TOWARDS ACTIVE AGEING IN

THE EUROPEAN UNION

Alan Walker
Professor of Social Policy
University of Sheffield
UK

Contents
1 Introduction............................................................................................................. 1
2 Workforce Ageing.................................................................................................. 2
3 The Age/Employment Paradox .............................................................................. 3
4 Social Protection Costs........................................................................................... 6
5 Supporting Change at Plant Lavel.......................................................................... 8
6 The Role of The European Union .......................................................................... 9
7 The Importance of Public Policy.......................................................................... 11
8 Age Discrimination: The Main Barrier to Active Ageing.................................... 13
9 The Recent Progress of Policies on Active Ageing in The EU............................ 16
10 A Strategy for Active Ageing............................................................................... 20
11 Conclusions ........................................................................................................... 24
Appendix ................................................................................................................. 25
References ................................................................................................................... 28
Table............................................................................................................................ 31

Prepared for the Millennium Project Workshop - Towards Active Ageing in the 21st Century, The Japan
Institute of Labour, Tokyo 29-30th November, 2001.
 TOWARDS ACTIVE AGEING IN THE EUROPEAN UNION

1. INTRODUCTION

Population ageing will have profound effects on all aspects of society, from the economy to
the labour market, to family relationships. Its combination with other major social and
economic changes, such as globalisation, the changing nature of work, the reconstruction of
the life course, changing family structures and behaviour, migration and so on, imply major
challenges for public policy in all developed countries. So far, however, the main focus of
attention has been given to the sustainability of pension systems, particularly in those
countries with long-established pay-as-you-go (PAYG) financed ones. Sometimes this issue
has been debated in alarmist terms such as the 'rising burden of dependency' or the 'old age
crisis'. Such rhetoric has appeared only rarely in the European Union (EU) and, certainly,
there has been nothing to match the outspoken debate, that took place in the US in the mid-
1980s, on generational equity. The responses of policy makers to the impact of population
ageing on public pension systems, in both the EU and the US, have been relatively modest
adjustments to their pension formulae (usually by extending the contribution years) or the
encouragement of private savings (Walker, 1999). (The radical change of policy in the UK in
the 1980s the switch from public PAYG to private pre-funding was carried out for
ideological reasons and has not been repeated elsewhere in the EU.)

Until very recently then, policy makers in the EU Member States have focussed their
attention mainly on the first three pillars of retirement income (public, private and
occupational). It is surprising how little the fourth pillar, employment, has figured in the
debate about pension system sustainability. What usually happens is that economists make
projections of 'dependency ratios' based on the assumption, ceteris paribus, that existing
conditions, such as the rates of employment among different age groups, remain static.

Now, however, policy makers have begun to emphasise the importance of employment in
later life and, in the EU, the concept of active ageing is beginning to take shape and to be
regarded as a political priority. The main purpose of this paper is to explain why this
emphasis on active ageing is emerging and why it is important. It is not my intention to
duplicate the work of the country reports but to take an EU-wide view and, especially, to
focus on policies and actions at the EU level. I will outline the five main reasons why policy
makers are focussing on active ageing. Then I will argue that, until very recently, the actions
in most of the EU Member States have been rather passive and that more active public
policies are required to create active ageing. Before that can happen, however, age

Walker(EU) 1
discrimination must be overcome because it represents a barrier to active ageing. Section 9
draws examples from the measures taken so far by EU governments to address the question
of gradual retirement and related active ageing policies.

Finally, in section 10, I will argue that a comprehensive age management/active ageing
strategy is required, within organisations, but also at national level in the Member States, if
Europe is to adjust successfully to the ageing of its workforce and remain competitive in
global terms. Thus section 10 addresses the second key question posed by the organisers of
the Millennium Project Workshop: how to deal with the issue of age in the workplace? In
conclusion I will emphasise that, although my focus is primarily on the role of public policy
in promoting active ageing, workforce ageing is a matter for everyone involved with the EU's
labour markets. It is not something that can be left either to the private sector or the public
sector, to individuals or organisations, to trade unions or employers but requires active
responses from all of these key actors.

2. WORKFORCE AGEING

The first reason why policy makers have begun to emphasise active ageing is a recognition of
the fact that population ageing means that the workforce is ageing and will continue to do so.
As a result of the continuing decline in fertility, there is an increase in the average age of the
economically active population in all Member States of the EU. Over the next 10 years alone
the age structure of the population of working age will change significantly: the numbers of
young people (15-19) will decline by over one million (-5 per cent) and those aged 20-29 will
fall by nine million (-17 per cent), while the numbers aged 50-59 will grow by 5.5 million
(+12 per cent) and the 60-64 age group will grow by one million. These changes mean that
there will be more older workers (Table 1) and a decline in the population of working age
(Table 2). Along with the increased participation of women in employment this is the most
important change in the composition of the European labour force over the last century.

With very few exceptions the phenomenon of workforce ageing affects, with differences in
timing, all of Europe's regions. The growth index for the 50-64 age group ranges from 105%
to 160% between 1995 and 2015. Regions in Belgium, France, Finland, Ireland and the
Netherlands show the strongest rate of ageing within the population of working age.

Although the USA is 'younger' than the EU, the number of middle-aged and older workers is
also rising. At the same time the younger workforce is growing very slowly. Thus, in both
the EU and US, as the workforce ages organisations will need to employ a greater share of

European Union 2
workers aged 50 and over. Employers will have to find ways to retain older workers and
keep them productive longer, because the supply of young workers is not sufficient to replace
the retiring baby boomers. Therefore a key question for the future is how successfully
employers can adjust to this unprecedented change in the composition of their workforces?
A question that I will return to.

3. THE AGE/EMPLOYMENT PARADOX

Perhaps workforce ageing by itself is not sufficient to reach the top of the policy agenda.
However, the combination of workforce ageing on the one hand with the development of a
European culture of early exit, on the other, has created an imperative for policy action. Thus
it is the age/employment paradox that is a key spur to action: while life expectancy has
increased by around 10 years since the 1950s, the labour force participation of older male
workers (60-64) has dropped from close to 80 per cent to approximately 30 per cent. Now
only just over one-third of 55-64 year olds are economically active. The average employment
rate for this age group in the EU is 37.7 per cent (2000) and this varies from a high of 66.4
per cent in Sweden to less than 30 per cent in Belgium, Luxembourg, Italy, Austria and
France. The average employment rate for this age group of the three leading EU countries
(Sweden, Denmark and the UK) is 65 per cent, which is close to the rates for Japan and the
US. There has been only a modest rise from the 36 per cent rate in 1995 (Graph 1). This
recent increase in participation has been accompanied by more older workers taking part-time
jobs. (However the employment rate among 45-54 year olds in the EU is 73.7 per cent and
this might provide the basis for a higher employment rate for 55-64 year olds a decade from
now.)

Thus the dominant characteristic of the labour market experiences of older workers in the EU
is the steady decline in their employment rates over the last 20 years. The pace of decline
varies considerably between countries, particularly between the north and south of the EU but
the trend is both unmistakable and persistent. It is well known that the main factors behind
this growth in early exit from employment are demand-related and, specifically, recession,
unemployment and redundancy (Walker, 1985; Trinder, 1989; Kohli, Rein, Guillemard and
Van Gunsteren, 1991; Laczko and Phillipson, 1991). Indeed it has been argued that 'early
retirement' or withdrawal from the labour market brought about through an increase in
unemployment is better understood as a form of unemployment rather than retirement (Casey
and Laczko, 1989). These demand-related factors lie behind the so-called 'push' and, to some
extent, 'jump' types of early exit but there are also strong 'pull' factors that have influenced
and sustained this trend (Walker, 1985; Drury, 1993; Trommel and de Vroom, 1994; Taylor

Walker(EU) 3
and Walker, 1994).

Although it is common to delineate 'push', 'pull' and 'jump' explanations for early retirement,
in practice it is difficult to distinguish them and, in fact, in many cases all three elements may
be in operation (Walker, 1985; Kohli and Rein, 1991; Johnson and Falkingham, 1992;
Hansson, 1997). A major survey of early retirement in Denmark - a low exit country - has
demolished the simplistic utilitarian assumptions (incentives and utility maximisation) that
underlie much of the literature and public policy on early retirement (Jensen and Kjeldgaard,
2001). This research found that, on the contrary, a large share of early exit is involuntary and
not the result of free choice. Jensen and Kjeldgaard (2001) distinguish two types of 'push'
factors: poor health caused by working conditions, and a common sense perception among
older employees that they have served their time and can retire which is based on the social
construction of a finite working age. Of course both employers' policies, on working
conditions as well as retirement, and public policy are likely to be important influences on
each of these push factors (Walker, 1985).

