Increasing Employment of Older Workers: Addressing Labour Market Obstacles

Abstract

The paper reviews international experience with selected measures aimed at increasing employment of older workers and identifies best practices. Among the measures addressing worker obstacles, the paper focuses on the promotion of training, on adjusting employment services and active labour market programs for older workers, and on promoting better working conditions; among the areas addressing employer obstacles, it focuses on adjusting employment protection rules for older workers, on subsidizing wages of older workers, and on challenging employers’ negative perceptions. In addition, to offer a perspective into more holistic approaches that countries have applied, the report provides three case studies of targeted programs on older workers in United Kingdom, Germany, and Canada.

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Fig. 1

Notes

  1. 1.

    Responding to the challenge of rapid population aging requires comprehensive reforms that include, beside measures focused upon in this paper, also accompanying actions in the areas of old-age insurance and welfare policies. Discussing these policies, however, is beyond the scope of the paper.

  2. 2.

    For the discussion of the age-related productivity-wage gap see, for example, Vandenberghe (2011), van Ours and Stoeldraijer (2011) and Cardoso et al. (2011).

  3. 3.

    The earliest training levy/grant programs in Belgium, Cyprus, Denmark, France and the Netherlands began as narrowly focused sectoral training programs in the 1960s and 1970s. See CEDEFOP (2008) for a summary of European training fund programs.

  4. 4.

    Labour market programs may have some unintended effects that reduce their effectiveness. For training programs, for example, the substitution effect refers to a situation when jobs created for a certain group of workers replace jobs for other groups because their costs to employers have changed. Similarly,the deadweight effect occurs when program outcomes are not different from what would have happened in the absence of the program – for example, a worker being trained under the program that would have been trained anyway (also in the absence of the training).

  5. 5.

    According to Johanson (2009), there are 17 programs in Central, Latin America and Caribbean, 17 in Sub-Saharan Africa, 14 in Europe, 7 in Middle East and North Africa, and 7 in Asia and Pacific.

  6. 6.

    For evidence on Austria, see CEDEFOP (2009b), and for UK, Department for Business, Innovation and Skills (2011).

  7. 7.

    The countries included are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain, and United Kingdom.

  8. 8.

    For details, see https://www.gov.uk/government/collections/age-positive

  9. 9.

    Into-work benefits are temporary or one-off bonus payments received by persons moving into employment. In contrast, in-work benefits – that can take the form of tax credits or reduced income taxes and social security contributions – increase the income of workers with low earnings capacity on a permanent basis. Both into-work and in-work benefit schemes are widely used internationally (see Immervoll and Pearson 2009).

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Acknowledgments

This paper is part of a larger project that received financial support from the European Union Programme for Employment and Social Innovation “EaSI” (2014-2020).

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Correspondence to Milan Vodopivec.

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Vodopivec, M., Finn, D., Laporšek, S. et al. Increasing Employment of Older Workers: Addressing Labour Market Obstacles. Population Ageing 12, 273–298 (2019). https://doi.org/10.1007/s12062-018-9236-4

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Keywords

  • Older workers
  • Training
  • Employment protection legislation
  • Labour policy

JEL Classifications

  • J14
  • J26
  • J38