Research: Relationship of Age and Unemployment

The Institute for the Study of Labor has published a paper seeking "to gain insights on the relationship between growth and unemployment, when considering heterogeneous agents in terms of age." According to the authors (François Langot and Eva Moreno-Galbis) of "Does the Growth Process Discriminate against Older Workers?":

under the assumption of homogeneous productivity among workers, firms tend to fire older workers more often than young ones, when deciding whether to update or not a technology: there is an equilibrium where the creative destruction effect dominates over the capitalization effect for old workers, whereas the capitalization effect dominates for young workers. This discrimination against older workers can be moderated when we introduce heterogeneity (in terms of productivity) among workers.

Source: Institute for the Study of Labor Discussion Paper 3841 Abstract (November 2008)

Remote Service as Means of Bridging Knowledge Gap in Manufacturing Industries Beset by Aging Workforces

One tool being put forward to assist manufacturers faced with rapidly aging workforces, approaching retirement age, and insufficient younger, skilled workers to replace them is to use technology to bridge knowledge gaps. Thus, in an article in Industry Week, Brian Anderson, Vice President of Marketing, Axeda, advocates the use of machine-to-machine (M2M) technology to provide remote service of equipment.

His advice follows up on research published in Manufacturing Insights, "The Aging Workforce--Impact and Opportunity" (April 2008), demonstrating that the gap between retiring workers and younger workers is characterized as a knowledge deficit and recommending technologies that can help bridge the divide, and initiate seamless workforce transition.

Anderson argues that with a remote service solution in place, "equipment up-time is increased, resulting in fewer field service visits to customers. This reduces personnel needs, and the need to hire new workers as older workers retire." It also helps centralize workforce skills, captures knowledge, and optimizes the workforce.

Source: Industry Week "The Aging Workforce Challenge: How Remote Service Can Help Product Manufacturers" (November 19, 2008)

New Zealand: Mercer 2012 Report Suggests Economic Downturn Won't Reduce Need for Older Workers

Mercer has issued as report concluding that the current global economic crisis will give New Zealand employers only limited relief from the squeeze of an ageing workforce, skills shortage, and continuing brain drain. According to the report--Workplace 2012 New Zealand, by 2012, one in five workers will be aged 55 or older and employers will have to shift their focus from young to old to maintain a viable workforce between now and then.

The report found that, among other things, the percentage of workers aged 55 and over will increase from 18% to 21% and that while thehe participation rate of workers aged 20-44 will decrease, the participation rate of workers aged 55-59 will increase from 79.6% to 82.4% and the participation rate of workers aged 60-64 will increase from 67.1% to 75%.

“The fact that the workforce is ageing is not new, the twin issues of the skills shortage and the pending wave of retiring Baby Boomers seems to have been debated perennially,” said [Mercer’s Business Leader in New Zealand, Mr Bernie O’Brien].

“But this research clarifies and cements the fact that one of the biggest business risks in New Zealand in the immediate future is not just economic factors – it is the significant demographic shifts occurring that will threaten the sustainability of many New Zealand businesses.

“New Zealanders aged 55 and older are, and will continue to be, the answer to the current skills shortage - not Gen Y.

“This is not about changing a few HR policies. There needs to be a shift in the mindset of how, and for how long, New Zealanders work,” he said.

Source: Mercer Press Release (November 27, 2008)

Case Study: How One U.K. Business Maximizes Use of Older Workers

B&Q, one of the founders of the Employers Forum for Age in the United Kingdom, has become a case study for many ways in which an employer can utilize older workers for both the employees' and company's benefit. Policies on employee engagement, work-life balance, equal opportunities and internal communications have helped the retailer, as have experiments, such as opening a store staffed entirely by those 50 and older. In the latter case, a study showed that that store out-performed others in terms of profits, employee turnover, absenteeism, and inventory shrinkage.

Sources: theMatureMarket.com PRess Release (November 21, 2008); Human Resource Management International Digest "Employee engagement “does it” for B&Q: Diversity at the heart of business success" Vol. 16, Issue 7 (2008)

European Parliament Report on Social Security Addresses Workplace Issues

Concerned that the increasing ageing population will affect social security systems, members of the European Parliament, in an own-initiative report, expressed their preoccupation with maintaining the core of European social models and, among other thngs, recommend encouraging higher employment rates.

