The 10th European Conference of the International Labour and Employment Relations Association
University of Amsterdam
20-22 June 2013
Regulating Ageing and Work(Work in progress – not for citation)
Therese MacDermott, Macquarie Law School
Macquarie University, Australia
1.INTRODUCTION
The need to more fully utilize the economic potential of older workers is a key social policy concern in many developed countries, both in the European Union and elsewhere. However, overcoming barriers to the participation of older workers and implementing pro-active measures to facilitate and sustain the participation of older workers presents particular regulatory challenges. While equality and non-discrimination principles apply to workplace age discrimination, the area is not necessarily perceived in the same way as other attributes subject to equality legislation. In addition, the human rights case for proscribing age discrimination is not always on its own an adequate motivational factor for employers to deal with systemic age discrimination or to implement pro-active measures. This need to deal with workplace age-related issues is often portrayed as more appropriately a subject of economic labour market regulation, rather than a core human rights concern and a social rights issue.
Regulating ageing at work does involves broad economic and fiscal factors such as how to manage an ageing population, dealing with skills shortages, determining the appropriate timing of access to superannuation and pensions, and the need to maintain a broad tax base of working persons to meet future community costs. These factors point to the need to extend the participation of mature age workers in paid employment and to minimize workplace discrimination against mature age workers. They also require specific legislative responses in other areas such as social security laws, taxation systems, and superannuation and pension entitlements. However many countries struggle to set in place the appropriate balance between prohibitions on discriminatory conduct and incentives to implement pro-active measures to facilitate and sustain the participation of older workers.
This paper examines measures introduced in a variety of countries to deal with the regulation of ageing and work. It critiques both soft law and hard law approaches to regulation in this area, and assess the impact of these various strategies in a comparative context. It looks at recent endeavours to secure better compliance and attitudinal change within workplaces through regulatory structures that provide incentives for the voluntary adoption of positive measures, underpinned by proscriptive requirements. Finally, assesses the interaction between equality law regimes and other legislative areas such as social security laws, taxation systems, and superannuation and pension entitlements within the complex regulatory arrangements necessary to deal with ageing and work.
2.THE “AGE” CONUNDRUM
Age discrimination does not appear to have the same human rights status in public consciousness as areas such as race and sex discrimination.[1]Some commentators attribute this to the ‘perception that age discrimination is an economic labour market issue, rather than an equality issue,’ which in turn undermining any sense of a rights based approach.[2] Fredman points out that there is ‘little consensus on the meaning of equality in the context of age and how it can be achieved.’[3] One explanation for this perceived ambivalence to the attribute of “age”is that chronological age is a recognized and accepted basis for allocating and defining certain rights and responsibilities, such as voting, consent to medical treatment, marriage, and concessional entitlements. It has an aspect of universalism that does not affect other attributes, whereby all individuals are likely to experience each age and stage. There may be debates about what the right age is for particular purposes, but chronological age does play a role in the way we define life phases of education, work and retirement, despite the fact that the reality is more fluid. Assumptions about needs and capacity are made on the basis of age, and as with other areas of anti-discrimination regulation, there is a need to demarcate the valid from invalid distinctions based on age.[4]
There are also arguments about intergenerational equity. In times of economic uncertainty and high youth unemployment, there is additional pressure to favour younger workers over an older generation.[5] These views are fuelled by common perceptionsthat older workers have had a long period of workforce engagement and should make way for younger (and by implication more talented) workers. Another common assumption is that institutions need constant renewal and that older workers should make way for younger workers who are the ‘new blood’ of the organization.[6] There is the belief that older workers are not well suited to the dynamic nature of the modern workplace in which technological innovation and creativity predominate.[7] Finally there is the ‘image’ aspect; that older age workers, irrespective of their talents, experience and loyalty, are perceived as not a good fit for the ‘image’ an organisation seeks to project.
2.1 Gender and age
There is a need to be cognizant of the gender dimension of the age debate. The periods that women commonly experience out of the paid workforce, or in a reduced form, affect employment opportunities, contributions to retirement savings, and pay equity. The caring responsibilities that many women have for young children are often revisited in later life in the form of responsibilities for parents, partners or children with disabilities in need of care and support. In addition, challenging age restrictions in employment has been characterized, at least in the US context, as the domain of white middle class men.[8]It has been argued that women are likely to ‘normalise’ the ageism they are subject to, based on their experiences of gender-based discrimination.[9] There has been a narrowing of the gender gap for participation of older workers, but this varies on a country to country basis.[10] It has been observed that “[i]n countries where it is relatively easy for women to work and have children, female employment and fertility both tend to be higher.”[11]
3.THE FISCAL AND DEMOGRAPHIC CONTEXT
Increased longevity and declining fertility shape the demographic landscape in many developed countries. An ageing population puts pressure on national pensions, social security,health care and aged care systems. (For developing countries, which are often likely to have a younger population, the problem tends to be the absence of the supporting social infrastructure of developed social security systems and retirement income schemes). There is a need to keep workers engaged with the paid workforce and consequently paying taxes for longer, as well as delaying reliance on aged pensions and other sources of retirement income. Declining fertility threatens efforts to maintain a broad tax base of working persons to meet these future costs.[12]There are associated concerns regarding skills shortage and increased competition for skilled labour. Many of these factors point to the need to extend the participation of older workers in paid employment and to minimize workplace discrimination against such workers, necessitating incentives both for workers to remain engaged in paid employment and for employers to hire and retain older workers.
