South Korea: Government To Seek to Encourage Earlier Retirement to Boost Younger Workers

Writing in the JoongAng Daily, Jung Ha-won reports that the South Korean government is intensifying pressure on state-run companies to shed more employees before they hit retirement age to open the door for younger workers. part of its efforts to prop up the job market. The Finance Ministry is expected to unveil guidelines to discourage state-run enterprises from taking advantage of the current system to keep all their older workers on the payroll, instead of keeping only a select few senior workers deemed absolutely necessary.

“Extending the retirement age for all employees can block new employment opportunities for youth and deal a blow to the labor market,” said one Finance Ministry official who declined to be named. “We are preparing guidelines to fend off thoughtless attempts to extend retirement ages.”

Source: JoongAng Daily "Gov’t to tighten older worker policy" (February 25, 2010)

United Kingdom: Survey Finds Increase in Forced Retirements at Age 65

A survey conducted by DNS/BMRB for Age Concern and Help the Aged suggests that the number of people aged 65-plus forced to retire during 2009 increased to more than 100‚000, a figure four times higher than the number the charity feared would be hit when the Default Retirement Age was introduced in 2006. According to the poll of people aged 60 to 70, 24% knew a friend or colleague who had been made to retire at or after 65.

Michelle Mitchell, a director at Age Concern and Help the Aged, said: “Our survey clearly shows the use of forced retirement has spiralled out of control, offering some employers a low-cost shortcut to shed jobs during the recession."

Source: AgeUK News Release (February 25, 2010)

Reversing Course? Call for Lowering Retirement Age to Boost Younger Employment in United States

Pressures of the recession on labor participation rates are leading to some calls for temporarily reducing some retirement ages in the United States to encourage older workers to leave the workforce. According to the Economic Policy Institute (EPI), the labor force participation rate for workers age 16-24 decreased from 59.1% to 54.7%, while the labor force participation rate of workers age 55 and older increased from 38.9% to 39.9%. Thus, EPI suggests:

This lost work experience is likely to have a lasting detrimental effect on the wages and occupational paths of these young workers. Congress should consider making Medicare and unreduced social security retirement available to workers at age 64 for the next two years so that older workers would be able to retire. Such a policy would have the added benefit of creating job openings for younger workers.

Separately, Rep. Dennis Kucinich (D-Ohio) called for a six-month period during which people could retire at the age of 60. With a price tag of $15 billion, he said this would create a million jobs.

"It's voluntary and the idea is that since we already know that 70 percent of people are taking early retirement at age 62, this idea that I have would say that -- just for a limited period, on a voluntary basis only -- if people want to take retirement at age 60, we calculate that maybe a million people would take that, and create a million job openings and enable people to move into the workforce, while others would have their retirement secure," Kucinich said during an appearance on Fox News.

However, according to at least one commentator (Bruce Bartlett), "To be actuarially fair, the benefits for those retiring at age 60, as Congressman Kucinich proposes, would have to be even lower, thus making it very unlikely that his plan would induce much in the way of additional retirement among employed older workers. The only ones that would be attracted to it are those that are unemployed, which necessarily means that no vacancies would be created."

Sources: Economic Policy Institute "Leaving in Droves" (February 24, 2010); The Hill "Lawmaker wants retirement age lowered to 60 for six months" (February 21, 2010); Wall St. Pit "A Bad Idea from Dennis Kucinich" (February 22, 2010)

Utah Issues Career Guide for Older Workers

Utah's Department of Workforce Services has published a career guide for older worker. Designed to meet the special needs of older workers, Workers Over 50 is a supplement to the main adult career guide from DWS, Utah Careers, and includes articles covering topics such as "Myths about older workers," "Staying current in skills and knowledge," and "Finding employment after age 50."

"As the baby boomers approach retirement age, some are choosing to retire at 65 or even earlier. Many others will continue to work long after they could retire. Some will retire, then decide, for a variety of reasons, to go back into the workforce," says Lecia Langston, contributing author of Workers Over 50. "There are many factors to consider for whatever path is chosen. This publication is meant to help with these decisions and with other issues and questions workers over 50 grapple with."

