Comprehensive strategies for active ageing - mutual learning ...

SUMMARY 

1. Introduction 

Comprehensive strategies for active ageing 

Thematic Review seminar of the Mutual Learning Programme 

of the European Employment Strategy 

Brussels, 20 April 2004 

Summary 

The Thematic Review seminar, held in Brussels on 20 th April 2005, was the second in a series of seminars 

which take place biannually in the framework of the ‘Mutual Learning Programme of the European Employment 

Strategy 1 ’. The theme of the second Thematic Review seminar reflected one of the major challenges facing the 

European Union in the coming years: demographic ageing and its economic and labour market implications. 

The Review was hosted by DG Employment, Social Affairs and Equal Opportunities of the European 

Commission (DG EMPL) and attended by government delegates, national and European stakeholders and 

social partners from EU member states, Bulgaria, Romania, Turkey, Norway and Iceland. 

The Thematic Review seminar was opened by Odile Quintin, Director General of DG EMPL and Maarten 

Camps, Chairman of the European Employment Committee. Odile Quintin outlined the challenges related to 

demographic ageing in Europe and the European Union’s policy response. Maarten Camps underlined the need 

to find rapid practical measures to raise participation rates in the labour market. Experts Jaap de Koning (SEOR 

B.V., Erasmus University Rotterdam) and Philip Taylor (University of Cambridge) presented papers on the 

challenges facing European labour markets and strategies to promote the employability of older workers. These 

were complemented by four country presentations which provided concrete examples of different strategy 

approaches: the United Kingdom and the Netherlands in the morning and Germany and Sweden in the 

afternoon. Both the morning and afternoon sessions were concluded with discussions on the country examples, 

and the day was rounded off with a panel discussion with representatives from the European social partners and 

OECD on the key issues covered by the seminar. 

2. Background and policy considerations - Opening Statements 

The opening statements by Odile Quintin and Maarten Camps provided the background and thematic framework 

for the second Thematic Review seminar of the Mutual Learning Programme. The fact that active ageing should 

have been singled out as a priority theme for the programme is indicative of its importance for the European 

labour market. In her opening statement, Odile Quintin remarked that the Lisbon target of having 50% of all 55- 

64-year-olds in employment would not be reached by 2010. More concerted action is needed at all levels to 

come even close to that target in the future, when demographic ageing will be particularly pronounced. One of 

the main barriers to reaching the target is the prevailing attitude in most member states that is still influenced by 

a culture of early retirement. The European Council of Barcelona (spring 2002) adopted two new targets: to raise 

the effective real retirement age in Europe and to provide more pre-school care facilities for children. Both are 

essential for increasing participation in the workforce (of older workers and women in particular). 

1 The Mutual Learning Programme builds on the former Peer Review programme. 

See: http://www.mutual-learning-employment.net 

20 April 2005 Thematic Review Seminar Comprehensive strategies for active ageing 

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SUMMARY 

Active ageing is not an issue that affects older workers in isolation but all members of society and a wide range 

of policy fields. Odile Quintin stressed that to age actively you have to start young! 

Maarten Camps agreed with the points made by Odile Quintin in her opening statement and expressed the wish 

for concrete examples policies to attract and maintain people in the labour market. He argued that the evidence 

suggests that a range of incentives, for employers to maintain older workers in the workforce and for employees 

to remain in work, could be effective and that it was therefore important to discuss and disseminate these. 

3. Thematic Expert Paper 

“Incentives to take up work and remain in work longer” – Jaap de Koning 

The Implications of the ageing process on the labour market 

Jaap de Koning’s paper focused on the implications for the labour market of demographic ageing. He outlined 

the possible impacts of the ageing process on the relative size of the workforce, on participation rates and on 

productivity and innovation. He then looked at the role of incentives to keep older people in work, and at the 

challenges posed by ageing and policy responses to them. 

The impacts of the ageing process on the relative size of the population of working age between now and 2050 

are: a huge increase in the old age dependency ratio (i.e. the number of people over 65 divided by the number 

of people of working age); a rise in the share of the very old (80+); and a decrease in the share of young people. 

The latter may reduce pressure on the dependency ratio in countries with extremely low birth rates (e.g. some of 

the new member states), but accelerate the effects of ageing of the workforce. These impacts will lead to an 

upward pressure on age-related public expenditure, a growth in the share of the active labour force needed for 

care activities, negative effects on macro-economic productivity and higher tax rates (which may, in turn, 

generate a vicious circle reducing incentives to work and thereby pushing tax rates up even higher). 

Currently the participation rates of 50-65 year-olds in the workforce are low (57.7% EU average in 2002). If one 

assumes that the current low labour market participation of this age category continues, the impacts of 

demographic ageing would be a drop of 10% in overall participation rates between 2000 and 2050 2 . The effect 

would be particularly acute for the countries of Central Europe. However, it is likely that the share of 50-65 yearolds 

in working age population will increase although the all-age participation rate will decline. Thus the overall 

impact of demographic ageing on participation rates will have a negative effect on the size of the labour force, 

and the level of employment, as well as macro-economic output and income. 

