Contract Reference Number: VC/2004/0214

Ageing and Employment – Final Report

Contract reference number: VC/2004/0214

Ageing and Employment:

Identification of Good Practice to Increase Job Opportunities and Maintain Older Workers in Employment

Final Report

Submitted to

Commission of the European Communities

DG EMPL

7th March 2006

Warwick Institute for Employment Research, University of Warwick

Economix Research & Consulting , Munich

In collaboration with

Social Economic Research Institute Rotterdam (SEOR BV)

LABORatorio R. Revelli, Centre for Employment Studies (Moncalieri / Torino)

Arnkil Dialogues Co (Hämeenlinna)

S2E2-Sociedade de Estudos Económicos e Sociais (Lisboa)

Collegium Civitas, PolishAcademy of Science (Warsaw)

Institute for Social Research, VilniusUniversity

Jiri Vecernik, Institute of Sociology, Academy of Sciences (Prague)

Szusza Szemans, independent consultant and Institute of Sociology of the Hungarian Academy of Sciences (Budapest)

Danielle Kaisergruber, Professor at the Ecole Nationale des Ponts et Chaussées (Paris) and independent consultant – DKRC

Members of the Research Team

Project Co-ordination

Professor Robert Lindley (Project director, co-ordination team)

Dr. Nicola Duell (Co-ordination team)

Contributions to the Synthesis Report

Nicola Duell (Chapters1,2,3,8,9,10,12)

Robert Lindley (various chapters and the Executive Summary)

Robert Arnkil (Chapter 7, 11)

Beate Baldauf (Chapter 12)

Derek Bosworth (Chapter 4)

Bernard Casey (Chapter 5)

Arie Gelderblom (Chapter 6)

Simone Leitzke (Chapter 8)

Country Reports and Case Studies

Robert Arnkil (FI)

Beate Baldauf (UK)

Luis Centeno (PT)

Leszek Chajewski (PL)

Bruno Contini (IT)

Arie Gelderblom (NL)

Danielle Kaisergruber (FR)

Romas Lazutka (LT)

Simone Leitzke (DE)

Gerry McGivern (UK)

Andrew Sparks (UK)

Szusza Szémans (HU)

Jiri Vecernik (CZ)

Kurt Vogler-Ludwig (DE)

Ageing and Employment – Final Report

Contents / Page
List of Tables, Figures and Boxes / iv
Acknowledgements / viii
Executive Summary / ix
1. / Introduction / 1
1.1 / The background / 1
1.2 / Objectives of the study / 2
1.3 / Structure of the study / 2
2. / Methodological Framework / 4
2.1 / Analytical framework / 4
2.2 / Country selection / 7
2.3 / Methodological approach: tools for the identification of good practice / 9
3. / Overview of Case Studies / 12
3.1 / Company case studies / 12
3.2 / Institutional case studies / 30
4. / The Economic and Labour Market Conditions of Older Individuals: International Comparison / 31
4.1 / Introduction / 31
4.2 / Life expectancy and dependency ratios / 31
4.3 / Structural change / 33
4.4 / Labour market context / 42
4.5 / Risks of older age groups / 47
4.6 / Conclusions and main findings of the country report / 51
5. / The Institutional and Political Conditions: Strengths and Weaknesses of Policy Reforms / 55
5.1 / Adapting pension systems – the dangers of ignoring the demand side / 55
5.2 / Longer working – the state as an employer and a source of ‘bad practice’ / 58
5.3 / Regulating employment by norm setting - a European endeavour / 60
5.4 / Special employment measures – the importance of an holistic approach / 63
6. / The Relationship between Age and Productivity / 66
6.1 / Introduction / 66
6.2 / Theories / 66
6.3 / Age and earnings / 69
6.4 / Age and productivity: measurement problems / 73
6.5 / Conclusions / 82
7. / Working Conditions and Work Ability / 83
7.1 / Introduction / 83
7.2 / Work ability / 83
7.3 / Key messages with regard to the promotion of work ability from an age perspective / 86
7.4 / Working conditions / 94
7.5 / Case examples / 95
8. / Lifelong Learning: Consequences for Older Workers / 100
8.1 / Introduction / 100
8.2 / Age differences in training investments – a theoretical framework / 100
8.3 / Age-related differences in the participation of training – institutional , workplace-related and individual factors / 103
8.4 / Approaches to support and adapt the further training system to an ageing workforce in knowledge economies / 113
8.5 / Conclusions / 128
9. / Human Resource Management, Work Organisation and Working Time: Ways to Enhance Mobility and Flexibility / 130
9.1 / Introduction / 130
9.2 / Internal mobility and career planning / 132
9.3 / Work organisation: design of tasks and intergenerational workgroups / 141
9.4 / Recruitment, dismissals and the role of the external labour market / 146
9.5 / Working time / 152
10. / The Role of the Social Partners / 159
10.1 / Introduction / 159
10.2 / Factors influencing the strategy of the social partners / 160
10.3 / The strategies of social partners at sector and company level by collective bargaining fields – recent evidence from European countries / 166
10.4 / Conclusions / 175
11. / Mapping Out Good Practice – and How We Can Learn From It? / 176
11.1 / Introduction / 176
11.2 / What is good practice? / 176
11.3 / Good practice transfer and learning networks / 177
11.4 / Closing the ‘knowing-doing’ gap / 184
12. / Conclusions and Recommendations / 191
12.1 / Summary and conclusions from case studies / 191
12.2 / Conclusions: identifying good practice / 200
12.3 / Success factors / 202
12.4 / Recommendations / 204
References / 210

