ANTICIPATING POPULATION
AGEING – CHALLENGES AND
RESPONSES
Peter Whiteford
Social Policy Division, OECD
www.oecd.org
www.oecd.org/els
Outline
z
What is the OECD and what does it do?
z
Anticipating the challenges of population
change
z
Possible responses
•
How does US compare with other countries?
What is the OECD?
•
•
•
The OECD groups 30 member countries sharing a
commitment to democratic government and the market
economy. With active relationships with some 70 other
countries, NGOs and civil society, it has a global reach.
The OECD is a group of like-minded countries.
Essentially membership is limited only by a country's
commitment to a market economy and a pluralistic
democracy. It is rich, in that its 30 members produce two
thirds of the world's goods and services, but it is by no
means exclusive.
Its work covers economic and social issues from
macroeconomics, to trade, labour market and social policy,
education, development and science and innovation.
What is the OECD?
•
•
•
The OECD grew out of the Organisation for European
Economic Co-operation, formed to administer American
and Canadian aid under the Marshall Plan for the
reconstruction of Europe after World War II.
The core of original European and North American
members has expanded to include Japan, Australia, New
Zealand, Finland, Mexico, Korea and four former
communist states in Europe: the Czech Republic,
Hungary, Poland and the Slovak Republic.
Since 1961, the OECD's vocation has been to build strong
economies in its members, improve efficiency and market
systems, expand free trade and contribute to development
in industrialized as well as developing countries.
What does the OECD do?
•
•
•
The OECD fosters good governance in the public
service and in corporate activity. It helps governments
ensure the responsiveness of key economic areas with
sectoral monitoring. By anticipating emerging issues and
identifying policies that work, it helps policy-makers adopt
strategic orientations. It undertakes individual country
surveys and reviews.
The OECD produces internationally agreed instruments
and recommendations to promote rules in areas where
multilateral agreement is necessary to make progress in a
globalised economy.
The 2 300 staff of the OECD Secretariat in Paris work
directly or indirectly to support the activities of committees.
Some 700 economists, lawyers, scientists and other
professional staff, mainly based in a dozen substantive
directorates, provide research and analysis.
The challenges of population change
• People are living longer.
• Fertility has declined, particularly in Japan
and Southern Europe.
• The large “baby boom” generation – born
1946 to 1964 - has started to enter preretirement and retirement years.
– These developments have significant
implications for social programmes and for
the future labour force.
The US population is ageing less rapidly
than in many other OECD countries
80
Ratio of the population aged 65+ to the population age 20-64
Japan
70
60
Japan
50
Germany
EU
OECD
40
EU
OECD
30
Japan
Germany
Germany
United States
United States
Turkey
EU
OECD
20
United States
Turkey
10
Mexico
0
1975
2000
2025
2050
… But spending on Social Security, Medicare, and
Medicaid is forecast to rise significantly
CBO Midrange Assumptions,
Assumptions, 1970 to 2040
Change in public expenditure on pensions in the United
States and other OECD member countries, 2000-2050
% of GDP
Italy
France
Germany
Poland
Spain
Sweden
Belgium
Finland
Japan
Czech Republic
OECD Average
Netherlands
Canada
United States
United Kingdom
Australia
Korea
-4
-2
0
2
4
6
8
10
In addition to higher public expenditures, population
ageing is likely to result in:
a sharp slowdown in labour force growth
• labour shortages
• slower economic growth
•
OECD Labour force in millions, 1950-2050
Historical
750
700
650
600
550
Projected
20
50
20
45
20
40
20
35
20
30
20
25
20
20
20
15
20
10
20
05
20
00
19
95
19
90
19
85
19
80
19
75
19
70
19
65
19
60
19
50
450
400
350
300
250
19
55
500
Projected labour force growth, 1950 to
2050
1950-2000
-1.5
2000-2020
-1.0
-0.5
0.0
2020-2050
1.0
0.5
1.5
2.0
1.67
0.65
0.55
United States
1.24
Japan
-0.51
-1.00
0.63
EU
-0.08
-0.46
The composition of the US workforce
will change
• Currently, older workers (i.e. aged 50 and
over) account for around 23% of the US
labour force. Assuming participation rates by
gender and age groups do not change, the
share of older workers is expected to peak at
30% around 2030.
• If policies to increase workforce participation
are effective, this share could increase
further.