In terms of the impact of ageing on innovation and productivity, the existing evidence suggests that an older 

workforce has negative effects on productivity and on innovation and productivity growth. However, the 

observed patterns may not be inevitable. Learning capacity stays intact if people continue to learn, older workers 

perform equally well as younger workers in certain fields (which is an argument in favour of job mobility), and 

mobility and training throughout one's life positively affect performance later in life. 

Policy to date 

Incentives for employers to employ older workers are insufficient. The productivity-wage ratio is seen as 

unfavourable for these groups. Both younger and older workers appear to cost more than they produce whereas 

middle-aged workers produce more than they cost. Although there may be an 'implicit deal' between employers 

and employees regarding productivity-wage ratios over time, employers are unlikely to respect this if the 

government offers the option of using social benefit schemes as exit routes for older workers. In addition, older 

2 Burniaux, Duval and Jamotte (2004) 


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SUMMARY 

workers may be less adaptable and less able to cope with organisational and technological change. The high 

separation costs of older workers discourage employers from hiring them in the first place. Training older 

workers is often not very attractive for employers because the pay-off period is typically shorter than with 

younger workers. Even though it can be argued that older workers may be less likely to quit than their younger 

(upwardly mobile) colleagues, employers may still be wary of investing in them. There is also a common belief 

among employers that older workers get sick more frequently than younger ones. The behaviour of employers 

is, it can be argued, partly based on bias. 

The incentives for older employees to stay in employment are also insufficient. Early retirement was encouraged 

for many years in Europe in an attempt to reduce unemployment and provide jobs for the young. Jaap de Koning 

argued that such a policy was based on false assumptions (the so-called 'lump of labour fallacy') since it did not 

take into account that a reduction in supply can itself lead to a reduction in demand. Many countries, e.g. the 

Netherlands, developed early retirement schemes which made it possible for workers to retire between the ages 

of 55 and 60 with a relatively small decline in net income. The fact that, at this age, children have usually left 

home and mortgages are paid means that employees faced with this choice would often opt for leisure. 

Older workers have, in the past, tended to have relatively easy access to disability and unemployment benefits. 

These were also used as unofficial 'exit routes' by employers. Many EU member states (e.g. the Netherlands 

and the UK) have, in recent years, introduced stricter checks on people claiming disability benefits and have 

made it more difficult for people to remain on unemployment benefits until retirement without actively looking for 

work. The incentive to remain in employment or to look for work is thus heightened. 

Older employees often have the same negative attitude towards training as their employers, and may also 

believe that the individual pay-off period is too short to get positive returns from investment in training. 

Policy response 

The above analysis leads to the conclusion that the ageing process poses considerable challenges to society 

and that new policy measures are needed to ensure the future stability of per capita income growth. Jaap de 

Koning suggested that such policies should focus on two main objectives: 

– to increase labour force participation, in order to compensate for the expected decline in the labour force, and 

– to increase labour productivity and productivity growth. 

The fact that some countries (e.g. Sweden) have high rates of employment among older workers suggests that 

policy measures can make a difference. What might these be? 

Incentives to older workers to stay in work for longer. These may include the following measures: 

– Blocking the road to unofficial early retirement through social security benefits (disability and unemployment 

benefits) 

– Stimulating investment in human capital (training), in particular targeting individuals (e.g. through 

initiatives such as individual learning accounts and learning vouchers) 

– Making benefit entitlements and levels dependent on previous investment in human capital 

Incentives to employers. These may include: 

– 'Experience-rating' in social security schemes, under which in the contributions paid by employers 

increase according to the number of older workers they lay off 

– Reducing separation costs in combination with tax bonuses for employers who hire older workers 

– Subsidising wage costs or reducing social contributions/taxes 

– Increasing government support for training and mobility 

Other measures to encourage the participation of older workers in the labour force, include: 

– Active labour market policies raising the pension age 

– Making early retirement financially less attractive and making work pay 


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– Adjusting pension systems to discourage early retirement 

– Initiatives by the social partners 

Conclusions 

Jaap de Koning concluded that population ageing will almost certainly entail economic problems. Since many of 

the effects mentioned above will depend on the behavioural reactions of employers and workers, it is difficult to 

predict the extent of these problems. He reiterated the need for reducing incentives to early retirement and 

raising the incentives to remain in work or return to work among the 50-65 year-olds. He emphasised the need 

to complement incentives to employees with incentives to employers to take on or keep on older workers. He 

pointed out that empirical evaluations show that active labour market measures can also be very effective for 

this age group. Finally, he stated that further research was needed into the interaction between measures and 

their unintended side-effects. 

4. Country examples – the United Kingdom and the Netherlands 

The country examples of the United Kingdom and the Netherlands had the specific aim of complementing the 

introductory paper by Jaap de Koning. The UK example focused on the British strategy of extending working life 

and the Dutch example concentrated on policies in the Netherlands aimed at improving the financial incentives 

for workers to retire later and for employers to retain older workers. 

