“We have reached a turning point in demographic terms. The baby-boom generation is starting to retire and number of the people over 60 is rising by 2 million a year”, László Andor, commissioner for Employment, Social Affairs and Inclusion, said Wednesday (20 June) during a conference organised by the European Policy Centre (EPC) and the Bertelsmann Stiftung.
With baby boomers retiring and fewer children being born, the labour force is on course to shrink significantly, as will the number of taxpayers to support the pension system.
Eurostat data show that whereas in 1960 there were on average about three youngsters (aged 0-14 years) for every elderly person (aged 65 or over), by 2060 there may be more than two elderly people for each youngster. Andor said that unless Europe tackles the demographic shift, it will undermine the sustainability of pension systems.
How to deal with ageing?
Sven Otto Littorin, Sweden’s former Minister for Employment, said there are "myths that we have to crush" about the employability of older workers.
Some point to a common belief that in order to increase employment among young people, policymakers should “make room” by pushing older ones into retirement.
“I think that’s the most important myth to crush, because every piece of evidence shows that a labour market which has older people also tends to have more younger people involved as well,” Littorin said.
His argument is: “If you look at people who have just retired, their domestic demand goes down quite significantly, because they’re not travelling to work and they don’t spend as much as people who are active in the labour market. So if you keep them working, basically they are spending more, which is a good idea for those younger."
Another myth that needs to be overcome is that older people can’t and don’t want to contribute to the labour market.
Littorin pointed to research conducted in Sweden showing that between 2004 and 2012, the number of people over 65 who are working doubled to 1.5% of the labour force.
“They really do want to participate and I think that’s the key from a political point of view: we have to make sure that those who are approaching the retirement age understand that we really need them, we need every single hand on deck to be able to afford pensions and health care in the future”, Littorin said.
The German example
Ursula von der Leyen, the German minister of Labour and Social Affairs, presented a roadmap on how to achieve a sustainable labour market.
Over the last 10 years, Germany changed its attitude towards ageing and adopted a measures to get older people back into the workforce.
“’First, government has to set the rules and take away false incentives, such as the retirement age up to 67 .... Second, you have to convince human resources departments that you need to experiment and mix groups of young and older workers and show that productivity is rising when you do so. ... Third, it is key support the science of lifelong learning, because we can get way better. You need to show what is possible in the company or the economy and what can be achieved with the appropriate mix of employees”, von der Leyen said.
Littorin and von der Leyn both stressed that the key to better productivity is to have appropriate mix of both younger and older workers.
EU recognises the problem
Eurostat’s figures show the proportion of the population in the EU27 aged 55 and over rose from 25% in 1990 to 30% in 2010, and the number is estimated to reach around 40% by 2060.
Demographic challenges presented by this increase encouraged the EU to make 2012 the European Year for Active Ageing and Solidarity between Generations.