Europe: Consultation Opens on Designating 2012 Year for Active Ageing and Intergenerational Solidarity

Following on April's conference on intergenerational solidarity, the European Commission has been receiving calls to organize a European Year for Active Ageing and Intergenerational Solidarity. The purpose would be to increase the awareness of the contribution of older people to society and spread innovative measures that could help to mobilize the full potential of the ageing baby-boom cohorts.

Accordingly, it has launched a consultation with the purpose to collect ideas and suggestions from key stakeholders and experts on how to achieve the greatest possible impact with such a European Year and to help the Commission decide whether and how to organize a European Year. There are separate questionnaires for citizens, organizations, and public authorities. Responses to the questionnaire, which is meant to help respondents in structuring their response to this consultation and the Commission in analyzing the responses, should be submitted by the 31st of July 2009, preferably in English, French or German.

Source: European Commission News Release (July 17, 2007)

OECD Urges Countries: Don't Lump Older Workers among Disabled

Addressing policy challenges for disabled workers in a time of high unemployment, the OECD co-sponsored a High-Level Forum on Sickness, Disability and Work and, in its final communique, warned against repeating the mistakes of the past where in previous economic downturns, many older workers who lost their jobs were pushed onto disability benefit rolls rather than unemployment benefit schemes.

"While this may seem a harmless short-term measure, we now know that most people who receive a disability benefit for more than a year will never work again," said John Martin, OECD Director of Employment, Labour and Social Affairs. "It is crucial that governments align short-term social protection measures taken in response to the downturn, with longer-term goals of economic security and strong labour force participation."

As one of the background papers showed, older workers dominate the disability benefit rolls.

For links to other information, see OECD's "Sickness, Disability and Work" project.

Source: High-Level Forum on Sickness, Disability and Work Final Communique (May 15, 2009)

Europe: First European Day on Solidarity between Generations

The European Commission declared April 29 the first "European Day on Solidarity between Generations." In conjunction with that, various events took place throughout Europe.

"Over the coming years, the first baby-boomers will be starting to retire. This marks the beginning of a fundamental shift in the balance between retirees and people of working age. We have to make sure that ageing will not undermine solidarity between generations", said Vladimír Špidla, Commissioner for Employment, Social Affairs and Equal Opportunities.

Among other things:

• a conference on "Intergenerational Solidarity for Cohesive and Sustainable Societies" was organized by the Slovene Presidency in Brdo, seeking "to reinforce social links between generations as well as to initiate a shift in policy-making to promote greater solidarity between generations."
• the results of a Flash Eurobarometer on "Intergenerational Solidarity" was released. It showed considerable disparity in views about the generations among older and younger people. With respect to working, 56% of Europeans believe that as people work to an older age, fewer jobs will be available to younger workers.
• Eurofound launched a special website which brings together its recent findings, data and recommendations on issues related to the employment of older people, and active ageing issues, and the solidarity between generations.

Source: European Commission "Intergenerational solidarity: key to responding to demographic ageing" (April 28, 2009)

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)

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)

Europe: Eurofound Report Examines Key Factors to Age and Working Conditions

The European Foundation for the Improvement of Living and Working Conditions (Eurofound) has published a report highlighting four factors that are key to shaping the age structure of Europe’s workforce: ensuring career and employment security; maintaining and promoting the health and well-being of workers; developing skills and competencies; and reconciling working and non-working life. The report--"Working conditions of an ageing workforce" was authored by Claudia Villosio, with Dario Di Pierro, Alessandro Giordanengo, Paolo Pasqua and Matteo Richiardi, of theLABORatorio Riccardo Revelli, Centre for Employment Studies in Italy.

The reports findings show that improving working conditions leads to better job sustainability over the lifecycle, which in turn can prevent early exit from the labor market and encourage stronger participation rates among older workers. The analysis is based on findings from the fourth European Working Conditions Survey carried out in 31 countries, including the 27 EU Member States.