4.1 The United Kingdom 

The UK strategy for extending working life was presented by James Elder from the Department for Work and 

Pensions. Of the 8.8 million people aged between 50 and state pension age 3 , 70.7% are in employment (a high 

rate compared with the European average), 2.1% are unemployed, and 27.2% are inactive. 1.7million of this 

group are claiming benefits. A relatively high proportion of those people over 50 in employment are selfemployed. 

The evidence suggests that, in Britain, the decision to retire is largely a financial one and one taken 

at a household level with couples typically wanting to retire at the same time. There are marked regional 

differences in the employment rates of older people between, with the regions traditionally dominated by heavy 

industry (e.g. the North-East) have the lowest employment rates for people aged 50-plus , and the South-East 

and the South-West the highest. James Elder posed the question of why older people have lower than average 

employment rates, and argued that like most countries in the EU, the UK had, until recently, a culture of early 

retirement, which has only recently begun to be eroded. It is also no longer attractive for companies to 

restructure using early retirement as a tool and it is more difficult for workers to claim sickness and incapacity 

benefits. Age discrimination is still prevalent and endemic, however, and was described as 'the last sociallytolerated 

form of discrimination' in the UK. The caring roles of older workers (e.g. for ageing parents) should also 

not be underestimated as a factor contributing to their lower employment rates. 

Research shows that the reasons older people tend to give for early labour market exit are ill-health (46%), 

redundancy (16%) and to spend time with partner or family (11%). A high proportion do not leave the labour 

market through their own wishes, however, and 60% are involuntarily out of work. 

The reasons older people give for not seeking work are mainly health reasons (50%), because they regard 

themselves as retired or because financially they do not need to work (22%), care duties (12%) and inability to 

find a job (2%). 

3 i.e. 50-64 for men and 50-59 for women. 


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SUMMARY 

Qualifications are a decisive influence on the labour market participation of older workers, with better educated 

people having higher rates of employment at all ages. Levels of education are gradually changing, with 

significantly more people from 50 to state pension age with qualifications nowadays than in the early 1990s. 

Older workers are, however, still less likely to be offered training by their employers and less likely to take the 

opportunity to train. Despite this, there is evidence to suggest that the skills and experience of older workers 

makes up for their relative lack of qualifications. 

Given the above picture, what is the rationale for UK government involvement? Firstly, the government is 

interested because of economic contribution effects. Secondly, it is interested because of its role in pension 

provision, and thirdly because of its policy agenda of 'equality and opportunity for all'. 

The government response has been to introduce the target of raising the employment rate of the 50-69-yearolds. 

This will be achieved through a number of measures including: the New Deal 50-plus, a tailored active 

labour market policy for over-50-year-olds involving advice, back-to-work support and financial support for inwork 

skills training; and the ‘Pathways to Work’ programme, a pilot scheme to get people on incapacity benefits 

back to work involving health and rehabilitation methods as well as advice and financial incentives. Further 

initiatives include ‘Age Positive’ and the ‘Employer Guidance Campaign’, campaigns which promote age 

diversity in the workplace and encourage employers to hire and keep on older workers. The government has 

also increased the options for deferring state pensions and has raised the minimum age for drawing a private 

pension to 55, and put forward proposals to raise the public sector pension age to 65. It has also introduced the 

possibility of drawing a pension and continuing to work (e.g. part-time) for the same employer. 

In the field of skills, the government has developed a number of initiatives which, while not specifically targeted 

at older workers, will also be of benefit to many older workers. These include, the New Deal for Skills, the 

Employer Training Pilots (with financial support to SMEs who release their workers for training), the Trade Union 

Learning Fund, and the establishment of a range of sectoral, regional and local bodes whose responsibilities 

include the addressing of demographic change and skills needs. In conclusion, James Elder outlined the UK 

strategy for the future. In particular, there is a five-year plan which includes the target of an 80% all-age 

employment rate, which implies an extra million over-50s in work. The plan includes help for those out of work 

and support for retaining workers. 

4.2. The Netherlands 

Aart Jan Bette from the Dutch Ministry of Social Affairs and Employment started his intervention with a brief 

description of the development of the labour participation of older workers in the Netherlands, and the 

determinants of early retirement. He portrayed the institutional factors influencing the behaviours of employers 

and employees, and the recent financial policies that have been introduced to encourage the increased 

participation of older workers in the labour market. 

The participation rate of older workers in the Netherlands has increased steadily from 31.2% in 1999 to 39.8% in 

2004 (based on the Dutch definition, which counts only jobs of at least 12 hours a week. Using the EU definition 

(which counts all jobs), then a participation rate of 45% can be expected by 2007. The reasons for this rise are 

twofold: the first is demographic (among 55-64 year-olds, the share of relatively active persons in the age group 

55-59 has been rising) and the second is behavioural (an overall trend to retire later). 