List of Tables, Figures and Boxes

Chapter 2
2.1 / Labour market and policy framework / 7
2.2 / Selection indicators / 8
2.3 / Overview of the policy approaches targeting older workers in the EU15 / 9
Chapter 3
3.1 / Overview of the case study sample / 12
3.2 / Overview of company case studies by fields of intervention / 15
3.3 / Overview of institutional case studies / 30
Chapter 4
4.1 / Life Expectancy at age 60 (and percentage point changes) / 33
4.2 / Structure of inactive population by age group in 2004 - % of total inactive population in age group / 43
4.3 / The rate of unemployment by country, 2004 / 45
4.4 / Percentage of individuals reporting long-standing health problems, by age, 2002 / 47
4.5 / Proportion aged 60 to 64 that report a given health severity level / 48
4.6 / Proportion of life expectancy that is healthy / 49
4.7 / At risk of poverty rate after social transfers / 49
4.8 / Risk of poverty rate by age and gender, 2001 (per cent of age category) / 50
Chapter 6
6.1 / Earnings ratio (gross annual earnings before taxes) by age group and level of educational attainment, 1995 / 70
6.2 / Overview of productivity indicators and related advantages and disadvantages / 75
6.3 / Overview of empirical studies on age and productivity / 77
Chapter 7
7.1 / RESPECT research focus and new work models / 92
Chapter 8
8.1 / Participation rate of adult workers in continuing education and training (age group 25-64) / 103
8.2 / Participation rate in non-formal learning by occupation status of participants (%) / 107
8.3 / Participation rate in informal learning by age and educational level in selected countries, in % / 107
Chapter 12
12.1 / Recommendations at European, national, company and individual level / 206

Figures

Chapter 2
2.1 / Analytical framework / 5
Chapter 4
4.1 / Life expectancy, all individuals, 2003 (years) / 32
4.2 / Increases in Life Expectancy, 1960 to 2003 (additional years) / 32
4.3 / Dependency ratios / 35
4.4 / Average growth of GDP per capita, 1998-2004 / 35
4.5 / Percentage of GVA attributable to agriculture, 2004 / 36
4.6 / Percentage point changes in GVA attributable to agriculture, 1998-2004 / 36
4.7 / Percentage of GVA attributable to production industries, 2004 / 37
4.8 / Percentage point change in GVA attributable to production industries, 1998-2004 / 37
4.9 / Percentage of GVA attributable to construction, 2004 / 38
4.10 / Percentage point change in GVA attributable to construction, 1998-2004 / 38
4.11 / Percentage of GVA attributable to transport and telecommunication, 2004 / 39
4.12 / Percentage point change in GVA attributable to transport and telecommunication, 1998-2004 / 39
4.13 / Percentage of GVA attributable to business and financial services, 2004 / 40
4.14 / Percentage point change in GVA attributable to business and financial services, 1998-2004 / 40
4.15 / Percentage of GVA attributable to other services, 2004 / 41
4.16 / Percentage point change in GVA attributable to other services, 1998-2004 / 41
4.17 / Activity rates over time / 43
4.18 / Activity rates for the over-65’s over time / 44
4.19 / Change in rate of unemployment (percentage points), 1998 to 2004 / 46
4.20 / Unemployment amongst older individuals (Source OED) / 46
4.21 / The share of part-time in total employment across EU countries (including CEEC accession states), 2001 / 47
4.22 / Ratio of pre- to post-transfer income / 50
Chapter 6
6.1 / Age-productivity and age-wage curve according to the human capital theory / 67
6.2 / Age-productivity and age-wage curve according to the wage-efficiency/contract theories / 68
Chapter 7
7.1 / Dimensions of work ability / 85
7.2 / Ageing and the work matrix (Ilmarinen 1999) / 87
Chapter 8
8.1 / Participation rate in learning by age group (in %) / 105
8.2 / Population attained at least upper secondary education; Percentage by age group / 109
8.3 / Continuing training system / 114
Chapter 9
9.1 / Internal mobility and age management / 132
9.2 / Factors influencing the changing working time preferences of older workers / 153
Chapter 11
11.1 / The SECI-process / 180
11.2 / The ‘knowing – doing’ gap / 185

