In the current widespread debate about how to deal with demographic ageing, particularly in the economically advanced countries, this provocative book addresses in a comprehensive manner the changing status of older workers, public policy responses to it and their diverse motivations – putting too often emphasis on the economic dimension – public deficits and the sustainability of pensions – rather than the welfare of older workers.
It examines the current emphasis by policy makers on delaying retirement and, taking account of employers’ attitudes and behaviour towards older workers, raises the critical question of whether the latter can look forward to the prospect of longer working lives with choice and security and, hence, for making successful transitions to retirement. Analyzing anti-discrimination legislation and practice, active ageing, employment policy, the gender dimension and the attitudes and behaviour of the various actors, it challenges the validity of the claim that older workers are on the threshold of a new ‘golden age’ of job openings and flexible retirement. The book contains eight case studies of industrialized countries – Australia, Canada, France, Germany, Japan, the Netherlands, the UK and the US – carried out by an interdisciplinary team of thirteen academics from these countries.
The book starts with a brief overview of the recent history of older workers and discusses the changing policy landscape, following decades of early exit, and the growing awareness of the impact of demographic ageing on the public purse, the competitiveness of the economy, society and … the individual. From the outset, the authors point to three major problems faced by many older workers, namely society’s preference for youth, the tacit and sometimes overt support by European governments to employers wishing to discharge older workers, and older workers themselves who sometimes help perpetuate ageist myth (by considering retraining unnecessary or that they are too old to retrain, or that age is a barrier to employment even if it is not).
Paradoxically, retirement age has been lowered at a time societies have been ageing. Europe and Japan, whose population are most rapidly ageing, increasingly consider this issue as strategic, though it is on the policy agenda across the industrialized countries (and beyond!) - with increased awareness that the economic future depends on meeting the challenges of an ageing society with its concomitant shrinking labour force which can only partially be offset by immigration. Overall participation rate could fall by 4-5 percentage points for the OECD on average between 2000 and 2005, implying increasing dependency ratio of the population and the escalating costs of supporting a growing inactive older population. Hence the recent shift away from the rhetoric and action of early retirement – which became common in the second half of the 20th century – towards ‘active ageing’. The huge scale of early labour market exit over the past decades explains the emphasis on ‘active’ employment policy in the European Union and the vision and the participation rate targets of the Lisbon, Stockholm and Barcelona councils (2000-2002). The authors note a few positive signs towards these targets, but on the whole progress remains modest, with the generous disability and unemployment programmes which continue to provide generous early retirement. Moreover, UK and France have high levels of non-work for people aged 55-59. By contrast, US and Japan have low levels of non-work for this cohort and a high implicit tax on work at older ages.
The authors scrutinize the motives and behaviour of the key actors against the backdrop of older workers’ labour force participation, the kind of jobs that they hold, the difficulties they encounter to retain their jobs or find new ones when industries restructure, assessing their likely position in future.
They note that most policy makers and commentators consider that continued labour market participation of older workers as an obvious – if not easy to implement – option to address anticipated shortfall in welfare (particularly pension) coverage and labour and skill shortages associated with ageing populations. Leaving people with skills and experience to retire early and remain “inactive” for a quarter of a century is obviously considered as a huge waste for the national economy. Some sections of business acknowledge the concern of labour and skill shortages and have already turned to older workers. For some time workers and unions vociferously claimed the right to retire early, and saw it as the less painful transition in the context of restructuring. Working longer can no doubt help maintain incomes, better pension coverage and social participation. So, working longer appears a globally attractive prospect.
However, while acknowledging the potential benefits for economies and older people from working later, the authors caution that the reality of older workers’ experience is often rather different. First, they note that the policy shift from early retirement to ‘active ageing’, which blocks off early exit pathways, seems to be driven more by the economic concerns about the economic consequences of the ageing population rather than by the well-being of older people (Canada). In Germany, they argue that lowering pension costs is the main target of the policy shift against early retirement – claiming that the current policy climate determines a research agenda which discourages any dissenting views, despite the fact that older workers face serious risks on the labour market (poor job prospects, poor quality of jobs, long-term unemployment, greater health risks).
Active ageing policies have clear limits. Ageing policies in the various case studies have evolved in a piecemeal manner, lacking a holistic approach. The Australian author referred to a ‘disjointed incrementalism’ rather a strategic approach. Existing ‘holes’ in retirement policies reduce the potential for continuing to work. Indeed, mandatory retirement age exists in several of the countries, and employers’ doubts about performance and commitment of older workers override the ‘right to work’. Mandatory retirement discourages continued employment in Canada. In the Netherlands, incentives to continue working (‘active ageing’) are not on the policy agenda. In Japan and the UK, people with skills in demand can continue working but with reduced job quality, pay and security. As for the lesser skilled who want to continue working, there has been lesser support from policy makers.
Moreover, active labour market policies are often poorly funded. Vulnerable groups (older disabled and long-term unemployed) face huge barriers. Downgrading of jobs for those who continue working has been common, leaving little hope for improvement or openings for the long-term unemployed. Creaming off of those with best job prospects (highly qualified) and deadweight effects are common.