The report reveals how age is an important factor in describing working conditions and that significant differences emerge between younger and older workers. For instance, compared with younger workers, older workers are less exposed to physical risks in the working environment and enjoy a higher degree of autonomy in the workplace and a lower degree of work intensity. However, they have fewer opportunities with respect to involvement in new organisational forms, training and learning new things at work. Young and older workers both share a higher probability of being subjected to acts of discrimination at the workplace and, to a lesser extent, of experiencing difficulties in accessing IT. For their part, middle-aged workers carry a heavier burden in relation to caring activities outside of work, as well as reporting a lower level of satisfaction with work–life balance.

Source: Eurofound Publication Notice (May 6, 2008)

Europe: Foundation Creates Resource for Active Aging Research

The European Foundation for the Improvement of Living and Working Conditions (Eurofound) has launched a major communication campaign on active ageing. According to Eurofound, promoting employment opportunities for an ageing workforce is a complex challenge that requires rethinking at company, national and EU level. Eurofound's campaign is aimed at bringing policymakers, companies and society up to par with the latest research data, recommendations and case examples to tackle the challenges and explore the opportunities associated with active ageing.

To this end, Eurofound has published an online Resource Pack for "Working longer, living better-–Europe’s coming of age" launched with a variety of materials, inlcuding:

• Fact Sheet: "Europe's coming of age"
• Fact Sheet: "What companies can do"
• "Ageing workforce initiatives: company cases"
• "Employment initiatives for an ageing workforce: national reports" These are overview country reports that look at the evolution of initiatives related to older employees undertaken by selected organisations over the last decade: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, UK, and which have been extended to include cases from the new Member States: Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia.

Source: European Foundation for the Improvement of Living and Working Conditions Press Release (March 14, 2008)

Europe: Economic Affairs Commissioner Addresses Summit on Demographic Crunch

Economic Affairs Commissioner Joaquin Almunia is warning that European society is at risk of losing its dynamism if it does not develop a coherent approach to an ageing population and decreasing workforce. He spoke at a oned-day summit Friends of Europe conference entitled "Europe's looming demographic crunch". The Friends of Europe says this crunch will be felt dramatically in the years to come, as by 2050, 30% of the population will be over 65 and only two people of working age for each
pensioner.

In his address--"Investing in the future: an agenda for addressing Europe's Demographic Challenge", Alumnia identified the decreasing share of the working age population as a "major factor" influencing stuttering economic prospects. Thus, one prong of the strategies that European states must adopt is to raise employment rates, especially among women and older workers.

The best way forward is to promote flexible working arrangements where employment security for workers is provided by adequate skills. Such a flexicurity approach will help modernise European labour markets and ensure that people have access to employment throughout their working lives. The success of this model relies on active labour policies combined with good education and training systems that allow people to gain new skills whether they are 16 or 60.

Sources: EurActive "Almunia warns of looming demographic crunch in Europe" (February 5, 2008); Friends of Euroipe Press Release (January 31, 2008)

Europe: Survey Shows More Companies Responding to Demographic Changes, Responsive to Older Workers

According to Adecco Institute, European companies are waking up to the demographic challenge of an aging and shrinking workforce, with an increased number of companies having started to analyze their internal age structure and more large companies planning to hire more employees aged 50 and older in 2008 versus 2007. These are the results of Adecco's second demographic survey: "Facing Europe’s Demographic Challenge: The Demographic Fitness Survey 2007".

Applying its Demographic Fitness Index (DFX), which measures the preparedness of companies to cope with the demographic crunch on a scale of 100 to 400 points, Adecco also shows there is much to be done. Overall, European companies averaged 182 points, with Germany and the UK leading with 186 index points each, followed by Italy (182), Spain (180) and France (174). The DFX measures career management, lifelong learning, knowledge management, health management, and diversity management.

The increase in the number of companies analyzing age structures indicates an increased awareness of the issue: 40 percent of all European firms, up from one third a year ago, have conducted an analysis of the overall age structure of their organizations. Medium-sized firms have demonstrated the most significant improvement over the past year.