Labour shortages today and in the
future
• Labour shortage problems vary across OECD
(short/long term, sectors/skills, determinants).
• High demand for skilled workers in ICT but also
medical, biomedical and agro-food sectors
• Also in skills such as customer relations,
communications
• Low-skill shortages in construction, service
personnel.
Ageing and the labour market – possible
responses
• Is immigration a solution to the problem of
labour force shortages?
• Increasing the labour force participation of
women.
• (Re)Integrating persons with disabilities in
the labour market.
• Promoting the employment of older workers.
Can immigration make-up for labour
shortages?
• Most European nations will actually shrink
between 2000 and 2050 (EU -10%, Japan -14%).
• To maintain current worker/retiree ratios Italy
would have to admit 2.2 million immigrants p.a.,
Germany 0.5 million (France in 2000: 100,000
immigrants). Impossible to fully control
migration gains and age distribution of entry and
exit flows.
• Adaptation of immigrant fertility patterns to host
country.
• Ageing of foreign populations.
Mobilising the female labour force
•
Labour supply objectives
•
Economic independence and social inclusion
•
Gender equity
•
Children’s perspective
Increases in female employment can prevent
drastic shrinking of the labour force
a
Total labour force from 1980 to 2000 and projections to 2030, thousands
30,000
Japan
65,000
France
28,000
60,000
26,000
24,000
55,000
22,000
Constant rates
Female workers
Constant rates
20,000
Female workers
50,000
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
1980
1985
1990
1995
2000
2005
Notes on projections:
"Constant rates": assumes constant labour force participation rates for men and women from 2000 to 2030;
"Female workers": assumes that female participation rates reach current male participation rates in each country in 2030.
Source:
2010
2015
2020
2025
2030
OECD analysis of work-family balance
•
•
•
•
Promoting parental employment
options, and balancing work
and care commitments are key
policy challenges
– Parental labour market
outcomes
– Family outcomes
Babies and Bosses addresses
the wide range of factors that
affect the parental work and
care choice.
Reviews will cover 13 OECD
countries in all (Australia,
Denmark, Netherlands Canada,
Finland, New Zealand, Portugal,
Sweden, Switzerland and United
Kingdom).
www.oecd.org/els/social/familyfriendly
Types of family friendly policies
• Part-time work
• Flexible working hours
• Teleworking / working at home
• Leave arrangements
• Caring for sick children
• Childcare
The business case
• Reduce staff turnover
• Become employer of choice.
• Improve the motivation and productivity of the workforce.
• Desire for flexibility in hours among employers.
• Perceived social obligations.
Why are workplaces not more family
friendly?
• Is the business case overstated?
• Ranking of FFPs among worker preferences
• Leadership
• Public encouragement
• Employer costs
(Re)Integrating people with disabilities
• Disability benefit recipiency rates are high and
rising steadily in many countries, while outflows
from disability benefits are very low.
– Around 1% of DI beneficiaries in the US leave benefits in a
year
– Nearly ¾ of disabled beneficiaries in the US are over 45
• General focus on activation programmes is low.
Disability policy approaches
•
Recognise the status of disability independent of the work
and benefit situation and make cash benefits a flexible
policy element
•
Enforce an approach of mutual obligations and design
individual work-benefit packages.
•
Promote early timing of active intervention.
•
Involve the employer.
•
Design the disability programme as a labour market
programme.