According to the summary of the non-legislative resolution "Future of social security systems and pensions: their financing and the trend towards individualisation", the Parliament stresses the need to enable flexible retirement on a voluntary basis and suggests that it will necessary to discuss at national level raising the legal retirement age and encouraging workers to remain in employment on a voluntary basis, as long as conditions permit.

Source: European Parliament Press Release (November 20, 2008)

European Commission Issues Second Demographic Report on Aging Societies

The European Commission has issued its second demographic report to provides the facts and figures that are needed to assess where member states stand in responding to the challenges of demographic change. The 2008 report--"Demography Report 2008: Meeting Social Needs in an Ageing Society"--focuses on the aging society and changing family and household patterns in the EU. Among other issues addressed in the report are: What about the working population? Are people working longer? How are older people involved in society, besides work?

With respect to the baby boom generation and work, the report finds that the growth of the working-age (20-59) population is slowing down fast and will stop altogether in about 6 years; from then on, this segment of the population will be shrinking by 1 to 1.5 million people each year. While employment rates at age 60 are ten percentage points higher than in 2000, but there is still much room for improvement.

Employment after the age of 65, the typical statutory retirement age in many Member States, is very rare: only about 13% of men aged 65-69 years and 7% of women are still in employment. Part-time working could be a good way of achieving a gradual transition from work to retirement, but only about 11% of men aged 55-64 work part time and 38% of women.

Other findings include:

• There are major differences in the social activities of older workers across countries--more so than across socioeconomic groups in a given country.
• Rapid ageing requires adequate policy responses: opportunities to stay active on the labour
  market and in society; access to goods and services that preserve older people's autonomy; solidarity with the dependent and protection of their dignity.
• Member States can raise labour force participation, thus creating a better balance between the active and the retired.
• In about ten years, the potential for
  further employment growth will be exhausted; productivity will become the main
  engine of growth.

Source: European Commission News Release (November 21, 2008)

Missouri: Census Bureau Issues Profile of the Older Worker

In a continuation of its partnership with 31 states on a series of reports on workers 55 and older, the Census Bureau has released its report on Missouri, the 23rd state to be released in the series. Among the highlights of the report--"The Geographic Distribution and Characteristics of Older Workers in Missouri: 2004":

• 14.2% of workers were 55 and older, while 3.2% were 65 and older;
• statewide, the real estate and rental and leasing industry had the highest proportion of or workers 55 and older, but no industry had 20% or more of its workers in that age group; and
• the state's retail trade industry employed the greatest number of older workers, with about 15.6% of the workers 55 and older being in that sector.

Source: U.S. Census Bureau Longitudinal Employer-Household Dynamics What's New (November 20, 2008)

Europe: Research Suggests that Varying Health Conditions across Europe Will Impede Increasing Older Worker Participation Rates

Investigators at Leicster University have published a paper in Lancet finding that substantial inequalities in ife expectancies and healthy life years at 50 years exist within EU countries. Thus, without major improvements in population health, the target of increasing participation of older people into the labor force will be difficult to meet in all 25 EU countries.

Healthy life years varied more than life expectancy, with a range for men from 9.1 years in Estonia to 23.6 years in Denmark and for women from 10.4 years in Estonia to 24.1 years in Denmark. According to a BBC report on the study:

Lead researcher Professor Carol Jagger, from Leicester University, said: "What we have here, for the very first time, is data we can really compare.

"And it really questions whether the countries with the longest life expectancies are the healthiest.

"In the case of the UK, we are looking pretty average, but slightly better than our life expectancy figures suggest."

She said that the figures might be useful to governments who are trying to work out the number of older people able to remain working, or who will need health care.

Sources: Lancet "Inequalities in healthy life years in the 25 countries of the European Union in 2005: a cross-national meta-regression analysis" (November 17, 2008); BBC News "Periods of healthy old age 'vary'" (November 17, 2008)

McKinsey Study Suggests Boomers Have To Keep Working for Both Their Good and for Good of Global Economy

According to a new study from the McKinsey Global Institute, the only realistic way to prevent aging boomers from experiencing a significant decline in their living standards and becoming a multidecade drag on U.S. and world economic growth is for boomers to continue working beyond the traditional retirement age. This, in turn, will require important changes in public policy, business practices, and personal behavior.

The authors--Eric D. Beinhocker, Diana Farrell, and Ezra Greenberg--found that two-thirds of the oldest boomers are financially unprepared for retirement, and many are not even aware of their predicament, and that US labor force participation rates are declining: "Without an unexpected burst of productivity growth or a significant upsurge in investment per worker, the aging boomers’ reduced levels of working and spending will slow the real growth of the US GDP from an average of 3.2 percent a year since 1965 to about 2.4 percent over the next three decades."

