Institutional steps towards longer working lives

AE Trainer


Since 2000, Member States have adopted a number of measures aimed at reform of the pension and social security systems.

Most Member States have increased the statutory pension age, developed plans for the gradual convergence of pension ages for men and women, and have raised the age of entitlement or increased the period of contribution needed to claim full retirement benefits. Some countries are considering a link between average life expectancy and pension age, such as the case of Sweden.

In several countries early retirement schemes have been closed, restricted, or made less attractive, such as in the Dutch case, where early retirement payments are subject to special taxation. Simultaneously, various forms of gradual, phased, and partial retirement schemes have emerged. Member States have adopted career-end planning policies which allow workers to plan a transition period between work and retirement in which they can reduce working hours while benefitting from compensation allowances (Adecco Group, 2011; Eurofound, 2012a; 2012b).

The focus is shifting in all countries. Most already have reduced the national schemes for early retirement. One exception is Denmark where the retirement age has not increased, although the age to request voluntary early retirement pay (VERP) has increased.

It is also possible to combine work and the VERP: for each hour worked, a proportional deduction is made from the VERP. Older employees who are eligible for the VERP, but continue working until they turn 65 years, receive a tax-free premium of around EUR 20 000. Employees who postpone taking up the public old age pension will receive a higher pension when they actually retire.

Another example of this type of incentive comes from Sweden where income tax rates on work have been lowered, creating a tax gap between income from work and income from pensions. To encourage longer labour market participation among senior workers the government in 2010 introduced a higher in-work tax credit for people who have turned 65. To increase demand for hiring older people, contributions paid by employers is about one third for people over the age of 65, compared to younger employees. Hiring long-term unemployed senior citizens is highly subsidised (75%).

In Germany the State provides financial support to companies that grant their employees a gradual transition to retirement. Employers who offer workers aged 50 and over a job can get a wage subsidy of up to 50%. The standard obligation to keep the worker on for up to a year after the subsidised period (Nachbeschäftigungspflicht) is not applicable with older workers.

In the Netherlands, extra days of annual leave linked to seniority were removed to reduce the costs of employing older workers. The Netherlands also offers compensation to companies that hire older people who subsequently become ill, as a means of risk reduction.

In Poland, the Act on promotion of employment and labour market institutions envisages partial or total reimbursement of expenses incurred in a specified period by an employer who provides employment and training to the unemployed over 50 years of age. Poland also refunds costs of social insurance premiums related to employment of an unemployed person of preretirement age.

Professionalisation contracts in France allow an employee over 55 to act as a tutor for a young worker. The company receives public funding to cover part of the wages of the old worker, thus promoting active ageing of older workers.

Italy has a similar measure, the solidarity agreement between generations. This allows for the transformation of contracts of workers over 55 from full-time to part-time, and, at the same time, to recruit unemployed young people aged under 25 (or 29 if graduates) so that they cover the hours no longer worked by the older employee.

In Belgium (Flanders) all employees aged over 45 who are made redundant are entitled to the benefits of an outplacement programme, while in Brussels and Wallonia there is a right to outplacement support at the employer’s expense.

The European Social Fund is mentioned in almost all country report as an important source of funds for age management projects. Most of these focus on how workplaces can be innovative and contribute to workplace learning to deal with waves of retirement. The ESF funds mostly public sector projects.

Although ESF funding is generally reported as fundamental, the projectbased nature of initiatives funded by the ESF poses challenges to their sustainability. Despite the benefits created during the implementation phase, follow-up actions and activities are usually untraceable (at least from public sources).

Pressure continues to build to devise further policy packages and support services which can help workers plan their career across the lifespan, with the perspective of more prolonged working lives. Although initiatives which attempt to work on the development of career skills and individual planning with a lifelong perspective can be identified, they are seldom found within an articulated policy. The increase of the retirement age and the incentives to for older workers to remain active are evolving at a faster pace than the establishment of guidance services to support citizens in this process.

All Member States have adopted legislation and measures to fight age discrimination. In principle, this means that a worker’s age can no longer be a (formal) factor in human resources management decisions, including recruitment as well as redundancy. In some countries, there are stipulations in the labour code that make it more difficult to make older workers redundant. In Germany, the Netherlands and Sweden there is a ‘last in, first out’ provision in collective dismissals. In Latvia the labour code stipulates that those five years from retirement should be seen as a priority when deciding which employees are kept in employment during a collective redundancy.

Anti-age discrimination legislation might tend to encourage governments to develop generic policies, not addressing specific target groups such as older workers. By encouraging no distinction on the basis of sex, age or other factors to fight the stigmatisation of some groups, such legislation has the effect of prompting employers to manage employees’ training and working arrangements according to individual needs, rather than general features such as age. This type of approach carries, nevertheless, an underidentification risk of age-related needs in the definition of both policy and firm-level support measures.

Examples of countries following generalist policies are Denmark, Estonia, the Netherlands and Sweden. Denmark is an example where older workers have the same right to unemployment benefits and to receive job-training and other offers according to active labour market policy provisions.

In these countries, with little exception, there are no special activation instruments for the older unemployed. This does not exclude the possibility of ad hoc measures set up by job centres combining the available instruments (training, wage-subsidies) to fit the needs of a particular target group, for instance among the older unemployed.

There are few national laws or mandatory guidelines for active age management in workplaces; the exception is France, having one of the most influential regulations in the field of active ageing. The French Law on the finance of social security for 2009, adopted in December 2008 (Loi No 2008-1330), introduced the obligation for French companies, having more than 50 employees, to develop an enterprise or group agreement or an action plan in favour of the employment of older workers ( 18).

The law invites social partners to identify in each firm specific active ageing issues: recruitment of older workers; anticipation of career development;  improvement of working conditions and risk prevention; skill development and access to training; facilitating the work-to-retirement transition; knowledge and skill transfer and the development of tutorship programmes. All these issues can be supported by guidance activities but there is no specification of which activities to develop.

A recent study published by the research department of the French Ministry of Labour, Employment and Social Dialogue (DARES, 2011) evaluated the first qualitative impacts of the resulting older worker action plans and agreements. This study revealed relatively low concern with the mature stages of career development: issues such as the hiring of older workers and transitions from work to retirement had reduced relevance in the analysed agreements.

The general absence, across the EU, of guidelines on how guidance activities can be developed in workplace contexts means no contribution to the development of late career support. The examples which do exist (in Denmark, Finland and the UK) frequently depart from strong stakeholder engagement in active ageing in firms, independently of the existence of favourable normative settings. Further analysis follows in the next section.

( 18) If no action is taken, companies are fined, and they must pay a penalty of a 1% of the total payroll during the time the enterprise lacks these agreements/plans (since 1 January 2010).