NCPA - National Center for Policy Analysis

DEMOGRAPHY IS NOT DESTINY

October 26, 2005

By 2050, Europe will only have one employed person for every retired person, straining public pensions and reducing economic growth. To prevent this problem, Europeans must improve the employment prospects for older people aged 50-64, says the Organisation for Economic Co-operation and Development (OECD).

Today, more than four out of 10 older Europeans are unemployed or inactive -- nearly double the figure for persons aged 25-49; this situation is a result of a number of barriers to the employment of older workers, says OECD:

  • Older workers are not sufficiently rewarded, so they prefer to retire or take advantage of other early pathways out of the labor market
  • In the past, early retirement was seen as a way to make room for younger workers; however, the reverse has occurred, since unemployment rates of young workers remains high in countries where early retirement has been widely used.
  • Some employers believe wrongly that older workers are not capable of adapting to technological change and new work patterns.
  • Older workers cost more than younger workers and in certain countries, wages, social security contributions and sickness insurance premiums tend to rise with age.
  • Working conditions are often not well adapted to the needs of older workers.

As a result, a substantial number of older workers have been sidelined, many of whom could have and would have continued to work.

Source: Editorial, "As they don't like it: Europe's demography," Economist, October 22, 2005; based upon: "High-Level Forum on Ageing and Employment Policies: Chair's conclusions, Bruno Tobback, Belgian Minister for Pensions," Organisation for Economic Co-operation and Development, October 18, 2005.

For text (subscription required):

http://www.economist.com/displaystory.cfm?story_id=5056302

For OECD text:

http://www.oecd.org/document/45/0,2340,en_2649_201185_35520621_1_1_1_1,00.html

 

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