Boxes

Chapter 5
5.1 / Working beyond the contractual retirement age / 60
Chapter 6
6.1 / Strengthening the link between wage and performance / 71
6.2 / Linking career development and mobility to the relative strengths and weaknesses of various age groups / 80
Chapter 7
7.1 / Comprehensive approaches to age management addressing health issues / 96
7.2 / Internal mobility: adapting to health requirements / 96
7.3 / Improving working conditions by technical solutions / 98
7.4 / Using expertise to improve working conditions / 99
Chapter 8
8.1 / Knowledge transfer / 123
8.2 / Identifying training needs / 125
8.3 / New learning methods / 126
8.4 / Training in the context of industrial restructuring / 127
Chapter 9
9.1 / Multi-skilling to meet flexibility requirements / 133
9.2 / Internal mobility in the context of technological change / 134
9.3 / Increasing mobility and task rotation in order to increase motivation / 136
9.4 / Implementing models for career management / 138
9.5 / Barriers to career management / 140
9.6 / Creating new roles for older workers / 141
9.7 / Intergenerational teams / 143
9.8 / Adjusting jobs to the capabilities of older workers / 145
9.9 / Recruitment strategies for older workers – case study examples / 148
9.10 / Promoting intersectoral and intrasectoral mobility / 150
9.11 / Retaining pensioners at work – case study examples / 151
9.12 / Part-time work arrangements for older workers / 155
9.13 / Flexible working time arrangements and age specific leave schemes / 155
Chapter 10
10.1 / Collective bargaining agreements tackling age management issues / 172
10.2 / Training in the context industrial restructuring – a trade union’s claim, case study example / 173
10.3 / Involving employees’ representatives in the design of age management strategies / 174
Chapter 11
11.1 / Case study examples / 187

ACKNOWLEDGEMENTS

We should like to thank on behalf of the whole research team, all those who have taken the time to discuss with us the practice of ‘age management’ in the employment field or who have provided valuable background information. This includes people from both sides of the employment relationship and social partnership: in particular, company owners, senior executives, human resources managers, employee representatives and trade union officials. Without their willingness to share their perceptions and experiences, this study would not have been possible.

In addition, as co-ordinators of the study we wish to thank our colleagues for their co-operation in carrying out an extremely challenging project. We are particularly grateful to Beate Baldauf who played an important part in bringing the main report and country/company case studies together.

We have also benefited greatly from discussions with Ioannis Drymoussis and his colleagues in DGEMPL.

Finally, special thanks are due to Joy Warren for her secretarial support throughout and capable copy-editing in the final stages.

Robert Lindley and Nicola Duell

EXECUTIVE sUMMARY

A key element of European economic and social strategy is the raising of the employment rate through extending working life. How this can be encouraged in practice without lowering living standards, endangering attempts to improve work-life balance, and undermining the pursuit of equity, economic efficiency and community depends on finding good practice approaches at organisational and institutional levels. The project on ‘Ageing and Employment: Identification of Good Practice to Increase Job Opportunities and Maintain Older Workers in Employment’ (AEIGP) was designed to shed light on the emergence of ‘good practice’ drawing on the experience from eleven Member States. The central part of the research consisted of 41 organisational case studies. This was complemented by analysis of the strengths and weaknesses of the national institutional framework within which the organisations operate together with the exploration of selected good practice examples of initiatives of social partners, NGOs and national or regional policy-makers.

This Executive Summary covers each of the principal chapters of the main report of the study.

THE case studies: COUNTRIES, COMPANIES AND INSTITUTIONAL EXAMPLES

Company case studies

In general, five case studies were carried out in France, Germany, Italy and the UK, and three in the Czech Republic, Finland, Hungary, Lithuania, Netherlands, Poland and Portugal. In order to ensure a reasonable mix with regard to sectors, skill levels and gender and to allow for cases turning out to be less useful exemplars than had been expected, a higher number of potential case studies were initially explored. Thus, 67 case study organisations were initially approached, producing a final sample of 41.

• As regards the nature and size of the organisations chosen, public companies represent approximately one-fifth of those investigated, a quarter are SMEs and just one belongs to the co-operative sector.
• The company case studies covered a wide range of areas of economic activity. At the same time there were five branches for which cases were investigated in several countries: financial services, retail trade, public administration, the electronics industry and construction. These clearly do not provide for generalisations about sectoral effects but they offer a basis for drawing attention to especially interesting contrasts and for formulating hypotheses.