If we compare the reasons given by men aged 55-64 for leaving their last job we find
significant differences between Member States. Redundancy is a major factor in four
countries (Denmark, Finland, Sweden and the UK); illness and disability in six countries
(Finland, Germany, Ireland, Luxembourg, Spain and the UK); and early retirement in seven
countries (Austria, Belgium, Denmark, Germany, Luxembourg, the Netherlands and
Sweden). Retirement at pension ages applies to more than one-third of men aged 55-64 in
only France, Greece and Italy and to more than half in only Greece and Italy.

The US also experienced early exit on the same scale as the EU in the 1970s and early 1980s.
Indeed the labour force participation rate of men aged 60-64 began to decline in the 1950s
and among those aged 55-59, it started to decline in the 1960s (Kohli, et al, 1991). During
the 1990s, however, labour demand remained high. Moreover 'bridge jobs', those held
between the end of a long term career job and retirement are more common in the US than
the EU. Some EU policy makers are envious of the high level of job creation in the US. But,
in fact, overall employment rates for the age group 25-54 compares favourably between the
EU and the US. However there are big differences with regard to employment among
younger and older workers. The older age group represents one quarter of the jobs gap
between the US and the EU. In other words, a buoyant labour market, like the sea, raises all
boats. Also the 1967 Age Discrimination in Employment Act has made US employers more
aware of the issue of discrimination than their EU counterparts.

European Union 4
Early Exit as a Goal of Public Policy

In the EU one of the main engines driving early exit over the last 20 years has been public
policies. Early retirement incentives have played an important role in manufacturing the low
employment rate among older workers in the EU - whether financed directly by public
authorities or indirectly, through social insurance support for collective agreements.
Measures such as pre-retirement in Denmark and Germany, disability compensation in the
Netherlands and Sweden and the Job Release Scheme in the UK actively encouraged the
trend towards early labour force exit, sometimes as a means of substituting younger for older
workers. In other words policy makers regarded older workers as a partial solution to
unemployment, particularly mounting youth unemployment but they were wrong, the policy
failed to deliver. (Of course this was one element of a general policy of labour supply
reduction, which also included action to contract the inflow of young labour market recruits.)
Moreover early exit was a solution that was favoured by both employers, who could reduce
the size of their workforces or rejuvenate them with the assistance of public subsidies, and
trade unions, which were able to negotiate early retirement packages for their members, many
of whom were keen to leave the labour force. The national VUT scheme in the Netherlands,
for example, was created by collective agreement.

The late 1970s and early 1980s, therefore, witnessed a high level of consensus between the
social partners backing the policy of early exit. This does not mean that governments
intervened in their national labour markets to the same extent - in fact differences in the level
of such interventions have a bearing on the degree to which employers are now willing to
depart from the policy of early exit - but the widespread acceptance of early exit was
remarkable. Public early retirement schemes were oversubscribed in all European countries
in which they were available. They were not the only reason why older workers jumped out
of employment but they provided a springboard for them to do so.

In the US too public policy supported the early exit process, for example by awarding
favourable tax provision to employers whose pension programmes 'allowed and encouraged'
retirement at the age of 62 and younger. Even individual retirement plans allowed the
withdrawal of funds without tax penalties at the age of 591/2.

Unfortunately the policy of early exit entailed unforeseen consequences and, in retrospect,
may be viewed as a short-term solution to the pressing economic problem of unemployment,
the social and economic costs of which were never discussed openly (Walker, 1982) and
which, as circumstances change rapidly, looks increasingly anachronistic. In the first place

Walker(EU) 5
the growth of early labour force exit has diminished the role of public pension systems as the
key regulators of retirement and, thereby, increased the precariousness and exclusion of many
older people in the labour market (Guillemard, 1993). Thus a whole range of ad hoc
institutional mechanisms and benefits have been added to the social protection systems of the
northern EU states to facilitate the early exit policy and bridge the widening gap between
employment and retirement. However these benefits do not cover all older workers and many
are left with little other than social assistance.

Secondly, the unchecked growth of early exit from employment reinforced the devaluation of
older workers in the labour market. As age thresholds have been lowered to provide exit
routes out of employment this has had significant consequences for those ageing workers left
in the labour market because it is likely to have affected employers' perceptions of the age at
which workers may be considered to be 'too old' an issue I will return to in section 8.

Thirdly, for many companies it meant the loss of experience, skills and know-how. It also
diverted attention from the development of holistic human resource strategies designed to
prevent ageing at work. Also it increased employers' social security contributions in some
countries. The cost consequences of early exit cannot be described as unforeseen but it seems
that the costs were not fully anticipated by either employers or EU governments.

Thus, although they were not the only factor, public policies played a significant role in
creating the age/employment paradox. This suggests that public policy has an equally key
role to play in the promotion of active ageing.

4. SOCIAL PROTECTION COSTS

The main pressures behind the recent changes in policies towards older workers in the
different EU Member States are political and economic and, in particular, the desire to limit
the social security costs associated with early exit and, indeed, with public pensions. This is
the pre-eminent factor in Belgium, France, Greece and Italy and also in Finland and Sweden,
and it is a major factor in all of the other countries in the Age Barriers research which
covered nine Member States (Walker, 1997). Policy makers are well aware that the scale of
early exit in Europe is unsustainable and, especially so from around 2005 when the post-war
baby boom generation will reach 55. However, in each EU country there are specific national
features to the debate and its policy prescriptions. In France, for example, the desire to limit
pension costs has led to government action to both restrict the frequency of early exit, by
offering partial retirement schemes, and to reform the public pension system with the aim of

European Union 6
prolonging working life. In Sweden previously generous exit paths have been narrowed or
closed and firms have been encouraged to take responsibility for counteracting exit from the
labour market. However many Swedish employers have ignored these appeals and early exit
has continued.

The emphasis on the various factors underlying the recent policy shift away from early exit
and, in some cases, towards pro-active policies on age and employment, appears to differ
slightly in three of the nine countries in our recent research - Germany, the Netherlands and
the UK. In Germany two pressures are driving policy - although they do not have equal
weight. On the one hand it is felt that prompt action is required to develop employment
policies and training initiatives in order to pre-empt predicted future labour shortages
resulting from demographic change. On the other hand and much more influential are the
political and economic pressures to reduce pension costs which resulted in the 1992 pension
reform legislation which increased the pension ages. In 1996, the German government
abolished the early pension scheme which enabled men to retire at 60 after at least one year
of unemployment. A part-time employment scheme for older workers has been introduced
instead but experts see little chance for its implementation at company level. Simultaneously,
it has been decided to raise the pensionable age for men from 63 to 65 five years earlier than
was planned in the 1992 pension reform act, and this will come into force now in 2001. The
knock-on effect of this extension of working life is to further increase the need for
employment promotion among older workers. In the cases of the Netherlands and the UK
there is an additional, less important, normative factor behind the new policy orientation.
Following on from the campaigns by women's groups and black and ethnic minority groups it
is increasingly the case that representatives of older people in general, and older workers in
particular, are complaining about age discrimination and demanding equal access to job
opportunities (McEwan, 1992; Drury, 1993).

Thus the key factors that have created a new policy perspective on early exit and age and
employment are the EU and national political and economic pressures to reduce social
security and especially pension costs, pressures which are exacerbated by recession and high
unemployment, current and predicted labour shortages resulting mainly from demographic
change, and the increasing profile of age discrimination in some countries. In some countries
additional factors are important such as the loss of experience and know-how with the
premature departure of older employees (Belgium and France), and the unintended
consequences of early exit and the ageing of the internal labour market (the Netherlands).
Over-emphasis on early retirement schemes in some countries has excused employers from
the responsibility of examining the link between career and age and from the development of

Walker(EU) 7
good practice with regard to ageing workers (Walker, 1997).

Europe lagged behind the US in the timing of the policy shift against early exit. As we have
seen, it came relatively recently to the EU (mainly in the 1990s) but, in the US, as early as
1983 measures were being taken to restrain early exit by, for example, increasing the 'penalty'
for retiring before 65 and increasing incentives to defer retirement (Kohli, et al, 1991).