Source: Utah Department of Workforce Services News Release (February 22, 2010)

Entrepreneurship--Another Way for the Older Worker?

The Sloan Center on Aging & Work at Boston College has released a fact sheet on Entreprenuership and the Older Worker, reporting that workers aged 50 and over are more likely than their younger counterparts to be self-employed or small business owners. From 2007–2008 workers ages 54-64 experienced the largest increase in entrepreneurial activity, making it the age group with the highest entrepreneurial activity rate.

Additional findings include that 17% of older workers are independent, self employed workers, as opposed to 12 % of younger workers, and that 74% of older workers are wage and salaried employees who work for someone else, versus 83% of younger workers.

Supporting evidence for a rise in entrepreneurship among older workers may be found in the "The Babson College/Baruch College U.S. Global Entrepreneurship Monitor (GEM) Report 2008", which reported a marked reduction (around 8% to 9%) in entrepreneurial activity for individuals in the 18-44 age group and an increase of a similar amount in the 45-98 age group. In fact, this was the first year that GEM looked at entrepreneurial activity for those in the 18-99 age group, instead of just the 18-64 age group because there is growing evidence of entrepreneurial behavior past the age of 64.

Sources: Sloan Center on Aging & Work Fact Sheet (February 2010); Wall St. Journal "Older Entrepreneurs Target Peers" (February 16, 2010); New York Times "Starting Over at 55" (March 3, 2010)

Survey: Recession Easing Worries about Older Workers Leaving Utility Industry

Black & Veatch's fourth annual survey of U.S. electric power industry leaders finds that utility managers are finding that the recession is easing worries about the aging workforce as employees defer retirement. According to the “Strategic Directions in the Electric Utility Industry Survey” for 2009/2010, fewer utility managers are worried about the aging workforce issue in the immediate future, reflecting the deferral of retirement for many older workers as the declining stock market impacted their financial portfolios. However, some respondents voiced a concern about a retirement balloon in the next 2-3 years, as soon as the markets recover enough to make retirement affordable again.

Source: Black & Veatch News Release (February 18, 2010)

France: Government Looks to Pension Reform

News reports state that French President Nicolas Sarkozy has said that a bill on reforming the costly pension system would be ready by September, with one option being raising the retirement age. This will be a challenge with much popular opposition being documented.

According to an Ifop poll for newspaper Dimanche Ouest-Francea, 59% of French oppose a rise in the retirement age. In addition, another poll from BVA for broadcaster Canal+ showed that French workers and students on average expect to retire at 62, higher than the current age but earlier than in comparable European economies such as Germany, where the retirement age is 67.

Sources: Reuters "France tackles explosive debate on pension reforms" (February 17, 2010); BBC "Nicolas Sarkozy to introduce French pension reforms" (Feburary 16, 2010)

EBRI Published Research Showing Older Workers Staying in the Workforce Longer

The Employee Benefit Research Institute (EBRI) has released the results of a research study finding that the labor-force participation rate is increasing for older Americans (those age 55 and older) as older workers are faced with higher health costs and economic losses. As published in the February 2010 issue of EBRI Notes, "Labor Force Participation Rates: The Population Age 55 and Older, 2008" used U.S. Census Bureau data to determine that while the percentage of civilian noninstitutionalized Americans aged 55 or older who were in the labor force declined from 34.6% in 1975 to 29.4% in 1993, the labor-force participation rate has steadily increased since then, reaching 39.4% in 2008—-the highest level over the 1975–2008 period.

In addition, according to a summary of the findings, for those aged 55–64, the increase in participation is is being driven almost exclusively by the increase of women in the work force; the male participation rate is flat to declining. For those aged 65 and older, however, labor-force participation is increasing for both men and women.