Participation rates of older Americans are
relatively high
Men aged 50-64
Women aged 50-64
ISL
ISL
JPN
MEX
CHE
NZL
SWE
NOR
KOR
SWE
NOR
FIN
DNK
NZL
USA
CHE
GBR
CAN
JPN
FRA
PRT
KOR
AUS
OECD
CZE
DEU
EU
NLD
IRL
POL
SVK
AUT
HUN
MEX
GRC
ESP
BEL
LUX
ITA
TUR
USA
DNK
IRL
CAN
OECD
GBR
PRT
CZE
ESP
AUS
NLD
GRC
EU
FIN
DEU
FRA
SVK
ITA
AUT
LUX
TUR
POL
BEL
HUN
0
20
40
60
80
100
0
20
40
60
80
100
Few older workers in the US work part-time
Incidence of part-time work among workers aged 60-64
Women
Men
Netherlands
United Kingdom
Germany
Ireland
Japan
Belgium
Luxembourg
Poland
Australia
New Zealand
Norway
Austria
Mexico
France
Canada
Portugal
Sweden
Slovak Republic
Denmark
Italy
United States
Turkey
Spain
Korea
Greece
Netherlands
Japan
Poland
Australia
Sweden
United Kingdom
New Zealand
Denmark
France
Canada
Belgium
Ireland
Germany
Portugal
Norway
Korea
Austria
United States
Mexico
Turkey
Italy
Slovak Republic
Greece
Spain
Luxembourg
0
20
40
60
80
0
20
40
60
80
… but there are significant disparities between
groups of older people
80
3DUWLFLSDWLRQUDWHVIRUSHRSOHDJHG
75
70
65
60
55
50
45
40
Ethnic background
Education
University
Secondary
Primary
Hispanic
or Latino
Asian
African
American
White
30
All groups
35
… and early retirement before the age of 65 is
relatively commonplace
Retirement rate by single year of age, 2001/2002
Men
%
Women
20
15
10
5
0
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
Barriers to employment of older people
Incentives to retire
Tax on working longer
Subsidised early retirement
Limited retirement choices
Low
employability
Obsolete skills
Negative attitudes
Limited job search help
Poor health
Poor work conditions
Demand-side
barriers
Older
workers
Discrimination
Seniority wages
Strict EPL
Changing work patterns
Barriers on the supply side
• Early retirement age for Social Security
remains at 62.
• Defined-benefit pensions schemes still
prevalent, especially in the public sector.
• Disability benefits may have become a
pathway for some low-skilled to retire
early.
Barriers on the side of employers
• Negative or stereotypical attitudes by
employers towards older workers
• Leading to age discrimination
• But reluctance of employers to retain or
hire older workers may reflect rising
labour costs with age that are not
matched by higher productivity
Barriers to employability
• Education and training of older workers is relatively
high on average but the low-skilled are very
disadvantaged.
• Older jobseekers are under-represented in public
employment programmes in general and in training
programmes in particular.
• Long hours of work and poor working conditions may
push some older workers into early retirement.
• Lack of opportunities for phased retirement may also
discourage older workers from remaining longer in
work.
What should be done to improve
job prospects for older persons?
‡ Remove financial disincentives to work
‡ Encourage employers to retain and hire older
workers
‡ Improve employability of older workers
www.oecd.org/els/employment/olderworkers
Reducing work disincentives
Suggested policy actions:
‡ Speed up the transition from 65 to 67 for the full
retirement age
‡ Raise or abolish the minimum age for social security
‡ Ensure disability benefits do not become an
alternative route to early retirement
‡ Limit tax advantages in private pension schemes for
taking early retirement
Changing employer practices
Suggested policy actions:
‡ Strengthen measures to combat age discrimination
‡ Develop guidelines and promote good practice with
respect to age diversity
‡ Provide more information on current and prospective
skill shortages
Improving employability
‡ Strengthen and expand training opportunities for low-skilled
workers.
‡ Evaluate the effectiveness of the current arrangements for
providing employment services to older jobseekers.
‡ Tackle barriers to phased retirement arising from regulation
of defined-benefit pension plans.
‡ Encourage employers to adapt working conditions to the
needs of older workers.
‡ Improve the knowledge base on health, well-being and
safety at work.
Training opportunities need to be enhanced
Percentage of employees in age group who received job-related training over the previous year
50-64
25-49
50
50
40
40
30
30
20
20
10
10
0
0
De
nm
Ca
na
da
Cz Au
st
ec
ra
h
Re lia
p
Sw ub
it z lic
er
la
nd
Ne
Ita
th
l
er y
la
nd
s
Ire
Be
l
lg and
iu
m
(F
l.
Po )
la
nd
Ko
re
a
60
ar
No k
Un
r
ite wa
y
d
St
at
e
Fi s
nl
Ne
an
w
Ze d
al
an
UK d
60
Thus, a comprehensive strategy is required
• This should involve the public authorities and business
and workers
• Reform pension and tax/social benefits
• Modify pay and employment practices in the workplace
• Improve opportunities to upgrade skills and remain active
longer
• Change attitudes of employers and workers
THE BOTTOM LINE
CARRY ON WORKING!
www.oecd.org
www.oecd.org/els