At the present time policy in the EU Member States and in the US is concentrated on the
third age (50-74) but some policy makers are also well aware of the health and social care
costs of disability in the fourth age costs that will rise substantially with the ageing of the
baby-boom generation unless action is taken. There is a clearly demonstrated link between
health and activity and therefore, policy must also encourage unpaid activity in later life (see
section 10).

5. SUPPORTING CHANGE AT PLANT LEVEL

The focal point for age management and adjustment to workforce ageing must be the
individual organisation, firm or plant. Recent European research has revealed significant
shifts in the attitudes of employers towards older workers. Some employers are reassessing
the consequences of early exit. It is being seen by some as a waste of experience and human
resources and of the investment they have made in the workforce. Others see roles for older
workers in training younger people or in preventing skill shortages. In the pan-European Age
Barriers research we found 160 examples of good practice in the employment of older
workers, ranging from small changes in job recruitment advertisements through to
comprehensive age awareness programmes (Walker and Taylor, 1998). In the UK some
employers have even constructed a positive 'business case' for employing this group. This
'business case' is built upon five points: the return on investment in human capital; the
prevention of skill shortages; maximising recruitment potential; responding to demographic
change; and promoting diversity in the workforce (Walker, 1995, 1997).

Despite these clear and present signs of change, plant-level good practice in the employment
of older workers remains a minority pursuit. Progress is slow and haphazard and often relies
on the existence of a champion within organisations to persistently promote the issue or a
specific initiative. Thus the answer to the critical question posed earlier as to how
successfully firms are adjusting to workforce ageing is: a few in the EU have done so highly
successfully but the majority have yet to face up squarely to the issue. Policy makers in some
EU countries have recognised the need to support and encourage further the change taking

European Union 8
place at plant level.

6. THE ROLE OF THE EUROPEAN UNION

Fifthly it is important to acknowledge that the EU itself has played an important role in
prompting the shift in policy towards active ageing and that this role is increasing in
importance. The issue of workforce ageing and the problem of discrimination against older
workers has moved steadily up the European policy agenda over the past decade. When the
European Observatory on Ageing and Older People was established, in 1990, it identified age
and employment as one of the four key policy areas it would monitor (the others were
incomes and living standards, health and social care, and social integration) (Walker,
Guillemard and Alber, 1991, 1993). Consequently the 1993 European Year of Older People
and Solidarity Between the Generations was partly focused on this issue, with the publication
of the first major report on age discrimination against older workers in the EC (Drury, 1993).
In addition the Eurobarometer survey specially commissioned for the European Year
revealed, for the first time, the widespread public perception of age discrimination (Walker,
1993, p.26). At the end of the European Year older workers were confirmed, in documents
from both the Commission and the Parliament, as a priority area. A long series of research
and policy papers from DGV have repeatedly drawn attention to the importance of workforce
ageing.

In mid-1993 the Commission produced the White Paper, Growth, Competitiveness and
Employment which was approved by the heads of state as a basis for future EU action. The
White Paper set the important strategic goals of a more flexible workforce and more flexible
employment practices in order to meet the challenges of global competition. It provided the
first public EU recognition of the implications of the ageing workforce, although it did not
propose specific actions for older workers. The 1994 White Paper European Social Policy: a
way forward for the Union did not specifically mention older workers but referred to the
economic need for older people to make an active contribution to society.

At the December 1994 European Council meeting in Essen, the Heads of Government and
State confirmed the fight against unemployment as a paramount task of the European Union
and as the central objective of economic policy. The European Council Declaration
highlighted five key areas for action to improve employment, the fifth of which, improving
measures to help groups which are particularly hard hit by unemployment, stated that 'special
attention should be paid to the difficult situation of unemployed women and older
employees'. The French Presidency of the European Council, in June 1995, saw the first

Walker(EU) 9
political declaration at EU level of the need for special actions in this field. The Resolution
on the Employment of Older Workers emphasised two key principles:

the need to redouble efforts to adapt professional training and conditions of work to older
workers' needs;

measures should be taken to prevent the exclusion of older workers from the labour
market and older workers should have sufficient financial resources.

The Resolution proposed specific actions to be taken by national governments and/or the
social partners including raising awareness among employers of the consequences of making
older workers redundant, promoting the reintegration of older unemployed workers and
eliminating possible legislative barriers to the employment of older workers, although these
are not binding on the Member States. The Resolution also called on the European
Commission to promote the exchange of information and good practice concerning the
employment of older workers across the EU (for further information on EU actions on older
workers see Drury, 1995).

The European Councils in 1996 and 1997 emphasised long-term unemployment and youth
unemployment, but the National Action Plans (NAPs), agreed in Amsterdam and the
subsequent Luxembourg Jobs Summit in November 1997, did provide a framework for the
development and assessment of active employment policies although this potential was not
realised with regard to workforce ageing until two years later. The 1997 Amsterdam Treaty
(Article 13) empowered the Commission to propose actions against discrimination and, as a
result, there will be anti-age discrimination in employment legislation by 2006. The
European Council Summit in Cardiff in June 1998 re-emphasised the need to pay special
attention to older workers as part of the priority to develop a skilled and adaptable
workforce, and the importance of tackling discrimination in the labour market. In October
1998 the Vienna Summit also highlighted the issue of workforce ageing.

From the following year the European level policy began to be articulated in terms of 'active
ageing' and to take a broader approach than one simply focussed on older workers and
workforce ageing, although this is still the main focus in the employment field. In 1999 the
European Commission's contribution to the UN Year of Older People gave a considerable
boost to the idea of active ageing and a conference was held dedicated to this issue (European
Commission, 1999a). At the conference employment was only one of four major issues
considered as part of a strategy on active ageing (the others were pensions, health and

European Union 10
citizenship) (Walker, 2002). The 1999 Employment Guidelines included a reference to the
need to encourage older workers to participate actively in working life, and to the importance
of access to lifelong learning opportunities for older workers. The 1999 Finnish Presidency
put this issue at the top of the EU agenda and, therefore, the 2000 Employment Guidelines
included references to ageing workers, as do the 2001 guidelines. The 2000 Employment
Guidelines explicitly used the term 'active ageing':

Each Member State... will review and... refocus its benefit and tax system... to
develop a policy for active ageing, encompassing appropriate measures such as
maintaining working capacity, life-long learning and other flexible working
arrangements, so that older workers are also able to remain and participate actively in
working life.

Workforce ageing was an important issue under the Swedish Presidency of the EU in the
second half of 2000 and the Stockholm Council agreed a target employment rate of 50 per
cent for the 55-64 year age group by 2010. The 2002 Employment Guidelines strengthen the
emphasis on active ageing (see section 9).

7. THE IMPORTANCE OF PUBLIC POLICY

These are the main reasons why active ageing is moving to the top of the EU policy agenda
and why public policy is beginning, albeit inconsistently, to take seriously the issue of
workforce ageing. Future competitiveness in the private sector and efficiency in the public
sector will rest increasingly on the performance and productivity of ageing workforces. As
the Director of the Washington-based Centre for Strategic and International Studies rather
graphically stated the issue at a recent conference in Tokyo:

Most of the developed world will soon enter an era when all economic growth will
derive exclusively from the more efficient use of labour and capital This will mean
casting aside notions and practices developed for an era when unemployment was the
largest source of social crisis. The major social crises of the twenty-first century will
be a by-product of labour shortages. (Hewitt, 2001a)

In the EU the projected employment rate for men aged 50-64 in 2005 is 58.4 per cent, but the
maximum employment rate is 74.8 per cent, which suggests potential unused capacity of over
5.5 million men. For women aged 50-64 the projected rate is 36.6 per cent with a maximum
rate of 79.1 per cent, suggesting unused capacity in the realm of 7.5 women (European
Commission, 1996b) (Graph 3). In other words, a great deal depends on the maintenance of
work ability among ageing workers and their efficient utilisation by employers. Some idea of
the scope (and need) for public policy action can be seen in Table 3 (based on an analysis by

Walker(EU) 11
the OECD). The baseline (a) assumes that age-specific participation rates remain at their
current levels; while the later retirement scenario (b) assumes that the recent trend among
men towards earlier retirement is reversed and that the 1995 pattern of exit gradually moves
back to the 1970 pattern between 2000 and 2030. Just as public policies were required to
encourage early exit so now they are needed to achieve the change in culture necessary to
encourage and enable people to work longer.