While many boomers do want to continue working, a number of institutional and legal barriers-—health care costs, labor laws, pension regulations, and corporate attitudes toward older workers—-could prevent them from prolonging their careers. Thus, the government must reallocate health insurance costs for older workers, businesses and boomers must agree on more flexible work arrangements, policy makers must reform private pensions, and Social Security must remove disincentives to remaining in the workforce.

Source: McKinsey Quarterly "Why baby boomers will need to work longer " (November 2008)

Canada: Expert Panel Members Ask Government To Act on Recommendations

Although Canada established an expert panel on helping older workers in 2007, when the final report was presented in 2008, it was "quietly released by then-Minister of Human Resources and Social Development Monte Solberg in late July, months after it was submitted to him." Now, the former head of the panel and a leading member are calling on the government to focus on the panels recommendations with respect to employment insurance reforms.

According to Erminie Cohen, the panel's chair, the "thinking of the panel may be ahead of its time but our ideas were certainly an antidote to the economic trouble we're entering." Panel member Françoise Bertrand, president of the federation of chambers of commerce in Quebec, argued that improving the extent to which older workers participate in the workforce is as important to the economy as immigration and helping families reconcile the work-life balance.

Among other things, the panel recommended to let laid-off, long-time workers qualify for employment insurance without having to live off their severance cheques first and to let these laid-off, long-time workers receive benefits for longer than normal.

Sources: Telegraph Journal "Retired senator joins call for EI reforms" (November 13, 2008); Times & Transcript "Ottawa overlooking seniors, says panel member" (November 14, 2008)

United Kingdom: Study Focuses on How To Encourage Labor Market Activity Among 60-64 Year Olds

Researchers have published the results of a study (done on behalf of the Department of Work and Pensions (Extending Working Life Division)) on how to best encourage the 60-64 age-group to take up or remain in work. According to the report--"Encouraging labour market activity among 60-64 year olds", flexible working, particularly part-time and short-term contracts, were favored among those research participants who wanted to work longer.

For those not looking to work longer, most typically felt that they had worked for long enough, althouth women were much more likely to mention social reasons for continuing to work, whereas the men were more inclined to feel that they had already "done their bit."

Among the conclusions of the researchers from the School of Social Policy, Sociology and Social Research, University of Kent in conjunction with The University of Edinburgh Business School, was that "Extending working life for those able and willing to work for longer requires action on a number of different fronts and by a range of stakeholders." In particular, employers "will have a pivotal role in providing and sustaining employment for older workers in a range of different circumstances and individuals themselves need to improve their understanding of, and ability to, respond to the opportunities and disadvantages that they experience as older workers."

Sources: University of Kent News Release (November 11, 2008); Department of Work and Pensions Abstract (November 11, 2008)

Virginia: Census Bureau Issues Profile of the Older Worker

In a continuation of its partnership with 31 states on a series of reports on workers 55 and older, the Census Bureau has released its report on Virginia, the 22nd state to be released in the series. Among the highlights of the report--"The Geographic Distribution and Characteristics of Older Workers in Virginia: 2004":

• 14.2% of workers were 55 and older, while 3.5% were 65 and older;
• statewide, the educational services industry had the highest proportion of or workers 55 and older, with 20.8% of its workers in that age group; and
• the state's retail trade industry employed the greatest number of older workers, with about 14.6% of the workers 55 and older being in that sector.

Source: U.S. Census Bureau Longitudinal Employer-Household Dynamics What's New (November 10, 2008)

Minnesota: Census Bureau Issues Profile of the Older Worker

In a continuation of its partnership with 31 states on a series of reports on workers 55 and older, the Census Bureau has released its report on Minnesota, the 21st state to be released in the series. Among the highlights of the report--"The Geographic Distribution and Characteristics of Older Workers in Minnesota: 2004":

• 13.5% of workers were 55 and older, while 3.0% were 65 and older;
• statewide, the transportation and warehousing industry had the highest proportion of or workers 55 and older, but no individual sectors employed more than 20% of its workers in that age group; and
• the state's health care and social assistance industry employed the greatest number of older workers, with about 15.4% of the workers 55 and older being in that sector.

Source: U.S. Census Bureau Longitudinal Employer-Household Dynamics What's New (November 6, 2008)