EBRI also reports that education is a strong factor in an individual’s participation in the labor force at older ages, with individuals with higher levels of education being significantly more likely to be in the labor force than those with lower levels of education. EBRI also suggests that the upward trend is likely to continue because of workers’ need for access to employment-based health insurance and for more earning years to accumulate assets in defined contribution (401(k)-type) plans. EBRI also noted that monetary needs are not the only driver, and that there is an increased desire among Americans to work longer, particularly among those with more education, for whom more meaningful jobs may be available that can be done well into older ages.

Source: Employee Benefit Research Institute Press Release (February 18, 2010)

Survey: More Older Workers Reporting to Younger Bosses

CareerBuilder has released the results of a survey showing that four out of ten workers over the age of 35 are working for a younger boss. Looking more closely at the numbers, 53% of workers ages 45 and up said they have a boss younger than them, followed by 69% of workers ages 55 and up.

Looking at the challenges posed by the mixing of the generations, CareerBuilder reports that 16% of workers ages 25-34 said they find it difficult to take direction from a boss younger than them, while 13% of workers ages 35-44 said the same. However, only 7% of workers ages 45-54 and 5 percent of workers ages 55 and up indicated they had difficulty taking direction from a younger boss. Among the reasons why working for someone younger than them can be a challenge, those surveyed indicated that, among other things, They act like they know more than me when they don’t, they act like they’re entitled and didn’t earn their position, and they play favorites with younger workers.

"As companies emerge from this recession, it is important for employees to work together and move the business forward, regardless of their age," said Rosemary Haefner, vice president of human resources at CareerBuilder. "With so many different age groups present, challenges can arise. Younger and older workers both need to recognize the value that each group brings to the table. By looking past their differences and focusing on their strengths, workers of any age can mutually benefit from those around them, creating a more cohesive workplace."

Source: CareerBuilder Press Release (February 17, 2010)

Research: Productivity of Older Workers Decreases with Age, but Decline is Limited

A Dutch labor economist looking at age effects at the individual level by analyzing data on running and publishing in economic journals has concluded that the productivity of older workers indeed decreases with their age, but that the decline is limited, and found no evidence of a pay-productivity gap at higher ages. In "Will You Still Need Me: When I’m 64?" (De Economist), Jan C. Van Ours, of Triburg University, undertook the study to test the perception whether older workers without jobs have a harder time finding one because of A gap between wage and productivity--that is, older workers having a wage that is higher than their productivity.

To shed some light on the relationship between age and productivity I analyzed panel data on individuals and firms. To the extent that running performance represents physical productivity I find evidence of a productivity decline after age 40. To the extent that publishing in economics journals represents mental productivity I do not find evidence of a productivity decline, even after age 50. When measured at the firm level I find little evidence of an increasing pay-productivity gap at higher ages of the workforce.

Van Ours acknowledges that there are limitations of the empirical analysis, but nevertheless believes that while "the potential negative effects of aging on productivity should not be underestimated; they should not be exaggerated either." In particular, there "is no need to worry too much about age-related productivity declines or an age related pay-productivity gap." However, since older workers are not very likely to return to a job after becoming unemployed, he suggests that the labor market position of older workers will remain an area of policy concern.

Sources: SpringerLink Summary (January 9, 2010); PhysOrg.com "Older workers do not necessarily perform worse" (February 12, 2010)

Opinion: Call for More Research on How Older Workers Respond in Actual Working Conditions

Stating that too little is known about how workers manage job demands as they age and begin to lose physical and cognitive abilities., Business Insurance is calling for adequate research into older worker performance conducted in real workplaces, where all the workaday pressures are present. While there is widespread agreement that knowing more about older workers is important for employers, most studies on aging-worker performance have been completed in quiet lab environments where people are asked to complete specific tasks.

That means employers don't know enough about how aging employees are accommodating for declining capabilities. Are they jerry-rigging devices to help them lift loads or creating platforms that help them step over obstacles?

If employers are not directing such accommodations, it is possible individual worker efforts could actually be creating safety hazards for themselves and other employees.

Perhaps there are better ways to accommodate that could increase productivity. Research could help answer such questions.