Recently there has been a significant shift in official attitudes towards early exit in a majority
of the EU Member States. Most of those with public early retirement schemes or
programmes that facilitate early exit have taken action to curtail or restrict access to them
Austria, Belgium, Finland, France, Germany, Italy , the Netherlands and Spain. This does not
mean that active ageing is an issue that has been high on the policy agenda in all countries,
until very recently that is. For example among the nine Member States represented in the
Age Barriers research we found two broad groups (Walker, 1997). In Belgium, France,
Finland, Germany, the Netherlands and the UK the issue occupied a relatively high political
profile, whereas in the remaining countries (Greece, Italy and Sweden) it appeared to have a
lower priority. Out of the first group the issue of active ageing has a particularly high profile
in France, Finland, Germany, the Netherlands and the UK. In 1993 the British Employment
Minister personally sponsored a major publicity campaign aimed at employers to make them
more aware of the issue of age discrimination and to encourage them to recruit more older
people. This has been stepped-up under the New Labour Government in the form of the Age
Diversity Initiative and the publication of a Code of Practice on Age Diversity. The Dutch
government adopted an even more pro-active stance and established an Age Discrimination
Bureau to highlight this issue. In France there has been an ongoing debate on gradual
retirement and new measures have been introduced recently (see section 9). In Finland there
is the National Programme for Ageing Workers. In Germany the Commission of Enquiry
into Demographic Change set up by the Bundestag (German Federal Parliament) has
emphasised the need to encourage older workers to continue in employment.

Looking to the US there appear to be very few initiatives aimed at extending workability and
maintaining the productivity of older workers. For example, a study of more than 400 firms
found that hardly any have adjusted their training styles to take into account older workers'
different learning requirements (Barth, McNaught and Rizzi, 1993). The US Department of
Labor has sponsored research on good practice in employer-based training but very few
initiatives were focussed on older workers. However there have been some very recent
initiatives in IT training for older workers, such as Green Thumb an employment and
training agency serving residents in rural areas, supported by the Department of Labor and

European Union 12
Microsoft and the National Older Worker Career Centre in Washington DC.

The shortcomings of passive and short-term responses to workforce ageing (a long-term

feature of EU labour markets) are threefold. First, passive policies which centre on social
protection are likely, at best, to confirm age discrimination and, at worst, will encourage it
as was the case throughout the EU in the 1970s and 1980s. Second, if public policy begins
and ends at the closure of the early exit gates and the raising of pension ages (i.e. is a one-
dimensional Exchequer-led policy) it will increase the social and economic exclusion
experienced by older workers. Thus, in most EU countries, there is a lengthening 'limbo
period' between the age at which older workers leave paid employment and their pension age.
For some this is a period of acute poverty, psychological distress and hopelessness. The third
defect of passive, short-term responses to workforce ageing is that they are only remedial and
do not solve or prevent the underlying problem. The key issue is the maintenance of work
ability. Unless the factors which limit work ability are mitigated, as well as combating the
barriers to employment, then it will not be possible for active or productive ageing to be
achieved widely. Therefore a more active approach by public policy is required if active
ageing is to be encouraged.

Until very recently, therefore, the main response to workforce ageing in the EU Member
States has been a rather passive one centreing on the closure of subsidised early exit gates
and, in some, the encouragement of part-time work. Despite the evidence that public policy
can have a significant impact on labour market behaviour for example in the Age Barriers
research we found that changes in public policy were one of three key factors behind the
development of good practice in combating age barriers it is only a minority of Member
States that are being pro-active on this issue. The majority of Member States are being rather
reticent about policies in respect of active ageing and the ageing of the workforce and are
certainly not taking a comprehensive approach to active ageing. Thus, the European
Commission's assessment of the National Action Plans aimed at the implementation of the
2001 Employment Guidelines is rather gloomy:

A comprehensive approach to active ageing is essential for meeting the objectives and
achieving the employment rate target of 50 per cent for 55-64 year olds in the Union
by 2010. Such an approach is absent in the majority of NAPs. Most Member States
tend to see the ageing challenge primarily as a problem of another 'weak' group in the
labour market. (European Commission, 2001a, p.36)

8. AGE DISCRIMINATION: THE MAIN BARRIER TO ACTIVE AGEING

Walker(EU) 13
Before turning to consider the latest policy developments in the EU and how active ageing
may be promoted it is important to recognise that age discrimination is a major barrier to
active ageing. Thus, despite the obvious shift in the Member States' policies away from early
exit the reality of the labour market experience of large numbers of older workers in most EU
countries is still exclusion from employment. In most countries older workers tend to occupy
a relatively low status in the labour market, experience discrimination with regard to job
recruitment and training and are disproportionately represented among the long term
unemployed (Walker, 1997). The most common method of reducing future pension costs -
raising pension ages - merely emphasises and extends the exclusion experienced by older
workers.

Evidence on age discrimination is difficult to piece together because much of it is hidden and
indirect. Moreover older workers claiming age discrimination are often accused of using it as
a convenient excuse. In fact, when asked a direct question about it in the 1996
Eurobarometer very few men and women over 45 years of age (3.3 per cent and 3.6 per cent
respectively) say they have experienced such discrimination in the last 12 months. The small
numbers reporting discrimination may be the result of the indirect nature that such
discrimination often takes and the fact that it is often hidden from those on the receiving end
(because job applicants may be selected for interview on age grounds or people may be put
off by the wording of a job advertisement). Other evidence suggests that it is an endemic and
persistent feature of European labour markets. For example when the general public in
Europe was asked about this issue a huge majority recognised the existence of age
discrimination (Walker, 1993).

Older workers are more likely than younger ones to experience long-term unemployment and,
while these rates differ between Member States, in most of them they are higher than in the
US or Japan. Older workers also represent a smaller share of new hires than of total
employment. An OECD analysis shows that, among workers aged 45-64 , their hiring shares
range from around one-quarter to one-half of their employment share. Whereas, for younger
workers (15-24) it is more than twice their share of employment (Table 4). In other words,
many firms who employ a significant number of older workers nevertheless tend not to hire
them. The OECD's multivariate analysis reveals that employer preferences for younger job
candidates is one of the reasons why older people experience longer spells of unemployment
and lower earnings once they are re-employed.

Although the Age Discrimination in Employment Act (1967), as amended, prohibits

discrimination in all aspects of employment, including training, employers in the US invest

European Union 14
less in training older workers than younger ones. As in the EU, American older workers are
unemployed longer than younger ones, they are more likely to be non-employed (i.e. outside
of the labour force) and often experience large earnings reductions if they do find work.

We know from national research studies in the EU that employers often hold stereotypical
views about older workers and that these influence recruitment, training and promotion
practices. For example, with regard to training, older workers have less opportunities than
other age groups. The 1996 European Household Panel reports that 28 per cent of all
employed persons participated in training in the three years preceding interviews. The
highest rate (46 per cent) was among the young employed and the lowest was for older
workers (14 per cent). In the UK the stereotypes found to have the closest relationship with
actual employment practices are: older workers are hard to train; do not want to train; lack
creativity; are too cautious; cannot do heavy physical work; have fewer accidents and; dislike
taking orders from younger workers (Taylor and Walker, 1994). Against these deeply
ingrained stereotypes the scientific evidence shows that older workers are, on average, as
effective in their jobs as younger ones though of course there are variations in performance
between jobs (Warr, 1998). Older staff have fewer accidents than younger ones and are less
likely to leave an organisation voluntarily. Their average net cost to an employer is similar to
that of younger staff.

In sum, there is a growing body of evidence in different EU countries to show that people in
their third age are frequently discriminated against in the labour market (McEwan, 1992;
Drury, 1993, 1997; Walker, 1993, 1997: Naegele, 1999). Age discrimination is the very
antithesis of active ageing and, therefore, it will not be possible to realise active ageing in an
ageist labour market and society (Walker and Taylor, 1993). Public policy intervention is
required to combat this age discrimination for both social and economic reasons. The social
reasons are that it creates stigma, social exclusion and the denial of full citizenship. The
economic reason is that if older people are discriminated against purely on grounds of age
they are denied the chance of making an economic contribution. The ageing of the workforce
reinforces the moral and economic imperatives for action against age discrimination.

Precisely what form the action against discrimination should take has been a matter for
debate in each Member State and across the EU as a whole for several years. As far as the
general public of Europe is concerned there is strong support for anti-age discrimination
legislation and this support grew over the 1990s (Walker, 1993, 1999). Some national
governments already have legislation against age discrimination. For example Finland (since
1998), Ireland (1999) and, in 1999, a ban on age discrimination in employment was proposed

Walker(EU) 15
in the Netherlands. As noted previously, Article 13 of the Treaty of Amsterdam, which came
into force on 1 May 1999, empowered the European Commission to propose measures
against age (and other forms of) discrimination. The Community action programme to
combat age discrimination 2001-2006 and the EU Directive on equal treatment in
employment were adopted in October 2000. Member States have been set a target date of
2006 to introduce anti-discrimination legislation. Also a European Code of Good Practice in
the employment of older workers has been proposed by the pan-EU group Eurolink Age
(2000).

