Expanding Job Opportunities for Senior Citizens
Bureau of European Policy Advisers (BEPA) Session
The key socioeconomic trend in many parts of the world—including China, Europe and the United States—is an ageing society. This trend is driven in part by lower fertility but mainly by higher longevity. This means that growing old age dependency—the ratio of older retired people to younger working people—will not disappear with the passing of the baby boom generation: indeed, it will keep increasing.
This poses three big challenges: first, a possible slowdown in economic growth (associated with the shift from "demographic dividends" to "demographic liabilities"); second, budgetary pressures on pension and social systems; and third, conflicts over the intergenerational distribution of wealth (including conflicting conceptions of justice).
Various policy responses to these challenges have been proposed: raising the effective retirement age; promoting greater fertility and immigration; encouraging more female labor force participation; reducing unemployment; boosting productivity; and increasing working hours per employee. Of these, only the first can be expected to have a substantial effect that is deliverable in the short run and persistent over the long run.
But raising the effective retirement age is difficult, requiring an increase in both the demand for and supply of senior work. On the supply side, the retirement decisions of seniors depend in part on the incentives created through pension regulation and financial rules, as well as employment and social policies. These incentives are reasonably well understood.
Arguably, the most challenging policy issue is on the demand side: how can employers be induced to retain their senior workforces longer and to hire more seniors? And what changes in economic, political and social conditions are required for businesses to recognize that the employment of seniors is in their own interests?
How can perceptions and expectations of career paths be altered to allow for more progressive transitions towards retirement? Should there be more lifelong learning and should it be provided by businesses themselves or by the community? Would adapting employment protection for seniors create unintended negative consequences? And should career progressions, along with the related wage progressions, be allowed to peak and then decrease past a certain age, in line with productivity over the lifecycle?