The behaviour of employees and employers regarding early retirement is partly determined by institutional 

factors and incentives to retire. Employees will weigh up the gains in terms of leisure compared to the relative 

decline in income, and employers will weigh up the cost of separation in relation to the investments needed to 

retain workers and the differences between productivity and pay. The policy challenge is to redesign institutional 

arrangements so as to internalise the costs for society of individual decisions on early retirement. 

In the Netherlands, policy measures have been introduced in the areas covering the three main exit routes for 

older workers from the labour market: early retirement and pre-pension schemes, unemployment benefit 


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SUMMARY 

schemes, and disability benefit schemes. In November 2004, the government and social partners reached an 

agreement on reforms of early retirement schemes and disability benefit schemes. Changes are also expected 

in unemployment benefit schemes, pending the advice of the Dutch Social Economic Council. 

Early retirement and pre-pension schemes 

In the Netherlands, two broad types of early retirement scheme exist: voluntary early retirement schemes (VUT) 

and pre-pension schemes. VUT schemes were popular in the 1980s as a means to allow older workers to retire 

to make room for younger workers. They were financed on a pay-as-you-go basis and were therefore an 

expensive burden on workers remaining in the labour market. In most cases they presented no incentives to 

work longer since the benefit levels were largely independent of the number of years of contributions made. In 

addition, VUT schemes benefited from a favourable tax treatment. 

In the second half of the 1990s, the VUT schemes were gradually transformed into more actuarially fair prepension 

schemes on a funded basis. Early retirement was thereby no longer made so attractive in comparison to 

working longer, but contributions under the transformed schemes still benefited from a favourable tax treatment. 

In November 2004, however, the government reached an agreement with the social partners that the favourable 

tax treatment of collective early retirement schemes will end. Under the new system a distinction is made 

between the taxation of the funded pre-pension schemes and that of the pay-as-you-go VUT schemes. The 

entitlements under the funded pre-pensions are covered by the capital saved in the fund. Contributions are no 

longer tax-deductible and the capital in the fund is taxed under existing rules for wealth tax. The introduction of 

the new rules has been softened by transition periods (up to 2011) and exempted groups (over 55 year-olds). It 

is also still possible to retire early under the regular old age pensions schemes, on condition of actuarial 

fairness. A further option is the new 'individual life course saving scheme'. This scheme can be used to take time 

off for family obligations or for early retirement. It differs from current early retirement schemes in that it is 

individually-based (rather than collective) and fully-funded. 

Disability benefit scheme 

The second, and perhaps the most used, route for early retirement is the disability benefit scheme. 

In 2005, legislation for a new system of occupational disability schemes will be finalised and should come into 

effect on 1 st January 2006. The new system gives more responsibility to the employer and to the employee 

during the first two years of illness. The employer has to continue to pay wages for two years, and occupational 

disability benefit is granted only to those considered permanently unfit for work. For people who are considered 

partially unfit for work, benefits are dependent on them using their remaining capacity to work to their full ability. 

Despite the stricter regulations and restrictions, benefits will remain high for those who are considered unfit for 

work. 

Unemployment benefit scheme 

The third exit route for older workers is unemployment benefits. These are relatively generous and long in 

duration in the Netherlands (equal to 70% of last wage, and paid for up to a maximum of five years). Until 

recently, the unemployed could benefit from a follow-up benefit after the expiration of the unemployment benefit. 

This was set at 70% of the minimum wage and workers over 57.5 years of age were entitled to this benefit until 

retirement age. Unemployed people over 57.5 years of age were also not obliged to continue to look for work. In 

effect, the scheme provided a route to early retirement for workers over 57.5 years old. The follow-up benefit 

was abolished in August 2003. The obligation to look for work was re-introduced in January 2004. Further 

reforms are pending the advice of the Social Economic Council in April 2005. 

In his conclusion, Aart Jan Bette emphasised the role of the social partners in the process of reforming the 

benefit systems to discourage early retirement. The impact of legislation on behaviour is largely dependent on 

the negotiations between employers and employees. A further policy lesson from the Dutch example is that a 


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SUMMARY 

holistic approach to policy reform is needed to prevent a substitution effect of one exit route for another. Finally, 

the reduction of financial incentives to early retirement is a key element in the efforts to encourage participation, 

but it should be emphasised that they are not the only incentives that can be effective. 

5. Thematic Expert paper 

“Strategies to promote employability of older workers” – Philip Taylor 

In his paper, Philip Taylor considered the issues of extending working lives and of promoting age equality in the 

labour market. He first described the history of older workers and the labour market, then the imperative for 

change, posed by labour shortages and the potential unsustainability of pension systems, concluding with an 

overview of possible solutions in the form of new policies for older workers. 

History 

Regarding the history of older workers and the labour market Philip Taylor emphasised the collusion between 

government, social partners and older workers on early retirement. There has been widespread utilisation of 

other exit routes, e.g. disability benefits and unemployment benefits. He also remarked on the endemic ageism 

in the labour market, although individual employers often have a very positive attitude towards older workers. 

He also emphasised that the decline in the labour force participation of older workers has been long-term. The 

following table shows how the rates have changed in the EU-15 and in the USA and Japan. 