However, only in France and the UK has this improved level of knowledge of the age structure, so far, led to an increase in long-term staff planning. In the survey, no European company planned their overall staff needs more than 18 months ahead.

One of the most encouraging findings of the 2007 Demographic Fitness Survey is that more and more of the large European companies are willing to hire older employees. 16 percent intend to hire more older employees in 2008 than in 2007, and the share of companies who plan to hire fewer people over 50 has decreased from 42 percent to 34 percent.

Source: Adecco Institute Press Release (January 31, 2008)

Europe, China Promote Dialogue on Demographic Aging

On a visit to China, Vladimír Špidla, EU Commissioner for Employment, Social Affairs and Equal Opportunities, signed an European Union-China agreement to promote policy dialogue on issues of common interest and on long-term challenges in employment and social policy, such as demographic ageing. The agreement--or Memorandum of Understanding--sets up a structured dialogue with China's top think tank--the Chinese Academy of Social Sciences--on future policy challenges in areas such as employment, social security, demography, social dialogue and labour relations.

Another huge problem that China is only now beginning to confront - and which Europe knows plenty about - is an ageing population.

As a result of its "one family, one child" policy and of the fact that richer Chinese now live longer, the life expectancy rate of Chinese men has now risen to 71.3 years, compared with 63.2 years in India.

The EU has so far provided 20 million euros ($28.8 million) in funds, as well as technical assistance and training of civil servants, to help China modernize its pension system.

Such help is not entirely free of self-interest, however. If Chinese workers were granted better pensions and more rights, for instance, this would limit "social dumping" - a term used to describe a country's ability to export cheap products by enforcing only weak labour standards.

Sources: European Commission News Release (January 11, 2008); NDTV "EU advises China on welfare, labour laws" (January 13, 2008); People's Daily "Aging society a common challenge for EU and China" (January 15, 2008);

Europe: Expert Encourages Labor Market Reform in Advance of Aging Workforce

The European Union needs to undertake far-reaching labour market reforms if it wants to be able to safeguard its social security system, according to a Policy Brief written by Fabian Zuleeg and released by the European Policy Centre. Otherwise, it is not clear that Europe's social security system "will be affordable with fewer payers and a disproportionate rise in the number of recipients of, in particular, pensions and health care."

At a briefing on the issue, as reported by Jochen Luypaert, Zuleeg said that employment rates need to increase, especially among women, older people, ethnic minorities, people with disabilities and low-skilled people.

The EPC expert proposed to get rid of early retirement schemes, raise the retirement age and introduce policies that engage older workers in the labour market.

One of the proposed ways to avoid companies laying off older workers is to make sure that their wages correspond to their productivity, even if this means that older workers are paid significantly less than is currently the case.

Source: European Policy Centre Policy Brief (November 16, 2007)

Additional Source: EUobserver "EU labour market reform 'urgent'" (November 29, 2007)

European Court of Justice Upholds Mandatory Retirement Legislation

In the case of Palacios v Cortefiel Servicios SA, the European Court of Justice has held that the European Union's Equal Treatment Framework Directive does not prohibit member states from introducing mandatory retirement ages. Following an earlier ruling by an Advocate-General of the ECJ, the Court ruled on a complaint brought by Félix Palacios de la Villa against Cortefiel Servicios SA, in which Mr Palacios claims that his dismissal on the ground that he had attained the compulsory retirement age laid down in a collective agreement was unlawful and that a provision in Spain's discrimination laws which effectively allowed employers to force staff to retire at 65 was incompatible with European law.

In its decision, the Court first stated that national legislation fixing an age for compulsory retirement establishes rules relating to "employment and working conditions, including dismissals and pay" within the meaning of Council Directive 2000/78/EC of 27 November 2000--establishing a general framework for equal treatment in employment and occupation--and, therefore falls within its scope. Thus, since such legislation directly imposes less favorable treatment for workers who have reached that age as compared with all other persons in the labor force, it cannot pass muster unless there is justification for that difference in treatment.