Despite a range of policy initiatives, there has been slow progress made in increasing participation rates of older workers.[13] Although employment rates for older workers have increased in the last decade, the figures across all EU member states show that only 3 out of 10 in the 60-64 age cohort are in employment.[14] Older workers tend to be overrepresented in public service jobs that are vulnerable to cuts in public funding and they are more often engaged in part-time or self-employment. Despite the clear fiscal and demographic logic of keeping workers engaged with the paid workforce for longer, change in the pervasive negative stereotypes about the employability of older workers and concerns about the productive capacity of older personsis slow.[15] It has also been suggested that workers themselves need to accept the necessity of working longer.[16]
Social norms and community expectations about the appropriate timing of an end to workforce participation have often been constructed around pensionable age or mandatory retirement age for particular occupations or forms of employment. Changing those norms and expectations involves a range of different “push” and “pull” factors. Prospective retirement income is clearly a highly influential factors, as well as health and physical capacity, working conditions and job satisfaction. Hence working longer becomes a necessity where access to pensions and other retirement income is postponed to a later age. Alternatively, a more nuanced approach is one that provides incentives that make working longer more attractive financially, or imposes financial disincentives to early retirement. However, while these factors might address incentives and barriers to working longer, few of these approaches actually ensure that opportunities to work exist or remain for older workers, or that they create a demand for such labour.
4.PROMOTING EXTENDED LABOUR FORCE PARTICIPATION
One of the stated goals in many developed countries is to increase workforce participation by keeping people in the workforce for longer. From a regulatory perspective, promoting and sustaining longer labour force participation can be approached in a number of different ways, using a broad range of social policy tools and utilizing both hard and soft approaches.Approaches may vary depending on the prevailing economic conditions, and in terms of whether they can be staggered over a longer period or require immediate implementation. In addition, there is a role for social partners in achieving this goal, particular in terms of improving working conditions.[17]
4.1 Proscribing age–based discrimination
The proscription of age based discrimination in employment is a necessary prerequisite for promoting and sustaining longer labour force participation. National legislation prohibiting age based discrimination is relatively common, particularly in EU member states since the adoption of the EU Employment Equality Directive.[18] Relevant ILO Conventions and recommendations also provide a basis for proscribing direct and indirect discriminatory treatment that cannot be justified.[19]This can take the form of specific age discrimination legislation, or constitute one of a number of attributes proscribed in general equality legislation. The legislation may be specific to employment or more encompassing in scope. Additional protection can also be provided against discriminatory dismissal or redundancy arrangements though other forms of employment protection legislation, although there is evidence indicating that some countries still permit employers to dismiss at a nominated age.[20]
As with anti-discrimination laws generally, the regulatory framework can serve both a normative function as well as providing a discrete avenue for redressing individual complaints. In common with most complaints based equality legislation, pursuing specific incidences of workplace age discriminationischallenging. Factors that can be problematic include finding a suitable real or hypothetical comparator in order to establish less favorable treatment, proving that the reason the action was taken was on the basis of a proscribed ground, establishing a form of indirect discrimination, and the type of remedies available. However the prospect of enforcement is enhanced by the active engagement of equality commissions with the capacity to investigate and prosecute such claims. My own research on this subject in Australian indicates that not one case has been successfully litigated under the national age discrimination legislation, potentially attributable to a range of factors including short-comings of the legislative scheme, limitations in access to justice, an over-emphasis on conciliated outcomes, and difficulties of proof. In addition, remedies that are focused on compensation rather than reinstatement offer less utility to older workers, for whom the loss of a job results in a longer than average period of unemployment. In this context, the capacity for strategic enforcement by a well-resourced regulatory agency is highly significant.
