Older people must continue working longer. This is extremely important with a view to reducing tensions on the labour market and helping to cushion the costs of the ageing of the population. The Social and Economic Council (SER) has published a draft advisory report (1) containing recommendations and proposals to both the government and the private sector for increasing the labour participation of older people.
This is contained in a draft advisory report that will be discussed at the Council meeting to be held on Friday 17 December next. The report was written by a working group set up by the Commission on Labour Market Issues, chaired by Professor F. Leijnse. It was written in response to a request for an advisory report from Minister Klaas de Vries and Secretary of State Hans Hoogervorst of the Ministry of Social Affairs and Employment dated 12 May 1999.
Aim
In the draft advisory report, the Council concurs with the government on the need for a policy aimed at increasing labour participation among older people. The government wishes to see an increase in the level of employment among older people from around 25-30 percent at present to more than 50 per cent by the year 2030. In the draft advisory report, the Council characterises this quantitative policy target as a direction to be pursued in the policy to be implemented. The envisaged increase should be achieved in the first instance in the age categories below 60 years of age. In principle, all persons below the age of 60 who are fit for work should participate in the labour process. Retirement by over-60s should occur on the basis of individual preferences (a conscious consideration of the advantages and disadvantages of continuing to work, not working or retiring on a pension).
Two policy tracks According to the draft advisory report, besides intensification of current policy, an extra effort is required to keep older people in employment. Two policy tracks should be pursued for this purpose. The first track concerns the responsibility of employers and trade unions. Companies should follow an age-conscious, and in time age-independent, human resources policy. The second track concerns the schemes related to employment conditions and early retirement. Financial incentives must be introduced that reward people who work longer and force people who opt for early retirement to bear the associated costs themselves.
Recommendations to the private sector The draft advisory report contains the following recommendations to the parties to collective bargaining agreements (CBAs), companies and employees:
- Pursue a future-oriented employability policy. Employers must continually invest in the employability of all employees, and employees must invest in their own employability and mobility on the labour market.
- Periodically review all elements of the employment conditions from the perspective of promoting labour participation among older workers. Compulsory, unilaterally imposed demotion is not an option.
- Opt for sustainable financing of employment conditions schemes aimed at older workers (such as early retirement schemes, senior days, bonuses for older employees) in a way that does not increase the labour costs of older employees. This financing can be secured over a longer period of the career within the collective framework of the schemes. In this way, solutions tailored to the individual are also possible.
- Evaluate the existing options within the package of employment conditions in terms of their suitability for an age-conscious human resources policy.
- Assess whether it is possible in practice to be more flexible with respect to continuing to work after the termination of the employment contract when employees first receive a (flexible) pension, for instance by concluding a new employment contract. Generally speaking, the Council assumes here that the start of the pension results in the termination of the employment contract.
- Give older workers more opportunities during recruitment and selection procedures. Provide incumbent staff with introduction and orientation courses in order to improve their chances on the external labour market.
- Provide supplements to unemployment benefits sparingly, as they remove the incentive for older workers to return to work. The money can be better used to relocate older workers into suitable jobs and to improve their employability.
- In the case of collective redundancies, expressly take into account the chances on the labour market of those affected. The group of people made redundant should reflect the age structure of the company's workforce.
- Progressively transform early retirement schemes into pre-pension or flexible pension schemes. These schemes must allow employees to consciously weigh up the choice between continuing to work and retiring and must not create any barriers to working longer (after the pivotal age).
Proposals to government
In addition to these recommendations to the private sector, the draft advisory report makes the following proposals for government policy:
- Start a public information campaign aimed at increasing the employability, flexibility and mobility of over-40s.
- Place the emphasis in voluntary agreements on working conditions with industry on measures that make it attractive for older people to work longer.
- Encourage the social security agencies to take the lead in promoting an age-conscious approach to older job-seekers (tailored advice, close individual supervision, education and training).
- Use the existing job creation instruments to implement a policy promoting mobility among older workers, for instance in the shape of inter-sectoral mediation.
- Leave scope in job creation policy to continue, and if possible intensify, a sectoral approach, so that a customised approach can be adopted to deal with bottlenecks in specific sectors.
- Phase in the requirement that unemployed people over the age of 57½ must apply for jobs, once the government has made it plausible that older job-seekers have a realistic chance of finding suitable work. A number of elements play a role in the introduction of this requirement:
- the definition of the concept of suitable work for which the job-search requirement applies must take sufficient account of the age and work experience of the persons concerned;
- if separate categories are introduced upon the reintroduction of the job-search requirement, this requirement should be introduced first for unemployed persons with a good chance of finding work;
- the phased introduction of the job-search requirement should take place by gradually raising the age limit for the job-search requirement, thereby extending the requirement to new, older unemployed persons. According to the draft advisory report, views differ on when the job-search requirement can be re-introduced and the precise conditions that should be attached to it.
- Subject to strict conditions (in particular with regard to financial means), consider more far-reaching forms of differentiation of the sectoral unemployment benefits premium (specifically by continuing the creation of premium groups), to be considered after the return of the evaluation surveys.
- Use tax measures to reduce the labour costs of older employees and to compensate for the extra costs of increasing their employability, such as a reduction of the employer’s contributions for specific categories of older employees.
- Remove obstacles to the reintegration of older partially incapacitated persons in pension regulations through the Reintegration of Disabled Persons Act.
- Give individual employees the statutory right to revise the basis of calculation of their pension if a change in their working time or a transfer to a job with a lower salary causes the salary on which their pension is based to be reduced.
- Consider eliminating tax breaks for early retirement schemes that come into being after a particular date.
- Investigate whether pre-pension and flexible pension schemes are designed in such a way that they enable employees to make a conscious decision between continuing to work and retiring and do not create any obstacles to working longer (after the pivotal age). If the survey should indicate that this is not the case, the draft advisory report recommends a review of the relevant provisions of the Fiscal Treatment of Pensions Act.
The authors of the draft advisory report believe that this combination of recommendations and proposals can lead to an adequate and sustained increase in the labour participation of older workers. The proposed mix will also contribute to the change in mentality the government is seeking, in the sense that it will become more natural for employees to continue working longer and that employers will recognise the growing need to deploy older employees in the labour process.
The recommendations and proposals formulated in the draft advisory report replace the many conceivable policy measures presented by the government in the request for an advisory report. After all, the request for an advisory report does not contain a policy programme but a list of policy options with the associated pros and cons. According to the draft advisory report, some of these measures and instruments are ineffective. The structure adopted by the government makes it inevitable that a considerable number of possible policy options will be discarded, but this does not mean that the SER considers the issue to be less urgent or that a policy addressing this matter is less necessary, according to the draft advisory report.
1 . This is a draft advisory report. The views expressed here are those of the working group that prepared it.