9. THE RECENT PROGRESS OF POLICIES ON ACTIVE AGEING IN THE EU

Policies on ageing and employment and active ageing have gradually become an integral part
of the European Employment Strategy since 1999. The process whereby the Member States
prepare National Action Plans for employment (NAPs) and send them to the European
Council and Commission each May began in 1997 and is known as 'open coordination'. The
rationale is that shared experiences and the annual synthesis report by the Commission will
result in a convergence of Member States' policies. The Lisbon Council in June 2000
adopted the goals of making the EU the most dynamic knowledge-based economy and
regaining the conditions for full employment and policies on active ageing are seen as
contributing to the latter goal. However it is clear that Member States have some long way to
go in reaching the 50 per cent employment rate target for 55-64 year olds by 2010.

The absence of a comprehensive approach to active ageing has already been noted (page 15)
and, with regard to the employment rate of older workers, the Commission's assessment of
the 2001 NAPs says that these 'continue to be very low' (European Commission, 2001a, p.0).
Also there are wider discrepancies in the employment rates for older workers than in the
overall rates due to differences in policies and pension provision between the Member States.

The Guideline (3) on policies for active ageing states that:

Member States should develop active ageing policies by adopting measures to

maintain working capacity and skills of older workers, to introduce flexible working
arrangements and to raise employers' awareness of older workers' potential. They
should ensure that older workers have sufficient access to further education and
training and review tax and social protection systems with the aim of removing
disincentives and creating incentives for them to remain active in the labour market.
(European Commission, 2001a, p.50)

Also, as noted above, the European Council and Commission regard the 2010 employment

European Union 16
target for older workers as a key element over the overall EU employment target. However,
so far, few Member States have translated the commitment to raise the employment rate of
older workers into concrete targets (only the Netherlands and Sweden). Some Member States
have given little attention to enhancing the employment capacity of older workers and have
adopted a piecemeal approach to benefit reforms, without setting targets which allow for the
monitoring of progress. According to the NAPs initiatives to promote training and other
workplace or work-related initiatives targeted at older workers are rare, a conclusion which
accords with independent research in the EU (see page 9).

The effective retirement age in most Member States is lower than the statutory retirement age
in pension schemes (ranging from 55-67 for women and 60-67 for men) and is reflected in
employment rates for the age group 55-64, which for most Member States is below the 50 per
cent target for 2010 (Table 5). Some Member States have started to reform benefit and
pension schemes in order to make early retirement less attractive and, more generally, to
promote sustained participation in order to raise the effective retirement age. Examples of
such measures taken so far include:

the tightening of eligibility rules (Italy, Denmark, Netherlands, France, Austria, Finland);
the reduction of benefit levels (Italy);
the introduction of incentives to encourage older people to remain longer in employment
(Denmark, Austria, Belgium, Italy, Portugal, Spain, Sweden, Netherlands, France, UK).

Most of the latter incentives are supply side measures aimed at older workers but several
Member States - France, Spain, Finland, Italy, Austria and Portugal - have also targeted
incentives at employers. Austria has developed a comprehensive system of incentives aimed
at changing employer behaviour.

Some examples of the specific measures taken by the Member States gives a picture of the
relatively high level of public policy action that has been taken recently in the EU (further
details of specific actions are contained in the appendix). Denmark has introduced new
flexible early retirement schemes aimed at promoting gradual retirement. Austria provides
financial incentives for employers to keep older workers for longer and for workers to stay in
employment after the statutory retirement age (which has been raised for both men and
women by 1.5 years). Spain and Portugal are trying to promote age flexibility via incentives
for working beyond statutory retirement age and dis-incentives for early retirement. From
2002, Spain is reducing social security contributions for those aged 55-64 and abolishing
them for those aged 65 and over. From this year Italy is abolishing social security

Walker(EU) 17
contributions for those entitled to pensions who have temporary employment contracts.
Belgium has introduced a package of measures aimed at making staying at work more
attractive, including job search provision for unemployed people over 50. Sweden has
presented a bill in Parliament this year making it possible for workers to remain at work up to
the age of 67 and is giving invalidity benefit recipients the opportunity to test their work
capacity without losing their benefits rights.

The UK's New Deal 50 Plus, introduced in April, 2000, provides financial support for older
unemployed people moving into jobs or self-employment. The Netherlands has set a target to
increase the labour force participation rate of older people by 0.75 per cent per year. In May
2000, a package of measures was adopted which include employer incentives to take up older
unemployed people and to make it financially more attractive for older workers to continue
working. In addition capital funded private pension arrangements to finance early retirement
are being considered as a replacement for the current wage-based scheme in 10 years time.
Ireland has no targeted measures to promote active ageing but there are some elements of this
policy in general employment policies. France has introduced measures aimed at reducing
early exit from the labour market including reduced retirement incentives or increased
employer dis-incentives and measures encouraging people to stay at work longer and to
support job seeking. Although these measures have been introduced there are still early
retirement schemes in operation in France.

As this brief review indicates, most of the measures taken so far by the EU Member States
are aimed mainly at either providing incentives to remain in employment or
removing/reducing incentives for early retirement. They tend to reflect a narrow policy
paradigm in which the behaviour of employees is thought to be influenced primarily by
economic incentives and, therefore, to be amenable to a mixture of financial
inducements/penalties and cajolling. There is not any sound evidence for the effectiveness of
this approach. On the contrary the European Commission's (2001a) assessment of the
Member State's policies points to the continuing low rates of employment among older
workers and the absence of comprehensive strategy on active ageing.

There are very few initiatives in the EU aimed at enhancing the capacity of older workers to
remain in employment, of either a remedial or a preventative nature (Walker, 1997). Few
Member States are promoting training targeted at older workers and most of them have no
provision for older unemployed or inactive people (except for Denmark and the UK). Some
Member States include training as part of an older age strategy focussed on those 40/50 and
over (Finland, Sweden, UK). Similar initiatives include access to study allowances for 50-55

European Union 18
year olds (Sweden); social partner agreements/plans (Belgium, Spain); programmes for
training in companies and validation of achievements from professional experience (France).
In Austria, Belgium, Germany, Luxembourg and Spain measures to improve the
employability of older workers are being planned, with an emphasis on ICT training (such as
ICT skills programmes for senior citizens).

With regard to gradual retirement Belgium and France led the way in the EU (Delsen and
Reday-Mulvey, 1996) and, recently, Germany has introduced more flexible arrangements for
part-time work, whilst maintaining the right to unemployment benefits, and a social partner
agreement has been concluded on improving part-time work opportunities for older workers.
Belgium, through collective agreements, is promoting initiatives for more flexible
arrangements for part-time work.

Although the European Councils of Lisbon and Stockholm stressed the need to improve the
quality of jobs in the EU, under the slogan 'more and better jobs', which led to the
introduction of a job quality objective in the 2001 Employment Guidelines as one of five
horizontal issues, so far at least the Member States have interpreted this rather narrowly in
terms of labour supply (eg. lifelong learning) and not as part of a broader strategy of active
ageing. The idea of making employment more attractive for older workers through improved
quality has been picked up in Austria, Belgium, France, Germany and the UK but, apart from
Denmark, Finland and Sweden there does not appear to be a clear grasp of the dis-incentive
(push effect) and inability to continue working resulting from poor employment conditions.
For the most part the Member States do not make a link between work organisation and
quality but, instead, see quality as part of their general employment strategies (mainly lifelong
learning) aimed at promoting high quality labour supply. The NAPs provide a lot of material
on health and safety at work but this is mainly of a contextual and procedural nature and does
not address the quality dimension.