Turning to the justification in the case of the Spanish legislation, the Court found that it lay in a national policy aiming to promote better access to employment by means of better distribution of work between the generations, even though the legislation did not formally refer to that aim. Furthermore, the court found that the legitimacy of such an aim could not reasonably be called into question, since the promotion of a high level of employment constitutes one of the ends pursued both by the European Union and the European Community.

The Court stopped short of authorizing any such legislation. While member states and enjoy broad discretion in their choice, the national measures may not go beyond what is "appropriate and necessary" to achieve the aim concerned. Thus, the Court found it not unreasonable for a member state to take the view that compulsory retirement, because the worker has reached the age-limit provided for, may be appropriate and necessary in order to achieve a legitimate aim in the context of national employment policy consisting in promoting full employment by facilitating access to the labour market. Furthermore, the Spanish legislation was not based only on a specific age, but also took account of the fact that the persons concerned were entitled to financial compensation by way of a retirement pension at the end of their working life, the level of which cannot be regarded as unreasonable.

Source: European Court of Justice News Release (October 16, 2007)

Europe: Is "Active Aging" a Viable Response to Demographic Changes?

According to an article in Euractive.com, European legislation aimed at delaying retirement is having little impact, as employees push for an early exit from the labour market while companies continue to lay off older staff. Following on the need for effective policies to promote opportunities for an aging workforce, "active ageing" is being discussed as a way to keep the support ratio (the number of people of working age per person over the age of 65) bearable: "The concept of active ageing refers to the idea of remaining active as we age by working longer, retiring later, engaging in voluntary work after retirement and practicing healthy-ageing lifestyles."

The article reports on a special session on active ageing, which asked whether active ageing is the only response to demographic change and whether it can work for both companies and employees. Speakers addressed various issues, including how to overcome employers' reluctance with regards to increasing the activity rates of older people, good practices with regards policies in favor of participation in employment and the productivity of the aging workforce, and empowering people to invent new models to organize their lives differently.

Source: Euractiv "Workers unenthusiastic about 'Active Ageing'" (June 5, 2007)

Commentary: Older Workforce a Competitive Advantage for Europe

Nicholas Eberstadt, senior adviser to the National Bureau of Asian Research, and Hans Groth, member of the Board of Directors for Pfizer-Switzerland AG, suggest in a commentary in the the International Herald Tribune that while Western Europe demographic pressures are undoubtedly heavy, the aging population does not meen that the Continent need not become a glorious rest home. Since its aging population is exceptionally healthy, its people are more capable of remaining productive into their advanced years now than they used to be--perhaps even more so than their American counterparts--so that "healthy aging" may turn out to be a trump card for enhancing prosperity and international competitiveness.

In their essay, adapted from an essay to appear in the May-June 2007 issue of Foreign Affairs, Eberstadt and Groth state that, for example, Western Europeans have distinctly better odds of surviving their working years than do Americans. The prospect of living longer generally encourages investment in learning and skills and thus facilitates higher productivity. "Western Europe must therefore figure out how to capture more of the economic opportunities allowed by healthy aging."

Encouraging older people to work is an obvious and necessary step to unlocking the economic potential of good health over the next generation. But it is only one step. Making fuller economic use of this comparative advantage will require nothing less than a fundamental re-examination of many basic policies, especially regarding labor markets, education and health.

If Western Europe hopes to benefit from its growing pool of older workers, its labor markets must become far more flexible, and economically rational, than they are today. Less cumbersome regulations and less costly obligations would make it more attractive and less risky for potential employers to hire all prospective workers, including older ones. Some orderly transition to a pension system with a greater measure of direct personal responsibility in the financing of retirement would also be in order.

Source: International Herald Tribune "Healthy old Europe" (April 19, 2007)

Europe: Mature@eu Recuriting Project Opens Website

The European Union Leonardo Da Vinci project website mature@eu is up and running. The project is coordinated by the Vienna based ZSI (Center for Social Innovation) and aims at supporting HR Managers to recruit and retain older employees through developing effective age neutral personnel policies.