Some positive change can result from a deeper cultural change towards older workers via lifelong learning (LLL) – which has been introduced in some occupational groups in Germany, but it mainly concerned those who already have skills, and has not been widely implemented. While LLL seems to be the most promising approach for updating skills and competencies and helping older workers to overcome productivity declines after a certain age, it has to start early in working life, or at least in mid-career and applied massively to the workforce. Although it has become a very popular notion among policy makers, the authors question whether it is really achievable in the modern labour market, noting that the skills gap may eventually become too great to be bridged. [I would add that in spite of frequent reference to LLL over almost four decades as the key to solving employment problems at all ages, it seems that relatively little is known about its substance, the way it is (or should) be implemented, particularly how to adapt it to really fit the specifics of labour market demand and supply, or how to train the trainers. Reliable and meaningful statistics on its implementation are clearly unavailable (e.g. on contents, methodology, duration of training, outcomes in terms of job retention or re-entry, promotion and impact on job quality)].
While the benefits from extending working life improve mental well-being, this depends on the job quality and the contractual arrangements (open-ended rather than temporary job or self-employment). Employability of older workers is often quite poor, even for those who are skilled, and many unemployed would prefer to retire but lack the resources to do it. Active ageing that offers older people the right to work where no jobs are available due to age discrimination, lack of skills or poor health denies them the modest dignity of early exit and offers little or no prospect of meaningful job opportunities. Indeed, both the French and US case studies mention that despite the shift to the service and knowledge economy, many older workers are found in physically demanding and unsafe jobs, poor working conditions and meaningless and monotonous work, offering little opportunities to learn and to gain recognition – these features are not conducive to longer working. Many surveys in the different countries show willingness of older workers to continue working, but under different conditions. These imply true flexibility and choice about work or retirement without risks of social exclusion or poverty. The Dutch case study mentions that older workers who become unemployed despite legal restrictions on dismissals may loose both financially and in their prospects to re-enter the labour force.
The authors therefore call on policy makers and social gerontologists to acknowledge these limits of ‘active ageing’ and not rule out all early exit pathways. They also wonder about the policy rhetoric of continuing working till age 70 or beyond, given the limited labour demand, which may further shrink in a recession.
Considering business attitudes, the authors wonder whether the much touted increasing demand for older workers is a myth. Noting that new public policies are intent on increasing the supply of older workers, it is by no means certain that they will be welcomed by companies. The Dutch case study shows that while active ageing is high on the policy makers agenda, it is rarely so in business. Even in a relatively buoyant economy, employers do not consider recruiting older workers as a priority, nor are they aiming to delay retirement. In Japan, employers tend to retain only older workers with certain skills, while in the US the policy makers’ preference for phased retirement is not frequently practiced by firms who offer opportunities for early exit. Although there is a remarkable unanimity among the social actors about the economic and social benefits of working longer, and the case studies do mention examples of firms which retain older workers, there is no evidence of a strong market demand for them. Many older workers have been employed in declining industries, which have massively restructured, delayered and downsized, fragmenting the traditional employment relationship and undermining older workers’ occupational status. Globalization-driven competition pushes employers to get rid of workers above a certain age, sometimes perceived as a barrier to the necessary organizational change and to flexible performance, turning to younger, cheaper and more skilled workers in the emerging global labour pool. The authors wonder, in this context, what are the limits that nations states can do to protect their more vulnerable citizens.
They even question the examples of good employer practices in retaining older workers, which relegates them to the periphery. The Japan case study shows the low status, poor pay and working conditions of re-employed workers.
Raising older workers’ participation rates may have adverse consequences that have not been adequately considered by policy makers. Extending working life may impede caring activities, community involvement and volunteer work.
The authors note that European Commission older workers in low quality jobs face higher risks of transition into unemployment and inactivity. Indeed, the emphasis on ‘work’ versus the neglect of ‘life’ is a significant weakness of policies targeting older workers. The authors suggest that the Finnish concept of ‘workability’ offers holistic and coherent approach to the design of workplaces and jobs, management structures and behaviour, and attitudes of all actors, improving a person’s prospects for continued participation in the labour market.
The focus of policy should clearly be on employers, and the authors note that over the past two decades there has been a huge amount of employer case study research which should gradually improve the understanding of the factors that shape their response to the issues of workforce ageing. Clearly, policy makers need to identify the limits of demand for older workers in order to fix realistic employment target and to know where their own responsibility ends. Reforms need to take account of the collective representations of age and ageing and of justifications that shape the behaviour of actors. Adequate social safety nets for older workers are also all-important. Policy makers need to be brave enough to accept the current limits of active ageing, and adapt the policies accordingly, seeking a pragmatic balance between enhanced job opportunities and avoiding declining prospects. The authors conclude by stating that ‘active ageing’ should be a policy aspiration not an ideological straitjacket.
In spite of these rather pessimistic conclusions, the book is extremely valuable for policy makers, labour market and welfare (pensions) experts and the social partners, because it contains a comprehensive analysis of the legal, institutional, welfare and employment policy developments over the past few decades in the eight countries. It offers policy guidance and examples of good practices for dealing with ageing workforce, but also showing the adverse effects of well-intentioned policies and legislation.