EU Member States policies have, for a long time, actively contributed to a reduction in the contribution of older workers.
Governments and their social partners developed a mutual interest in promoting early retirement as a general remedy, against the backdrop of the 1973 oil crisis coupled with the decline of several economic industries, an increase in unemployment and excess supply of younger workers since the mid-1970s.
Measurements such as preretirement in Denmark and Germany and the early retirement and job release schemes in the Netherlands and the UK actively encouraged early exit from the labour force. Employment of older people has also been negatively affected by the imposition of a uniform mandatory age of retirement in several countries (Avramov and Maskova, 2003).
These policies have significantly contributed to the steady reduction in labour participation by older workers (aged 55-64) since the 1970s. After two decades participation stabilised at the all-time low of about 37% in the early 1990s ( 1 ) and remained at this level between 1992 and 2000. This has been labelled the age/employment paradox: while life expectancy in the EU has increased significantly since the 1950s, labour force participation by older people has dropped dramatically (Walker, 2001).
A change in policy began to take shape from the early-1990s onwards, partially due to rising social security costs, a foreseen increase in population ageing, and future shortages in labour and skills. It also became generally recognised that the early retirement schemes proved ineffective and very costly for society (Walker, 2001; Davey, 2002; Avramov and Maskova, 2003).
( 1 ) Walker, 2001; von Nordheim, 2003; Avramov and Maskova, 2003. See also Eurostat database on employment rate of older workers by sex (online data code tsiem020) http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database