Driving forces and fields of intervention

The rationales, driving forces and contexts for implementing age management strategies

The case study organisations have implemented age management strategies in a variety of contexts, which include:

• industrial restructuring;
• growing markets and dynamic developments;
• organisational change and technological development;
• demographic change in the company and the danger of skills losses;
• labour shortages;
• trade union policies.

Moreover, in some cases, these contexts have acted directly as driving forces for the development of age management. In more generic terms, they may derive from:

• cost pressures;
• requirements of consumers;
• flexibility requirements in production;
• the need to compete for skilled labour – recruitment and retention problems;
• changing social values within companies.

In many cases we find a combination of different contexts and driving forces for change co-existing with age management strategies. However, their impact on strategic choices is mediated by the different rationales pursued by the various actors. So, alongside the undoubted importance of changes in ‘structure’, there is a significant role for ‘agency’ in the determination of policy outcomes and their consequent impacts.

Fields of intervention

With regard to the variety of age management strategies revealed in the case studies, the measures implemented are mainly in the areas of work organisation, mobility management, career development, design of tasks, recruitment, working time arrangements, continuing training including knowledge transfer, health-related measures, outplacement. If found together in one organisation, they would represent an extensively holistic approach.

A potential prototype of a reasonably integrated strategy, falling somewhat short of the ideal holistic case would perhaps consist of training measures accompanying mobility management, whilst also taking into account health- related aspects, job assignment decisions, and the sustaining of career management approaches for all age groups.

In reality, our case studies represent quite broad selections from the menu of possible interventions in which their ‘joined-upness’ is a matter for debate. Some of the companies have consciously elaborated an age management programme, but this is not the case for all companies. Many pursue interesting approaches to what amounts to age management without having explicitly formulated an age management strategy.

ECONOMIC AND LABOUR MARKET CONDITIONS – SOME INTERNATIONAL REFLECTIONS

All countries are facing an ageing population and most exhibit declining activity rates among the older cohorts. Italy presents a particularly strong example of this whereas the main exception with regard to activity rates is Finland which has the most established age management policy approach though there is some debate about whether or not the rise in activity rates for both male and female older workers can actually be attributed to the policy regime. The relatively low qualifications and skills of older groups, along with their higher probability of working in agriculture or production activities, leave them at a particular disadvantage in accessing higher-level jobs in the major growth areas of services to businesses and services to households.

New Member States, having experienced the most significant structural change are likely to continue to do so. The impact on older workers has been ameliorated by the relatively high growth in economic activity and the fact that a number of these countries have rather well-developed education and training systems. However, though new areas of economic activity and forms of employment relationship are developing, the relative lack of opportunity for flexible working, including part-time and fixed-term contract employment, tends to reinforce the disadvantages of older workers. These are produced by a combination of inherent characteristics, which tend to make them less employable, and discrimination that goes beyond the objective assessment of their worth as employees.

The individual country studies demonstrate quite clearly that older individuals are inevitably at risk in a number of respects unless there is some legislative framework or collective bargaining practice that aims to protect them.

Given the relatively low probability of finding a new job if made redundant, unemployed older workers are faced with a particular problem, that of ensuring sufficient income when retirement eventually comes. This applies both to those who were (had they retained their jobs) fortunate enough to have pensions linked to their final salaries and those unfortunate enough to have had particularly low-paid employment during their working lives and were still trying to build up sufficient pension contributions.

Training programmes for older workers are, in principle, a constructive response to the above situation but the predominance of those with limited histories of formal and, even, informal learning, make them less able to capitalise on the potential benefits of training. This group also faces shorter periods of remaining working life than is the case for younger workers, which thus truncates the rates of return to training that they might otherwise enjoy.

NATIONAL POLICIES: pensions reform, legislation and special programmes

It is not surprising that, in view of the economic and social developments summarised above, virtually all countries have, at least started, to examine the case for changing major parameters of their pensions systems, particularly those relating to the notions of retirement age and disability. Some countries are sufficiently emboldened by their concern to do something, and by their reading of the evidence on what to do, that they have already set in train nationwide increases in norms for retirement ages.

Others point to the difficulty of changing national norms when different parts of the labour force face quite different conditions in terms of the demands placed upon workers; their capacities to continue employment even to the point of reaching current formal retirement ages are already in question, never mind pursuing working lives which extend beyond those norms.

However, pension reform is only one of the policy instruments available to governments which seek to create more positive conditions for age management. Two other instruments available are: the introduction of age discrimination legislation and the provision of employment and training programmes for older workers both within the organisation and in the external market.