Labour force participation rates among people aged 55-64 

Men 

Women 

1979 1983 1990 1995 2000 2003 1979 1983 1990 1995 2000 2003 

Austria - - - 42.6 44.5 42.3 - - - 18.8 18.9 20.0 

Belgium - 50.6 35.4 35.9 36.3 39.4 - 12.3 9.9 13.3 15.8 18.0 

Denmark - 67.2 69.2 67.9 64.5 70.8 - 41.7 45.8 40.1 48.2 55.2 

Finland 56.3 54.1 47.1 41.6 48.1 55.8 41.3 47.4 40.8 42.9 45.2 52.4 

France 69.9 53.6 45.8 41.5 41.6 - 39.0 32.7 31.1 30.9 32.9 - 

Germany 66.9 63.1 58.3 52.7 55.2 52.0 28.4 26.3 27.5 28.1 34.1 34.3 

Greece - 70.8 59.5 61.1 57.3 60.7 - 25.7 24.3 24.5 25.5 26.8 

Ireland 77.9 78.0 65.1 63.9 64.7 66.5 20.1 20.2 19.9 21.2 27.8 34.1 

Italy 37.6 36.8 51.7 44.1 42.2 44.4 10.5 10.5 15.0 13.8 15.9 19.3 

Luxembourg - 37.8 43.2 35.1 38.6 - - 14.7 13.8 13.3 16.8 - 

Netherlands 65.3 54.2 45.7 41.4 50.8 58.7 14.4 14.4 16.7 18.6 26.4 32.9 

Portugal 75.6 70.4 66.5 60.7 65.0 64.7 32.4 33.7 32.3 34.3 43.4 43.5 

Spain 77.6 71.5 62.4 54.9 60.3 62.9 21.9 20.3 19.5 19.9 22.7 25.8 

Sweden 79.2 77.0 75.3 70.4 72.8 75.5 54.5 59.7 65.8 63.4 65.9 69.5 

UK - 71.5 68.1 62.4 63.3 67.9 - - 38.7 40.8 42.6 47.3 

EU - - 56.6 51.5 53.0 56.4 - - 26.5 27.0 31.0 33.7 

Japan 85.2 84.7 83.3 84.8 84.1 83.0 45.4 46.1 47.2 48.5 49.7 49.3 

USA 72.8 69.4 67.8 66.0 67.3 68.7 41.7 41.5 45.2 49.2 51.8 56.6 

Source: OECD Employment Outlook (various) 


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SUMMARY 

The imperative 

There are increasing concerns in the EU over the effects of population ageing, and the sustainability of pension 

systems and labour supply. Population ageing may result in a slowing of labour force growth, increased 

dependency rates and a 'greying' of the labour force. The policy response has so far concentrated mainly on the 

reform of retirement income systems, with a move away from early retirement schemes towards flexible forms of 

retirement. Governments are emphasising the importance of having a mixed-age labour force but are making 

few policy efforts in the direction of active ageing. The emphasis has been more on removing incentives to retire 

early rather than on encouraging people to remain in work for longer. There are still conflicting policies in some 

countries (e.g. in the Netherlands where the initiative for longer working lives was undermined by a senior 

minister calling for early retirement from the civil service), but others have managed to introduce integrated 

policy packages, e.g. Finland and the UK. 

In particular, Finland’s Programme on Ageing Workers is an integrated programme which brought together 

different ministries and the social partners to initiate a wide range of measures, e.g. awareness-raising, business 

support, flexible retirement arrangements, support to health professionals, support for older workers themselves, 

and legislative and pension reforms 4 . 

The UK established a Ministerial Group for Older People to co-ordinate work across government departments, 

but despite some progress in joining up policy, more needs to be done to co-ordinate policies in some areas. 

Policy solutions 

Philip Taylor went on to outline a number of public policies and collective agreements at EU level. The EU Equal 

Treatment Directive has been implemented in a rather piecemeal fashion. Some countries already had 

legislation outlawing age discrimination before the Directive was introduced, e.g. Finland and, outside the EU, 

the USA, some Australian states, Canada and Japan. Elsewhere, older workers have specific protection against 

dismissal fixed in collective agreements though not all workers are covered, e.g. Germany. There is limited 

evidence to date on the impact of legislation. However, legislation appears to have largely eliminated overt 

discrimination, although research results point to modest effects on employment rates. 

Awareness raising 

One of the main challenges in encouraging the participation of older workers in the labour market is changing 

attitudes. Awareness-raising and business support has been introduced with some success in the UK, Germany, 

Denmark, Finland and the Netherlands. The UK has a Code of Practice on Age Diversity for employers and the 

Age Positive campaign. The Danish government has sponsored seminars on age and employment for business. 

The Finnish Programme on Ageing Workers contained free support to small firms and the Netherlands has 

campaigning bodies – the National Office Against Age Discrimination and the Taskforce on Ageing Workers – 

working in the field of awareness-raising. Evidence suggests that the results of such campaigns are positive but 

modest. 