In view of the relative lack of progress in the EU in developing a broad-based strategy on

active ageing and mainstreaming it into all relevant policy documents it is not surprising that
the 2002 Employment Guidelines adopt an even stronger stance on this issue. The
Guidelines call for 'in-depth changes in the prevailing social attitudes towards older workers'
and emphasise the importance of the quality dimension: 'The promotion of quality in work
should also be considered as an important factor in maintaining older workers in the labour
force'. Member States are expected to develop policies on active ageing by:

adopting positive measures to maintain working capacity and skills of older workers in

Walker(EU) 19
 particular through sufficient access to education and training, to introduce flexible
working arrangements including, for example, part-time work if workers so choose, and
to raise employer's awareness of the potential of older workers; and

reviewing tax and benefit systems to reduce dis-incentives and make it more attractive for
older workers to continue participating in the labour market. (European Commission,
2001b, p.12)

10. A STRATEGY FOR ACTIVE AGEING

(This section overlaps with section 7 of the UK report)

The current search for a new approach to retirement in Europe stems from the juxtaposition
of changes in employment (in particular the decline of the standard male industrial worker on
which most public pension systems were based) and the ageing of the workforce, in a context
of budgetary pressure created by a range of factors including economic and monetary union,
unemployment and population ageing. The idea of retirement as a distinct phase devoted to
leisure at the end of the working life is being undermined by changes in employment, while
the culture of early exit is challenged by workforce ageing and the pressures on social
protection systems. This has revived interest in the fourth pillar of retirement income
employment after an extended period in which the early exit of older workers was seen as
one of the goals of employment policy.

However, so far in the EU, there is little sign that policy makers have grasped the importance
to the labour market of the ageing challenge and still less that they have implemented policies
that seek to 'join-up' all of the relevant strands necessary to create a comprehensive strategy
on active ageing (though in some Member States there is a recognition of the need to do this,
for example, see Cabinet Office, 2000). In the words of the European Commission (2001a,
p.9): 'Most Member States follow a piecemeal approach towards improving the capacity of,
and the incentives for, older workers to remain in employment'. Similarly, with regard to the
ageing challenge 'there is little recognition of this as a major issue in terms of labour supply
and sustainability of pensions' (European Commission, 2001a, p.59). Thus the EU still
requires a comprehensive approach to active ageing if it is to combat age discrimination and
to meet the challenges posed by workforce ageing and public pension financing in an active
way, which is designed to promote employment and productivity.

The first element of such a comprehensive strategy should be age management. The term
'age management' may refer specifically to the various dimensions by which human resources

European Union 20
are managed within organisations but, also, more generally, to the overall national
management of ageing workforces. (Walker 1997, 1999). The idea focusses directly on the
second question posed for this workshop: how should we deal with the issue of age in the
workplace? When we applied this concept to organisations in the Age Barriers project we
found a continuum of good practices, stretching from very limited and narrowly focussed
measures to more comprehensive ones. We concluded that, rather than the present reactive
stance adopted by most employers, an integrated age management strategy would be the most
effective approach. This should encompass both preventative measures (such as life-long
training and job redesign) and remedial ones (such as special training for older workers). Its
focus would be on the whole working life and not only on its latter part with the aim of
neutralising the negative impact of ageing on employment. Age management must apply to
all five key areas of human resources policies: job recruitment; training, development and
promotion; flexible working practice, ergonomics/job design; and changing attitudes within
organisations (Walker, 1997).

While age management, first and foremost, is a matter for organisations, public and private, it
cannot be left solely to employers. Age management is a preventative strategy that must be
broad-based. Indeed I would argue strongly that it is the responsibility of everyone involved
in European labour markets, at all levels, to create the conditions in which good practice in
the management of an ageing workforce can flourish. This includes European and national
policy makers, employers, trade unions and older workers themselves.

Public policy, at national and EU levels, has a critical role in establishing the external context
within which organisations may develop their own specific forms of age management. As
the Nordic countries, especially Finland, demonstrate to the rest of the EU, a public policy
context which puts a high value on human capital and the maintenance of work ability is
likely to be the one most conducive to preventative policies at the organisational level.

The EU itself has an important role to play too in continuing to disseminate examples of good
practice and encouraging the transfer of knowledge between the Member States. There are
some signs that the method of open coordination is encouraging convergence in Member
States' policies and, at the very least, is putting the issue of active ageing on the public policy
agenda.

But responsibility for action does not rest only at the top - in the EU, the Member States, or
within organisations. Ageing workers themselves (which means everybody in the labour
market because the process of ageing is a continuous one) have a duty to take advantage of

Walker(EU) 21
what opportunities are available within firms or provided by public authorities in order to
manage their own ageing and careers. In other words age management is both an individual
and a collective responsibility.

Any strategy on age management must include concerted action to combat age discrimination
in employment. To raise pension ages while leaving ageism unchecked is simply to consign
older workers to exclusion, low incomes and eventually, inadequate pensions. As I have
noted, age discrimination is the antithesis of active ageing. Education and exhortation are not
likely to be sufficient to overcome age discrimination and, therefore, legislation has a role to
play in Europe as it has in the US. The logical extension of a policy against age
discrimination would be the abolition of mandatory retirement ages and to have, instead,
minimum pension ages. Then incentives could be introduced to encourage people to work
beyond the minimum. Public opinion in the EU is already adjusted to the idea of later
retirement in 1992 when the public was asked whether people will have to retire later more
than two-fifths said yes in only three out of twelve Member States but, in 1999, it was ten out
of fifteen (Table 6).

Secondly, if measures are taken to extend working life by raising pension ages without action
on the impact of employment on health then the result will also be exclusion and an increase
in the take-up of disability pensions. If these options are also closed to older workers the
impact would be severe and unjust. Although there is a trend towards a reduction of the
incidence of disability at older ages and although we might expect the shift away from
manual employment to diminish the significance of age-related health problems (OECD,
1998, p.136), nonetheless the onset of such problems affects the timing of retirement for
significant numbers of older workers. As was noted in section 2 employment induced poor
health is a major push factor in early retirement.

Action is needed to improve employment conditions to prevent both ill-health and disability
and the double jeopardy which sees workers affected excluded from employment with no
choice. Poor health is significantly related to age and, in turn, is a cause of large productivity
differences among older workers. To paraphrase the UK Black Report, in the collective
effort of production some people's bodies wear out faster than others (Townsend and

European Union 22
Davidson, 1982). Paradoxically employment is both a major cause of ill-health and an
important source of health gain, in terms of activity, self-esteem and social contact. Unless
the ill-health-producing and disabling aspects of employment are reduced or negated the
active ageing option will not be open to all on an equal basis and physical and mental ageing
for some will continue to precede chronological ageing. Put more positively: if the health of
workers is maintained then they will be more willing and able to extend their working lives.

Again a preventative strategy is likely to be the only effective one, and there are plenty of
examples of good practice in this respect, particularly among the Nordic countries. For
example the Finnish Institute of Occupational Health operates two relevant programmes.
Finn Age aims to promote the health, employability and well-being of those over 45; while
the Small Workplace programme aims at encouraging small firms to adopt good practices in
the interests of the welfare of all employees (as well as themselves). It goes without saying
that a healthy workforce is likely to be a productive one and, as the workforce ages,
employers will not be able to rejuvenate their organisations as readily and wastefully as they
did in the past.

Of course a strategy to break the link between employment and ill-health will mean
improvements in the health status of successive cohorts of retired people. But one of the
risks associated with a policy of active ageing is that it adds to the exclusion of those outside
paid employment or who are already dependent. (Dependency is itself a source of pressure
on social protection systems but beyond the scope of this paper.) Therefore, thirdly, we
should raise our sights from the workplace and focus on preventing morbidity wherever it
occurs and, thereby, extend the quality of life of all of those who reach retirement. This
means a broad public health approach in the Member States and at EU level aimed at
preventing ill-health and disability. The link between activity and health is well-known and
what is required in all Member States is a concerted effort to encourage healthy lifestyles and
healthy ageing. As the WHO has put it, years have been added to life now we must add life
to years (www.shef.ac.uk/uni/projects/gop). This would certainly enable people to remain
productive for longer. For those outside the labour market active ageing should mean active
citizenship, including engagement in unpaid voluntary activity but not excluding the
provision of help and support within the family.

Walker(EU) 23
This strategy to promote active ageing would not only provide a response to workforce
ageing but would also go a long way towards relieving pressure on Europe's social protection
systems - by reducing the costs associated with early exit, by extending working life and by
reducing health care costs. It would also be in tune with the aspirations of ageing workers for
more flexibility in retirement and it would help to enhance and extend the quality of life of
older people in retirement. This comprehensive strategy has implications for public policy
across the whole of the life course, indeed to be successful, it must be a lifecourse strategy
(Walker, 2002). Moreover, looking beyond the EU to the questions proposed for this
workshop, it provides the basis for a new relationship between age and employment. For
example, by minimising the push factors associated with employment, it would allow
financial and other incentives for gradual retirement a better chance of success. The
importance of flexible working time arrangements and improving working conditions and
health is emphasised by the recent rise in part-time working among older workers in the EU
(as noted in section 3). The policy of age management provides a clear answer to the
question of how to deal with age at the workplace.