The website holds a lot of useful information and it will be constantly updated as the project "matures". The link-list refers to a broad range of organisations in several countries, who have been engaged in supporting older employees and have valuable information and examples of good practice. In addition, a toolbox will be available, which will facilitate HR and employee representatives to promote a change in attitudes and practice towards the recruitment of older professionals and the perception of age stereotypes.

Source: Union Network Internationaal News Release (March 13, 2007)

European Court Upholds Collectively-Bargained Mandatory Retirement Age

Jan Mazak, an Advocate-General of the European Court of Justice, has rendered an opinion that European law allows individual countries to pass legislation permitting mandatory retirement ages. Thus, a provision in the Spain's discrimination laws that effectively allows employers to force staff to retire at 65 is compatible with European law.

The dispute was brought by Félix Palacios de la Villa against Cortefiel Servicios SA, in which Mr Palacios claims that his dismissal on the ground that he had attained the compulsory retirement age laid down in a collective agreement was unlawful. However, the Advocae-General ruled that the European principle of non-discrimination on grounds of age does not preclude a national law pursuant to which compulsory retirement clauses contained in collective agreements are lawful, where such clauses provide as sole requirements that workers must have reached normal retirement age and must have fulfilled the conditions set out in the social security legislation of the Member State concerned for entitlement to draw a retirement pension under the relevant contribution regime.

This decision particulary attracted attention in the United Kingdom.

Although [the] case concerns collective employment agreements, which are much less common in the UK than elsewhere in Europe, lawyers said that the legal opinion also applies to individual contracts and so the case is directly relevant to British workers.

James Baker, an employment lawyer at Macfarlanes, said: “This opinion will disappoint thousands of workers in the UK who are pinning their hopes on a legal challenge to the mandatory retirement age.

Source: European Court of Justice Opinion of Advocate General C-411/05 Palacios de la Villa (February 15, 2007)

Other References: The Times of London "Blow for workers as European court says mandatory retirement is lawful" (February 15, 2007)

Europe: European Commission Issues Communication on Aging Workforce

According to a Communication from the European Commission, Europe's ageing population is an unprecedented challenge for the whole of society, but it is a challenge to which Europe must rise to, and must rise to it now. "The demographic future of Europe --– from challenge to opportunity" stresses that this challenge underlines the ability of member states to meet the challenges of a shrinking workforce and an ageing population, and it suggests that the keys to success are the promotion of demographic renewal, more jobs and longer working lives, higher productivity, integrating migrants and sustainable public finances.

In particular, the Communication sets out five areas for concrete action to help states adapt to demographic change in their own national context:

• Helping people to balance work, family and private life so that potential parents can have the number of children they desire;
• Improving work opportunities for older people;
• Increasing potentially productivity and competitiveness by valuing the contributions of both older and younger employees;
• Harnessing the positive impact of migration for the job market
• Ensuring sustainable public finances to help guarantee social protection in the long-term.

According to Vladimír Špidla, Commissioner for Employment, Social Affairs and Equal Opportunities, "It is important that member states give a strong signal to businesses and citizens to change their expectations and attitudes, particularly in the labour market."

Source: Commission of the European Communities News Release (October 12, 2006)

Europe: Commission Issues Report on Ageing and Employment

The European Commission has published a report about what can be done to increase job opportunities for older people and to keep them in employment. "Ageing and Employment--Identification of good practice to increase job opportunities and maintain older workers in employment" reflects on good practice, identifies key factors and recommends actions that can be taken at EU, national, company and individual levels. The study also gauges the success of the European Employment Strategy, one objective of which is to extend the working lives and increase the employment rates of older workers.

The research involved selecting, from 11 EU countries, 41 company case studies across a mix of economic activities in the public and private sectors. An analysis followed into (1) the strengths and weaknesses of the national institutional framework within which these organisations operate and (2) selected good practice in initiatives undertaken by social partners, NGOs and national or regional policy-makers. "While some companies consciously developed an age management programme, many pursued interesting approaches to achieve the same thing without a strategy as such."