Active labour market policy 

Active labour market policies targeting older workers are beginning to emerge. In the UK, the New Deal 50 Plus 

was introduced in 2000 for those out of work for six months or more. Participation in the programme is voluntary 

and open to those on any kind of benefit as well as to those who are registered unemployed. It offers practical 

help from a personal adviser regarding job search skills, travel costs for interviews, work trials, and an in-work 

training grant. 

4 The Finish Programme on Ageing Workers has been the subject of two Peer Reviews. The Summaries of the Reviews and 

the expert papers can be found on the MLP website under http://www.mutual-learning-employment.net 


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SUMMARY 

Lifelong learning 

Lifelong learning is a further factor in raising participation in the labour market. France has an inter-sectoral 

agreement between the social partners concerning lifelong learning. Employees with 20 years’ work experience 

and all employees over 45 are eligible for a skills audit after having been with their employer for 12 months. 

They are given prioritised access to the recognition of their work experience. After two years, they are eligible for 

a careers guidance interview within their company. They get a ‘Training Passport’ which remains in their 

possession. The agreement also establishes a 20 hour annual training entitlement with no age limit, and 

employees who lose their jobs can keep their unused credit. The key question is whether such a policy will be 

effective in a strong exit culture such as that found in France. 

Framing policy 

Philip Taylor stressed that policy needs to be integrated and strategic. Ageism is not just a matter of individual 

prejudice; it is institutionalised in the labour market and other social and economic systems. Active ageing is 

also more than just about work. What is needed is ‘joined-up policy-making’ – to coin a British phrase – in which 

different strands of government are drawn together. It would also appear that a more holistic, life-course 

approach to active ageing is the way forward rather than an age-specific approach. A preventative approach is 

also better than a remedial one although, given the current situation, the latter is now also necessary. Localised, 

bottom-up initiatives should also be encouraged, e.g. outreach and community work. Firms need tailored 

solutions, and sector bodies and trade unions should be encouraged to come up with such initiatives. 

In conclusion, Philip Taylor warned that closing doors to early exit may result in some older workers being forced 

into low status and insecure employment, while others with remote job prospects may be denied a dignified exit 

from the labour market. 

6. Country examples – Germany and Sweden 

The country examples from Germany and Sweden provided concrete examples of strategies to promote the 

employability of older workers. 

6.1. Germany 

Peter Jülicher from the Federal Ministry of Economy and Labour in Germany first described the situation in 

Germany, which has an employment rate for older workers which is still below the EU average (Germany 39.5% 

and EU 40.2% in 2003) in spite of an upward trend in recent years. In the year 2004, a rise of 2% in the 

employment rate was registered. The aim in Germany is to raise employment rates to 50%, in line with the 

European Employment Strategy target. A further aim is to raise the average effective age of exit from the labour 

market by five years. 

The strategy in Germany is to reduce the incentives to retire early (e.g. by reforming the retirement system, by 

introducing a 'stick and carrot' system, by reducing the duration of unemployment benefits from 32 to 18 months 

from 2006); to develop active labour market policy for the integration of older workers and to raise awareness. 

The German Federal Government in co-operation with the Länder, the social insurance institutions and the 

social partners introduced an awareness-raising initiative, INQA (Initiative Neue Qualität der Arbeit), with the aim 

of promoting a 'new quality of work' for older workers, which is seen as having the following ingredients: 

– flexible working conditions 

– lifelong learning 


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SUMMARY 

– health protection 

– improvement of workplaces 

– ensuring the employability of older workers 

In an effort to change attitudes from a 'deficit model' to a 'competence model' of older workers, the INQA offers a 

very broad range of activities for companies and individuals. To ensure the employability of older workers it 

introduced the initiative '30, 40, 50 plus – healthy work into old age' which collects and disseminates good 

practice on enhancing the employability of older workers, promotes networking between numerous institutions 

with projects and activities on demographic change, and advises SMEs on the management of demographic 

change within the company. The campaign has reached approximately 30,000 companies to date including Ford 

Cologne and Rowenta. 

A range of active labour market policy measures has also been introduced in Germany. These include 

vocational training for older workers in SMEs, job rotation, recruitment subsidies for older workers, and wage 

safeguards for older workers. The take-up of these initiatives was seen as somewhat disappointing with only 

80,000 older workers participating. The government’s aim is to encourage more companies to take up these 

measures. 

In conclusion, Peter Jülicher argued that a lot had been done but that no fundamental change of attitude had yet 

taken place. In March 2005, in a continuation of the 'Agenda 2010' initiative, the Federal Chancellor announced 

the introduction of employment pacts for older workers. Negotiations will start with employers in April regarding 

the better use of labour market policy instruments for the reintegration of older workers. The possibility of 

creating 50,000 additional jobs is being discussed with the Länder, and a competition for good practices in active 

ageing at regional level is to be launched. 

6.2. Sweden 

Carina Cronsoie from the Ministry of Industry, Employment and Communications described the labour market 

situation of older workers in Sweden before outlining the policies in place to promote the labour force 

participation of older workers. 