11. CONCLUSION

This paper has emphasised the urgent need for active public policies in preparation for
workforce ageing and to reduce social protection costs, and has highlighted the deficiencies
of mainly passive or reactive approaches at both plant and national levels. There is no doubt
that the EU Member States have begun to address the age/employment paradox, but mainly
by curtailing early exit subsidies and focussing on supply side incentives. Also recent
European shows that a minority of organisations are already leading the way in adjusting to
workforce ageing. The fact that those in the vanguard include some of Europe's most
prestigious commercial companies and major public authorities indicates the importance of
this issue. Moreover, our research has illustrated a number of very practical ways in which
other organisations can mange their ageing workforces more effectively. There are signs too
of changing attitudes among the social partners.

There is, in other words, a unique window of opportunity in Europe to ensure that workforce
ageing does not limit either the employment potential of the individuals involved or the
economic competitiveness of enterprises. What is required is an EU-wide strategy for active
ageing. Reflecting national differences in policy and labour markets this strategy would be

European Union 24
designed to reinforce and extend the development of good practice already underway, here
and there, and to galvanise all of the key actors in the prevention of the negative effects of
ageing at work and, vice versa, of work on ageing. It would also aim to extend health and
activity in later life. Such a strategy would enable the EU to respond effectively to workforce
ageing and would also begin to make active ageing a reality.

Walker(EU) 25
 APPENDIX

RECENT POLICIES ON ACTIVE AGEING

Austria has raised the statutory age for early retirement from 55 to 56 for women and
60 to 61 for men; abolished early retirement on grounds of reduced working/earning
capacity; raised actual retirement age by changing the pension benefit calculation to
make greater actuarial reductions for retirement before 60 for women and 65 for men;
and, in order to facilitate gradual retirement, abolished benefit suspension provisions
for old-age pensions to enable people to receive pensions while still working. Since
2000 access to part-time benefits for older workers has been made easier and
employers need not pay insurance contributions when recruiting workers aged 50 and
over (previously they had to pay half of the contribution rate for this group and
nothing for those aged 55 and over). Also skills training has been targeted on older
workers (and women) and subsidies have been provided to assist older job-seekers. A
campaign was conducted in the first half of 2000 to promote the status of older
workers - part of a special programme for older workers called focus 2000.

In 1999 Denmark reformed its early retirement scheme to encourage older people to
postpone labour force exit and to create a more flexible withdrawal from the labour
market. This appears to have led to a postponement of retirement: the take-up rate
among 60 year olds has fallen from 30 per cent to 25 per cent. In 2000 the eligibility
criterion for the invalidity pension was altered to work potential rather than incapacity
(with effect from 2003). In 2001 the Ministry of Labour introduced a three year
programme to encourage extended labour market participation, including collecting
examples of good practice, self-activation initiatives and research.

Finland is a leader in the EU in this field, with a National Programme on Ageing

Workers, since 1998, aimed at changing attitudes in order to improve the labour
market status of people over 45. It already has in place a series of measures
encouraging continued employment, which has seen a faster rise in the employment
rate among the 55-64 age group than any other group. In 2001 new measures include a
new rehabilitation at work scheme; encouraging social assistance claimants to take
work by discounting 20 per cent of income received in calculating entitlement; raising
social assistance for those involved in training; and the provision of travel grants.
Also vocational training has been targeted more in the over 40s and the training of
older workers made more effective by tailoring it to specific needs/experiences; and

European Union 26
the introduction of a new training allowance for adults and special ICT training for the
middle-aged.

In 2001 France reduced incentives for early retirement, for example by phasing out the
employment replacement allowance, and focussed the possibility of early exit on those
that have experienced difficult working conditions (such as assembly lines and night
shifts). Financial assistance is also being provided for training in companies and the
validation of achievements and experience and there is increased support for older
workers from the employment service.

Germany has a range of active labour market policies that impact on older workers but
2000 saw a decline in the employment rate for those aged 55-64. The law on part-time
employment for older workers has been relaxed and there is a new law on part-time
work and fixed-term contracts. (There is an increasing number of collective
agreements establishing part-time employment for older workers.) Further action is
planned, including continuing training for older workers in SMEs and improved re-
integration grants.

Measures are already in place in Italy to raise the average retirement age by gradually
removing incentives for early exit. The new policies aimed at promoting an extension
of working life include a reduction in pension contributions for both employer and
employee if an older person enters temporary employment lasting at least two years;
training measures; and tax concessions for employers that provide ICT equipment for
their employees.

In the Netherlands there is a large set of measures on active ageing. For example, in
2000, the government introduced a package of actions designed to make it financially
attractive for older workers to continue in employment. Also there are measures in the
pipeline to abolish the favourable tax treatment given to voluntary early retirement
schemes (phasing this out between 2002 and 2022) and to reduce the numbers of older
people claiming unemployment benefits (38 per cent of insured employees aged 57
and over are on unemployment benefits). An Older Workers Task Force has been set
up to encourage employers and employees to change their attitudes; to collect and
publicise information on good practice and to act as an information and advisory
centre for employers and employees (especially small and medium size enterprises).
The Dutch early retirement schemes will be converted into actuarially neutral pre-
pension schemes.

Walker(EU) 27
Portugal has introduced several measures to encourage active ageing: a reduction in
social security contributions for older workers receiving a retirement or disability
pension and wanting employment; a more flexible old age pension which reduces the
amounts for early retirement and increases them for those retiring over the age of 65;
an advertising and promotional campaign on active ageing focussed in companies and
the general public; and encouraging the social partners to remove disincentives from
collective agreements.

Spain introduced new regulations in social protection in 2001 supporting the extension
of working life. These include provision for partial retirement, allowing those of 65
and over to work while receiving a pension, and, from 2002, exemptions from social
security contributions will be made for those 65 and over and reductions in
contributions for those in the 55-64 age group who have been with a company for at
least five years.

Sweden has introduced a special recruitment incentive for the long-term unemployed
over 57; is providing study allowances for people aged 51-55 for a number of
vocational courses; is raising to 67 the age at which people are legally entitled to work;
and is introducing an activity guarantee which makes it more difficult to use
unemployment benefit as a disability pension.

The UK's 1999 Code of Practice on Age Diversity contributed to a decline in overt
ageism in recruitment and the New Deal 50+ (from April 2000) provides flexible
support in gaining employment or self-employment (30,000 over 50s had taken part in
the first 10 months). Further developments in active ageing policies are planned:
Third Age Apprenticeships; An Age Advisory Group of social partners; pilot projects
on replacing compulsory retirement with more flexible phased retirement; and
encouraging opportunities for part-time employment in later life.

European Union 28
REFERENCES

Cabinet Office (2000) Winning the Generation Game, London, Cabinet Office

Casey, B. and Laczko, F. (1989) 'Early Retired or Long-term Unemployed', Work,

Employment and Society, vol.3, No.4, pp.509-26.

Delsen, L. and Reday-Mulvey, G. (1996) (eds) Gradual Retirement in the OECD

Countries, Aldershot, Dartmouth.

Drury, E. (1993) (ed.) Age Discrimination Against Older Workers in the European
Community, London, Eurolink Age.

Drury, E. (1995) Older Workers and Labour Market Programmes and Policies in the
European Union, Dublin, European Foundation.

Drury, E. (1997) (ed.) Public Policy Options to Assist Older Workers, London, Eurolink Age.

Eurolink Age (2000) Ageing in Employment - A Proposal for a European Code of Good
Practice, London, Eurolink Age.

European Commission (1999a) Towards a Europe for All Ages, Brussels, European
Commission.

European Commission (1999b) The European Lab our Market in the Light of Demographic
Change, Brussels, European Commission.

European Commission (2001a) Assessment of the Implementation of the 2001 Guidelines,

Brussels, EC.

European Commission (2001b) Guidelines for Member States' Employment Policies for the
Year 2002, Brussels, EC.

Trommel, W and de Vroom, B. (1994) 'The Netherlands. the Loreley-Effect of Early Exit' in
F. Naschold and B. de Vroom (eds) Regulating Employment and Welfare, Berlin, de Gruyter.