Source: Commission of the European Communities News Release (September 13, 2006)

Europe: Workers Believe Employers Are Age-biased

According to a Monster Meter poll, 46% of workers across Europe believe their organisations discriminate against older workers when it comes to looking for new recruits. "Norwegians lead the way in terms of a balanced view, and Germans observed the highest percentage of discrimination against older workers when looking for new recruits."

“The issue of age discrimination is a hot topic within the recruitment world,” comments Alan Townsend, COO for Monster UK and Ireland. “From the initial job posting right through to the HR handbook, organisations must be mindful that they are not discriminating against any potential recruits based on their age. Having a workforce that is age diverse is an indicator of good practice within a company. Furthermore, as we head towards the ’knowledge economy’ the more experienced employee brings a superior level of understanding and a richer skill set - which benefits the company as a whole.”

Source: Onrec.com"Almost Half of European Workers Believe Their Organisations Discriminate Against Older Workers" (September 29, 2006)

Europe: Aging Population Putting Pressure on Pensions, Governments

Verionka Oleksyn, writing for the Associated Press, reports Austria's social affairs minister as warning that by 2010--just four years from now--there will be more 55- to 64-year-olds than 15- to 24-year-olds in the European Union. Coupled with a falling birth rate, European lawmakers are struggling with "how to financially shoulder the burden of an aging society while staying competitive globally and finding workable incentives for people to have more babies."

According to a recent EU report, the bloc's working age population is projected to fall by 48 million, or 16 percent, between 2010 and 2050, while the number of seniors is expected to rise sharply by 58 million, or 77 percent.

Europe will go from having four people of working age for every senior citizen to a ratio of two to one by 2050, predicts the report by the Economic Policy Committee and the European Commission.

Oleksyn also writes that because general taxation is expected to come up short to pay for retirement benefits and healthcare, governments are looking into options such as mandatory retirement savings and insurance programs, or even spending less on the younger generation.

Source: Miami Herald "Aging Europe faces economic hurdle" (July 24, 2006)

Redistributing Work in Aging Europe

Scientists of the Rostock Center for the Study of Demographic Change show in an article published in "Science" (Vol. 313, Edition 5782) that the total number of hours worked will be reduced soon, should the low participation of the elderly in the labor market continue. To keep the ratio of workers to non-workers and the number of hours worked per capita at current levels, work needs to be distributed more evenly over the ages of life and it needs to become more flexible.

According to James W. Vaupel, Executive Director of the Max Planck Institute for Demographic Research (MPIDR), and Elke Loichinger, demographic change and the ensuing consequences for the labor market and macroeconomic development are challenging society and politics. Taking Germany as an example, they show that as early as in 20 years from now, the hours worked per capita will be reduced by 8 percent, should the few young continue to work a lot and the many elderly continue to work a little.

Future generations may wonder about the way we concentrate learning in the first phase of life, work in the middle of life, and leisure in the later years, when our children no longer need us, Vaupel and Loichinger point out. The rigid patterns of biographies and the low employment rates at older ages are no longer sustainable in the face of demographic change. "The 20th century was a century of redistribution of income; the 21st century will be a century of redistribution of work", says James W. Vaupel.

Source: Max Planck Society Press Release (June 30, 2006)

Europe: Are EU Measures Aimed at Increasing Employment Older Workers Delivering?

Anne-Sophie Parent, director of AGE, writes that while--following the adoption of the EU framework directive 2000/78, at which policy makers became aware of the complex issue of age discrimination--ambitious targets were set in the framework of the Lisbon strategy and all member states decided to do something to keep workers in the workforce for longer, this approach has usually not delivered the expected results. For example, draft legislation in Germany, which would have allowed employers to hire workers aged over 52 under limited contracts without any restriction, was deemed to constitute age discrimination and forbidden by the European courts.

In other countries, active labour market policies targeting the over 50s succeeded in increasing the employment rate of older workers: Finland, for example, whose active ageing policy is delivering very significant outcomes.

So, what lessons can we draw from the limited experience gathered so far on measures to promote the employability of older workers?