The situation of older workers on the labour market 

The employment rate of older workers, in particular that of women, is still very high by international standards 

(68.6% overall, 66.3% for women, 70.8% for men in 2004). The high percentage of older people in employment 

is partly due to a cohort effect: baby-boomers who joined the labour force in the 1960s have stayed in 

employment. It is also due to the rising levels of education of the new generation of older workers (due to better 

initial education and lifelong learning), and is reinforced by labour legislation which stipulates 'last in, first out' 

which mostly benefits older employees. The latter can, however, lead to reduced mobility since workers are 

reluctant to leave secure jobs even if they are no longer really suitable. Job mobility is recognised as giving 

people opportunities to develop new skills and improve their employability. A further explanation for the high 

levels of employment in Sweden is the long history of commitment to the work and skills principle, alongside 

active labour market policies targeted at older workers. Employment in Swedish labour market policy has always 

taken precedence over labour market programmes or the passive payment of benefits. Other relevant features 

of the Swedish institutional landscape are an individualised tax system that makes work pay, also for older 

women, and well-developed public care systems for children and old people. 


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SUMMARY 

Policy response 

In spite of a very positive track record, Sweden is actively promoting an active ageing policy which concentrates 

on promoting employability and health in the workplace. A relatively high percentage of people who exit the 

labour market early do so for health reasons, and their main source of income after leaving the workforce is 

sickness or disability benefit. There is also a trend toward longer sick leaves with a correlated rise in the 

likelihood of exiting the labour market early if nothing is done to adapt the workplace or the activity to the 

changing needs of older workers. 

Changes have been introduced in recent years to the social security system to discourage early retirement by 

promoting active labour market policy and work-related rehabilitation. 

Pension system 

The nature of the pension system is a major factor in the decision of older workers to remain in the workforce. 

Sweden’s new pension system will no longer limit the period during which contributions can be made. The 

earliest retirement age will be set at 61 and there will be no upper limit. The compulsory retirement age was 

already raised from 65 to 67 in 2001. It will also be possible to combine drawing a pension and working parttime, 

thus postponing the final retirement age. A special commission has been assigned the task of drawing up a 

proposal for legislation on this issue by December 2005. 

'Career transition agreements' are a further initiative deserving a mention here. These were developed by 

employer organisations and the trade unions and can be seen as complementing and assisting labour market 

policy. They provide active support for redundant workers in the form of collective agreements whose purpose is 

to help such workers find new jobs. They include various transition measures, from job-seeking advice and 

counselling to employment training and support for people to set up their own business. Evaluations have shown 

the career transition agreements to have positive effects: the risk of unemployment is reduced and most 

employees find a new job in a relatively short space of time. 

Labour market policy 

The unemployment rate among older workers is still below average in Sweden and falling. However, older 

workers who lose their job find it difficult to find another one. Approximately 50% of the long-term unemployed 

are over the age of 55. As in other countries, this is still a major problem in Sweden and although there are no 

specific measures for older workers in Sweden, the matter is given special attention in the framework of active 

labour market policy. 

In this context, one useful tool is the Activity Guarantee. This is a full-time programme for the long-term 

unemployed which is intended to break the vicious cycle between labour market programmes and 

unemployment benefit by providing a stable and sustainable full-time activity until participants can find a job. It 

involves the formulation of an individual action plan and can include all the traditional labour market measures 

such as training, rehabilitation and work experience. An important feature of the Activity Guarantee programme 

is co-operation between the business community, the municipalities, state employers and the trade unions. Also 

worth mentioning is 'Forum 50 plus', a non governmental organisation which runs a project for unemployed 

people over 50 in co-operation with the public employment service and the social partners. 

Carina Cronsioe concluded by emphasising the responsibility of government to carry out research into older 

workers in the labour market, and to ensure that Sweden’s policies and labour market continue to be inclusive 

and open to people of all ages. Age diversity and inter-generational management will become increasingly 

important in future to avoid conflicts between older and younger workers. 


11

SUMMARY 

7. Panel Discussion 

The final session of the Thematic Review seminar was devoted to a panel discussion of key issues from the 

seminar with representatives from UNICE, ETUC and the OECD. Józef Niemiec, Confederal Secretary of the 

European Trade Union Confederation (ETUC) opened the discussion by briefly outlining the position of the 

ETUC on the issues raised during the meeting so far. The first was the issue of quality of work and flexibility. It 

was important to maintain high quality jobs while encouraging flexibility in the workforce. He emphasised 

regional differences regarding the situation of older workers in the labour market, and regarding policy 

approaches. Even within one country, approaches could vary widely between regions. From the point of view of 

the trade unions, lifelong learning was seen as a key factor contributing to employability and should be started 

young. Health was also an issue which should not be reserved for older workers. The ETUC is in favour of an 

inter-generational approach which avoids segmentation and discrimination. Józef Niemiec pointed out that those 

member states which had managed to raise the employment rates of older workers also had relatively high rates 

of youth and female employment. He argued that there was too much concentration on financial questions and 

not enough on fiscal issues. The fiscal system puts companies with a large workforce at a disadvantage. While it 

was important to reform pension systems, the pre-pension schemes should not be completely discarded in 

certain specific cases. Józef Niemiec was of the opinion that raising the retirement age was not yet an issue. 