Guillemard, A.M. (1993) 'Older Workers and the Labour Market' in A. Walker, A.M.

Walker(EU) 29
Guillemard and J. Alber, Older People in Europe - Social and Economic Policies, Brussels,
CEC.

Hansson, R. 91997) 'Successful Aging at Work', Journal of Vocational Behaviour. vol 51,
pp202-233.

Hewitt, P. (2001) 'Global Aging Strains Fiscal policy, Shaws Growth' Press Release,
Washington, CSIS.

Jensen, P and Kjeldgaard, T. (2001) 'Dynamics and Effects of Early Exit/Early 'Retirement'.
Conference in Social Policy, Marginalisation and Citizenship, Aalborg, 2-4 November.

Johnson, P. and Falkingham, J. (1992) Ageing and Economic Welfare, London, Sage.

Kohli, M., Rein, M., Guillemard, A.M. and Van Gunsteren, H. (eds) (1991) Time for
Retirement, Cambridge, CUP.

Kohli, M., Rein, M., (1991) 'The Changing Balance of Work and Retirement' in M.Kohli, et
al, (eds) Time for Retirement, Cambridge, CUP, pp 1-35

Laczko, F. and Phillipson, C. (1991) Changing Work and Retirement, Milton Keynes, OU
Press.

McEwan, E. (1992) (ed.) Age: the Unrecognised Discrimination, London, ACE Books.

Naegele, G. (1999) Active Strategies for An Ageing Workforce, Dublin, European

Foundation for the Improvement of Living and Working conditions.

Taylor, P. and Walker, A. (1994) 'The Ageing Workforce. Employers' Attitudes Towards
Older Workers', Work, Employment and Society, vol 8, No. 4 pp. 569-591.

Trinder, C. (1989) Employment after 55, National Institute for Economic and Social
Research Discussion Paper no. 166.

Walker, A. (1985) 'Early Retirement: Release or Refuge from the Labour Market?', The
Quarterly Journal of Social Affairs, vol. 1, no. 3, pp.211-229.

European Union 30
Walker, A. (1993) Age and Attitudes, Brussels, EC Commission.

Walker, A. (1995) Investing in Ageing Workers - A Framework for Analysing Good Practice
in Europe, Dublin, European Foundation.

Walker, A. (1997) Combating Age Barriers in Employment - A European Research Report,

Luxembourg, Office for the Official Publications of the European Communities.

Walker, A. (1999) 'The Future of Pensions and Retirement in Europe: Towards Productive
Ageing', The Geneva Papers on Risk and Insurance, vol 24, No 4, pp 448-460.

Walker, A. (2002) 'A Strategy for Active Ageing'. International Journal of Social Security
(forthcoming).

Walker, A., Guillemard, A.M. and Alber, J. (1991) Social and Economic Policies and Older
People, Brussels, EC Commission.

Walker, A., Guillemard, A.M. and Alber, J. (1993) Older People in Europe: Social and
Economic Policies, Brussels, EC Commission.

Walker, A. and Taylor, P. (1993) 'Ageism Versus Productive Ageing': the Challenge of Age
Discrimination in the Labour Market' in S.Bass, F. Caro and Y.P. Chau (eds) Achieving a
Productive Ageing Society, Westport, Greenwood, p61-80.

Walker, A and Taylor, P. (1998) Combating Age Barriers in Employment Examples of

Good Practice, Luxembourg, Office for the Official Publications of the European
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Westergaard, J., Noble, I. and Walker, A. (1989) After Redundancy, Oxford, Polity Press.

Walker(EU) 31
Table 1 The Ageing EU Labour Force, 1990-2015

Percentage in 50+ Age Group

Member State 1990 2015

Belgium 14.1 19.2

Denmark 19.1 27.5
France 17.4 22.3
Germany 21.8 30.0
Greece 25.5 26.4
Ireland 18.3 20.3
Italy 19.6 24.2
Luxembourg 17.1 24.3
Netherlands 14.2 22.6
Portugal 21.0 25.2
Spain 18.7 21.7
United Kingdom 20.2 25.9

EU - 12 19.5 24.9

European Union 32
Table 2 First calendar year of total population and working age population
decline in the EU and the Member States (Eurostat baseline demographic
scenario)

Working age population

1998
1999 Italy

2001 Germany

2003 Denmark
2004 Austria

Total population 2006 Finland

2007 Spain
2008 Italy
2009 Greece
2010 Portugal
2011 EUR15, France, Belgium
UK, Netherlands

2013 Germany
2014 Spain 2014 Ireland
2015 Sweden

Difference of 12 years

2023 EUR15 2023 Luxembourg

2026 Finland

2029 Austria
2030 UK, Ireland

2032 Belgium

2034 Denmark, France

2037 Netherlands

Walker(EU) 33
2038 Greece

2040 Portugal

European Union 34
Table 3 Older Workers (45+) as a Proportion of the Labour Force

1970 1995 2030(a) 2030(b)

Austria 31.5 26.6 36.9 45.3

Belgium 31.4 25.5 31.8 43.3
Denmark 36.4 34.0 37.3 46.3
Finland 31.5 34.2 36.9 44.2
France 32.9 30.7 39.1 47.7
Germany 33.1 31.5 40.3 50.4
Greece 35.3 33.0 45.0 54.3
Ireland 39.0 28.4 42.2 49.9
Italy 30.5 29.5 43.0 50.6
Luxembourg 28.6 26.1 33.6 38.8
Netherlands 29.7 26.6 33.5 45.1
Portugal 33.0 31.7 44.0 55.4
Spain 32.6 27.2 44.6 54.1
Sweden 39.3 38.6 40.7 45.7
UK 37.9 33.8 38.7 46.1
EU 15 33.5 30.5 39.1 47.8
OECD 32.9 30.6 40.5 48.2
US 27.7 25.0 28.9 27.9
JAPAN 21.9 33.1 34.5 31.1

Source: OECD (1998)

Walker(EU) 35
Table 4 Relative Hiring Intensities by Age Group, 1995

15-24 25-44 45-64

Austria 2.3 0.9 0.4

Belgium 3.7 0.9 0.3
Denmark 2.1 1.0 0.4
Finland 3.3 1.0 0.4
France 3.4 0.9 0.4
Germany 2.2 1.0 0.4
Greece 2.9 0.9 0.5
Ireland 2.3 0.7 0.4
Italy 3.3 0.9 0.3
Luxembourg 2.9 0.9 0.3
Netherlands 2.5 0.8 0.3
Portugal 2.6 0.9 0.4
Spain 2.2 1.0 0.5
Sweden 3.1 1.0 0.4
UK 2.3 0.9 0.5
US 2.3 0.9 0.5
JAPAN 3.0 0.7 0.5

Source: OECD

European Union 36
Table 5 Activity rates and employment rates of older people 1995 and 2000

55-64

1995 2000

Country ER AR ER AR

Austria 29.0 30.2 29.2 31.4

Belgium 23.3 24.2 25.0 25.9
Denmark 49.3 53.6 54.6 56.9
Finland 34.4 39.6 41.2 45.5
France 29.4 31.4 29.3 31.6
Germany 37.8 42.8 37.4 42.9
Greece 40.5 41.9 39.0 40.6
Ireland 39.7 43.0 45.1 46.3
Italy 27.0 28.3 27.3 28.6
Luxembourg 24.0 24.0 27.2 27.6
Netherlands 28.8 29.9 37.9 38.6
Portugal 45.5 47.4 51.7 53.5
Spain 31.8 36.3 36.6 40.7
Sweden 63.1 68.1 64.3 68.4
UK 47.6 51.5 50.5 52.8
EU 35.7 38.9 37.5 40.6

Source: Eurostat, LFS

Note: Activity rates (AR) and employment rates (ER) presented in this table are
based on the European Community LFS and might therefore differ slightly
from those presented in the text which are based on the QLFD series (see
Data Sources in the Annex).

Walker(EU) 37
Table 6 Percentage Saying that in the Future People Will Have to Retire Later

1992 1999

Austria - 67.8
Belgium 28.8 40.8
Denmark 26.8 53.8
Finland - 67.1
France 41.6 60.5
Germany 45.5 41.2
Greece 13.6 5.9
Ireland 29.7 25.9
Italy 32.9 40.4
Luxembourg 25.1 40.6
Netherlands 47.8 50.7
Portugal 22.9 25.1
Spain 29.0 37.3
Sweden - 80.5
UK 24.8 31.8
EU12 (1992)
/15 (1999) 35.2 40.1

European Union 38