Source: Business Insurance "Older workers warrant researchers' attention" (February 8, 2010)

United Kingdom: Government Seminar Stresses How Older Workers Can Advise Businesses

At a seminar on “Is business ready for an ageing nation – economic opportunities for an ageing population” led by Department for Business, Innovation & Skills (BIS), Business Minister Pat McFadden said that older people bring skills and experience to the workplace that can be an asset to business and their spending power can boost the wider economy. "We should be recognising this and looking for ways to meet their needs, and to make the most of what older workers can offer."

The overall objective of the seminar was for attendees to come up with recommendations for future action by government and business in this area and to start developing a coherent agenda for future work. George Magnus, Senior Economic Adviser at UBS, commented; “The UK needs to re-boot its ideas about how it adapts to ageing. No one is suggesting people should be compelled to work in their 70s but many do want to do just that and this could have many advantages, not least in their own financial and psychological well-being."

Sources: The Age and Employment Network News Archive (February 4, 2010); Department for Business Innovation & Skills News Release (February 3, 2010)

Australia: Boosting Older Workers Important Feature of Third Intergenerational Report

The Australian Government had issued the Third InterGenerational Report addressing many issues as it looks towards 2050, by which time the number of people aged 65 to 84 years will have more than doubled and the number of people aged 85 and over will have more than quadrupled.

In his speech introducing the report, Wayne Swan, the Treasurer of the Commonwealth, focused on areas with respect to the aging workforce: increasing productivity and increasing participation. Responding to declining productivity, Swan said "And the best way to grow the economy is to maintain our focus on productivity, on investing in skills and infrastructure--nation building, the Education Revolution and regulatory and tax reform to underpin productivity growth in the decades to come." However, acknowledging that this is not enough, Swan said that "we need to keep encouraging workforce participation."

There has been a tendency in previous reports to present the ageing of the population only as a problem to be solved.

I prefer to focus on how we can best harness the life experiences and intellectual capital of older Australians. These are Australians who have already made a massive contribution to our nation. Their experience is invaluable.

Many will choose to leave the workforce, and enjoy a well-earned retirement, for a variety of reasons. But if they want to work they should be welcomed into the workforce.

Australia has a lower rate of mature age participation than other comparable countries – like the US, UK, Canada and New Zealand. There is considerable room for improvement in this area.

Groups like National Seniors Australia – and it's good to see Everald Compton here today – have identified a range of issues that we need to consider – including raising community awareness, encouraging skills development and promoting healthy workplaces.

If we can remove the obstacles for older Australians who want to work, we not only improve the quality of their life but we also strengthen the economy. That's what our Budget changes to the work bonus were all about.

The choice for older Australians to stay in or leave the workforce should be just that – a choice, not something forced on them by prejudice or bad policy.

Sources: Treasurer of the Commonwealth of Australia Speech (February 1, 2010); The Australian "Inconvenient truth on ageing" (February 4, 2010)

United Kingdom: Report Released on Evaluating Return to Work Efforts on Behalf of 50 Plus

The UK's Department for Work and Pensions has released a report reviewing the literature to provide greater insight into how the Department's back to work provision supports the over-50s return to work has been published. The main findings of “50+ Back to work evidence review and indicative guide for secondary data analysis” prepared by Sandra Vegeris, Deborah Smeaton and Melahat Sahin-Dikmen, Policy Studies Institute, are:

• Advisory support: Older customers valued regular meetings and support with job searches, IT skills and preparing CVs. Older people with professional or managerial backgrounds were less likely to find adviser services helpful. In programmes that involved a mandatory interview with an adviser, 50+ customers were more likely to have a health condition or disability which may have restricted engagement with advisory services.
• Training: Studies reported lower than expected rates of training among 50+ customers. Few studies provided reasons for non-take up: these included perceptions of being ‘too old’ for training or disappointment with training options. Positive work outcomes attributed to participation in Work Based Learning for Adults (WBLA) (a voluntary programme) did not identify possible reasons for this favourable outcome among older participants.

Source: Department for Work and Pensions News Release (January 26, 2010)