Rather, he argued that it was more important to get those under retirement age but inactive back into the labour 

force. On the use of disincentives to early retirement, reductions in the duration of unemployment benefits or the 

practice of adapting salaries to performance and productivity, he remarked that these were not very positive for 

older workers. A further social dialogue on these themes was essential, in his view. 

Thérèse de Liederkerke from UNICE (Union des Industries de la Communauté Européenne) began her 

statement with a reminder that although it is right to take a European perspective on the issue of active ageing, it 

is important not to forget that Europe and its workers are heterogeneous. She posed the question of whether it 

made sense to think in terms of older workers as one group, and argued that their situation in the labour market 

was influenced by their initial education, training, careers and policy. Regarding anti-discrimination legislation, 

she argued that it would often be irrational for employers to employ an older person given the legal framework 

and that anti-discrimination legislation was not the answer. However, the current European Employment 

Strategy appears to be going in the right direction, in particular the emphasis on a preventive, lifecycle approach. 

She argued in favour of moving towards performance models of pay – which would not, of course, necessarily 

benefit older workers in terms of remuneration, but may make them more employable. She also argued in favour 

of reforming social security systems to avoid pre-pension traps. Finally, she raised the care issue e.g. of ageing 

parents (in-law) which keeps older women out of the labour market. She argued that men also have parents and 

that caring for them should also be their concern. 

Martin Kees, head of the older workers team at the OECD provided some insight into the work of the OECD into 

ageing. A study is being carried out involving 21 OECD countries. It shows that while pension reforms will 

influence early retirement, they are not the only factor. Older workers face barriers to employment which must 

also be dealt with. He emphasised the need for a comprehensive approach, tackling barriers to employment at 

macro- and micro-economic levels. Policies need to be put in place that encourage growth and ensure that the 

full potential of the workforce is being used. Policy packages need to be tailored to individual countries, regions 

and people. The OECD recommends a lifecycle approach which concentrates on the two major issues of 

working conditions and lifelong learning. It warns against focusing on the age issue too much and recommends 

focusing on other factors affecting employability. Martin Kees also raised the issue of the side-effects of policies, 

e.g. employment protection. He also appealed to the audience to consider the issue from a more positive angle: 

we have population ageing because we are all living longer! 


12

SUMMARY 

In the ensuing discussion, the question of productivity and age was discussed at some length. In the view of 

some experts, much of the research on age and productivity is flawed, but it was generally agreed that 

productivity does appear to decline with age in some areas of activity and that some sectors of the economy are 

more affected by this than others. Job mobility could be the solution. 

The issue of ‘comprehensive reforms’ was also discussed. The view was expressed that reforms happen 

incrementally and not all at once and it can be, therefore, a little misleading to talk about ‘comprehensive 

reforms’. However, the important thing is that the reforms happen in a logical order which takes account of other 

activities and policies that are being implemented. How different policies are combined in an overall package is 

an important issue (E.g. it is rather pointless to offer training to older workers while still encouraging early 

retirement.). 

The question was also raised of what to do with unemployed workers over 60 who had very few job prospects. 

In this context it was argued that programmes to encourage economic growth are required on the one hand and 

active labour market measures on the other, to re-integrate people of all ages, and it would set a negative 

precedent to 'give up on people' on account of their age. 

A further issue for debate was the question of age discrimination legislation was also discussed, and the UNICE 

representative argued that, while it is discriminating to stipulate a specific age in a job advertisement, employers 

should have the right to ask for the kind of person and levels of experience they need. Legislation will not 

change this situation. 

The question was also posed of what we can learn from the USA which is often presented as a good practice 

example when it comes to active ageing or at least to high employment rates among older workers. Martin Kees 

from the OECD mentioned the flexible retirement system and the positive incentives to keep working in the US 

system – although it is also the case that many older people can quite simply not afford to stop working. There is 

also a cultural difference between the continental European outlook on retirement and the Anglo-Saxon 

approach. The USA, for example, never promoted a culture of early retirement and people want to and expect to 

retire much later in the USA than in Europe. 

8. Conclusions 

Antonis Kastrissianakis from the European Commission closed the meeting. He concluded that the importance 

of the issue of active ageing based on a life cycle perspective is reflected in the integrated guidelines of the 

renewed Lisbon Strategy. The EU risks losing 20 million jobs on account of demographic change and this will 

pose a major problem to the European economy. The Lisbon target is to reach an employment rate of 50 per 

cent for older workers (by 2010) which means, in turn, creating 7 million jobs for older people. A further aim is to 

raise the average age of exit from the labour market by five years. This needs a comprehensive strategy 

including making work pay, better working conditions, updating skills and making better use of active labour 

market policy measures for older workers. 


13

Comprehensive strategies for active ageing - mutual learning ...

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