Moreoverunlike other relevant attributes, the protection provided against age discrimination is often specifically qualified in national systems by the concepts of “justifiability” or “reasonableness”. Under the terms of the relevant Directive,[21]national legislative scheme can provide for differences in treatment on the grounds of age that are objectively and reasonably justified by a legitimate aim, and where the means adopted is considered appropriate and necessary. The Directive gives three examples of such differences in treatment, although these do not constitute an exhaustive list:
(a) the setting of special conditions on access to employment and vocational training, employment and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities in order to promote their vocational integration or ensure their protection;
(b) the fixing of minimum conditions of age, professional experience or seniority in service for access to employment or to certain advantages linked to employment;
(c) the fixing of a maximum age for recruitment which is based on the training requirements of the post in question or the need for a reasonable period of employment before retirement.
The interpretation of justification in the context of age discrimination has been characterized as not necessitating exceptional circumstances and permitting countries to use a broader range of legitimate aims that are not confined to matters of public interest.[22] European case law indicates that states are not required to draw up a list of differences in treatment which might be justified.[23] The aim of a fair distribution of employment opportunities and facilitating younger people finding work, particularly where there is high youth unemployment are potentially justifiable.[24] This approach acknowledgesintergenerational fairness and dignityas legitimate aims. In the UK the Supreme Court stated that intergenerational fairnesscan include ‘facilitating access to employment by young people’, ‘enabling older people to remain in the workforce,’ ‘sharing limited opportunities to work in a particular profession fairly between the generations’ and ‘promoting diversity and the interchange of ideas between younger and older workers’; while dignitycovers ‘avoiding the need to dismiss older workers on the grounds of incapacity or underperformance, thus preserving their dignity and avoiding humiliation’, and ‘avoiding the need for costly and divisive disputes about capacity or underperformance.’[25] However the court did go onto consider the need for this to be viewed in the context of the particular employment, and the means chosen must be appropriate.
The notion of sharing employment opportunities fairly between the generations, and avoiding disputes over capacity and performance of older workers, are strong themes running through much of the European case law. These outcomes suggest that the justifiability aspect has limited the effect of the prohibition onage discrimination in protecting older workers, particularly in relation to labour market policies and initiatives that seek to create job opportunities for younger workers. Hence, the capacity of anti-discrimination legislation to promote and sustain the employment of older workers is constrained by the justifiability of various policies and practices.
4.2 Abolishing mandatory retirement ages
A closely associated legislative intervention is the removable of mandatory retirement ages, although some countries retain mandatory retirement with respect to a specified range of designated categories of employment. Many systems now set an age pension age, but permit voluntary workforce participation beyond that age. However some allow termination of employment at a later age point, such as 70 years of age, thereby creating a de facto retirement age should an employer choose to exercise this option. Other countries have done away with default retirement age, but allow for a specified age ceiling to be justified. In Japan, the scheme by which employers could, from the point a worker reached 60 years of age, enter into a re-employment arrangement on different terms is now being phased out under amendments to its Act for the Stabilization of Employment of Older Workers.
4.3Changing age eligibility for pension schemes and other pension reforms
One of the bluntest instruments for influencing the timing of an end to workforce participation is to simply change the age-based eligibility for pensions. This has the dual consequence of delaying responsibility for paying pension entitlements and extending the period of taxation contribution. The ageing of populations presents challenges for the long term sustainability of pension schemes in many countries.[26] Recent financial instabilities in Europe have put additional pressure on the adequacy of such schemes. Despite the unpopularity of such a measure, many countries have taken this step, with the change in age-based eligibility often staggered over a long phase-in period. For example, in Germany the adjusted retirement age of 67 will be reached in 2029, with a similar phased increase to retirement age in France. In Australian, the age person eligibility age will move incrementally from 65 to 67 between 2017 and 2023.[27] This is a long term strategy, with the benefits of delayed retirement not realised for some time. There is related pressure to raise the preservation age for access to occupational pension schemes.
Anothertype of reform is the phasing out of pension schemes that rely solely on length or service and are not age dependent. The capacity to access early retirement schemes has been restricted in many countries, although it still remains in some countries to manage restructuring and redundancies.[28] In addition, the adverse taxation treatment of early retirement payments can diminish the appeal of early retirement schemes. Rules relating to social welfare entitlements can be tightened to limit the capacity of individuals to access sickness or disability benefits as a form of substitute payment prior to reaching the age pension threshold. Some countries have taken steps to try and reduce the fiscal burden of their pension schemes by changing from defined benefit to defined contribution, as well as encouraging a change in the mix of public pensions and privately funding occupational pension schemes.
Changing age eligibility for pensions and access to other retirement income imposes a compulsion to work longer, rather than a tangible benefit to continuing workforce participation. It simply denies access to pension entitlements until the new age criterion is met. On its own, it does nothing to ensure that the opportunities for this extended workforce participation actually exist.Without those opportunities there is the potential for increased dependence on forms of social welfare or poverty for older workers not able to access pensions.