We feel that labour legislation should aim at compensating the age factor in such a way that it becomes neutral for both employers and workers.

This means creating incentives for both employers and workers without being detrimental.

Parent beleives that "an age-friendly culture needs to be promoted both inside and outside the labour market. Awareness needs to be raised on the value of a diverse workforce which reflects the diversity of today’s EU population."

Source: "EU Employment Week: Reflecting Europe’s diversity" EUPolitix.com (May 17, 2006)

Europe's and Japan's Aging Populations Deterent To Participating in Coming Global Ecnomic Growth

Cisco Systems has released a report showing that, by the year 2020, a new global economic paradigm will emerge defined by the globalization of companies, the increased role of knowledge workers and the personalization of customer experiences as key factors to economic success, with the United States, China and India driving more than half of that growth, while economies of Europe and Japan due to aging workforces or relatively lower levels of productivity will be face challenges.

According to Foresight 2020 Economic, industry and corporate trends, prepared by the Economist Intelligence Unit, the consequences of aging population dynamics will exert a
profound influence on economic development patterns. Some countries will age faster than others. Take the old-age dependency ratios (the over-65s as a share of the population aged 15-64). Whereas the ratio in the EU25 will reach almost one-third in 2020 (it was 25% in 2005), in the US it will rise to only 25%, from 19% in 2005. Japan’s fertility rate, at 1.3 births per woman of child-bearing age, is among the lowest in the developed world. By 2020, the old-age dependency ratio will have risen to 46% (from 29% in 2005). Among the potential risks are slower economic growth, financial-market instability and difficulties in funding pension systems. Countries will have to offset the rising share of pensioners by getting the unemployed into jobs, by making people work longer and by encouraging immigration. More women will be drawn into the workforce, too.

Source: News Release Cisco Systems, Inc. (March 30, 2006)

Europe: Aging Workforce Issues Part of Annual EU Labor Progress Report

The European Commission has published "Time to Move Up A Gear" The European Commission's 2006 Annual Progress Report on Growth and Jobs to reinforce momentum and force the pace of delivery. The report, and its separate national evaluations, provides an analysis of the 25 new National Reform Programmes submitted by Member States, identifies the strengths in different programmes with a view to promoting the exchange of good ideas, and highlights areas where there are shortcomings and proposes concrete action at EU and national level to deal with them.

In the third of the four priority action areas--employment policies to get people into work, the EU proposes that, to help increase employment rates and to finance pensions and health care for an ageing population, Member States should adopt a lifecycle approach to employment, with people of all ages offered the support they need. In addition, it says "active ageing" should be implemented, with more training for those over 45, financial incentives for prolonging working lives and use of part-time work.

Source: News Release European Commission (January 25, 2006)

Commentary: Europe Can Age Gracefully If Reforms Implemented Now

Writing in Business Week, Natascha Gewaltig says that Europe's graying population will put economic pressure on the euro zone soon, but that what is needed is the political will to implement reforms now. "The share of the working-age population (15 to 64) will fall from around 66.9% in 2004 to just 56% in 2050. At the same time, the share of the population older than 65 will increase to 30% from 17%." One key issue will be female labor participation rates increase, which would at least partially offset the effect of a decline in labor supply; however, that will not be enough according to Gewaltig, so that immigration will also have to play an increasingly important role. In addition,

relatively favorable demographic developments over the next 4 to 5 years mean the period until 2011 is a window of opportunity for governments to prepare their pension systems and labor markets for the upcoming challenges. Radical changes and reforms of the PAYG pension schemes in key countries will be necessary. Despite the life-expectancy increase, the entry level for pension schemes has remained widely unchanged -- but this will have to be increased for the plans to remain sustainable.

Nevertheless, the time spent in retirement is likely to increase in the long run, all else being equal, and the change in dependency ratios will make the current PAYG system unsustainable. Pension levels will have to be lowered, and private-pension provisions will need to become more important.

Source: "How Europe Can Age Gracefully" Business Week (January 23, 2006)