across Europe; by 2040, those over the age of 65 will total more than 45% of the working age population (aged 15–64) in the EU’s 27 current Member States. Population ageing will require more individuals across Europe to work to an older age to satisfy the demand for labour and to relieve pressure on social security and pension systems.
RAND Europe participated in a project on ‘Restructuring in recession and labour force participation.’ The research explored overall trends in the employment of older workers (those aged 50+), policy directions before the economic crisis of 2008, and developments in policy and practice after the crisis and their implications for the labour market participation of older workers. Another goal of the research was to establish how age management practices changed during and after the economic crisis at the level of individual establishments, as many establishments underwent restructuring measures.
The European Foundation for the Improvement of Living and Working Conditions (Eurofound) engaged RAND and other research organisations in the study, which explored the age management laws and policies in nine EU Member States as well as business practices within those states, in light of restructuring undergone during the recession. The nine countries involved were Austria, Belgium, the Czech Republic, Hungary, Latvia, the Netherlands, Spain, Sweden and the United Kingdom.
- Previous incentives for early retirement have been reduced, dropped or reworked to encourage gradual or phased retirement or, more generally, working time flexibility for older workers
- Nonetheless, the case studies demonstrate that there was significant recourse to early retirement where recessionary pressures forced job cuts on employers
- The workforce age profile grew sharply during the recession. In all member states, employment rates of older workers tended to be less affected by the recession than that of core age and younger workers
- Retirement ages are being increased in many member states. Others have dropped the statutory retirement age. Incentives are increasingly geared to extending working lives (eg. bonuses for deferred pensions) and to penalising early withdrawal.