Retirement age varies across Europe

IE Focus

28 October 2003

The Old Continent is growing increasingly aware that it must keep its older workers on the job. The European Union is mindful of this as well. In March 2001 it set the goal of bringing to 50 percent the average level of employed 55 to 64 year-olds by 2010.

In most developed countries, the last 30 years have seen a trend toward reduction of those who are employed after 55. You can split this group into four subgroups:

:: Sweden, the U.S., Portugal and Ireland, where 55-64 year-olds maintained an employment level of over 60 percent;

:: Canada, Britain and Denmark, with over 50 percent;

:: Germany and Spain, around 50 percent;

:: France and Belgium, under 40 percent.

Finland and the Netherlands, who registered below 40 percent until 1995, have seen their levels rise considerably since, thanks to innovative reforms. Both countries managed to reverse the trend toward exclusion of seniors in five years. All the other nations mentioned above however report a drop in employment levels of the over-55s. This rate in Japan has fallen only nine percent in the last 30 years, but slipped significantly in Canada (-27 percent), the U.K. (-26 percent), Spain (-30 percent), Germany (-41 percent) France and Belgium (-43 percent).

Average retirement age in Europe ranges from 57 (Luxembourg and Belgium), to 58 (France), 59 (Italy, Austria, Greece and the EU average), 60 (Spain, Germany, the Netherlands), 61 (Denmark and Finland), 62 (Portugal, Sweden, the U.K.), and 63 (Ireland).

Some European countries seem to be approaching the EU goal - but not necessarily for the right reasons. Portugal and Greece, for example, show high senior employment rates, but principally because pensions are notoriously low. In Portugal, 30 percent of the male and 18 percent of the female populations are still working after age 65 - in small businesses, farms or even little jobs.

Sweden seems to be the European leader when it comes to employing seniors. This has its roots in the 1950s, when management, trade unions and government came together to devise plans to maintain the nation’s economic muscle, while giving priority to its human resources. There is no law prohibiting age discrimination on the books; the affair was managed by the three entities - a double economic and social strategy that has proved quite successful. In 1985, over 75 percent of males aged between 55 and 64 were active. The EU average at the time was less than 55 percent. Sweden’s score fell during the ‘90s and tough economic times, but the rift between that nation and the EU norm stayed roughly the same: in 1997 it stood at 64 percent versus 46 percent.

A wide gulf between north and south Europe still exists, however. Generally speaking, northern Europe is more committed to work organization reform than the more passive south.

The Organization for Economic Cooperation and Development (OECD) meanwhile, is doing its part to try and raise the age for retirement.

[*D Reforms are being reviewed by governments in many countries *]

In a report entitled “Employment Perspectives,” the Paris group advised governments to double their efforts to improve employment perspectives for women, aging workers, the handicapped and less-qualified personnel.

The report, published in September, stated that if action is not taken, perspectives for growth in many of its member nations would wither as their populations age.

If current trends continue, the OCDE estimated that workers over 65, which stood at 27 percent of the population in 2000, would jump to 47 percent in 2030. If reforms currently under review in many nations are not carried out, annual growth in the active population among the OECD’s 30 member nations would slow considerably. Rates would drop from a 1.3 percent average seen over the past 30 years, to 0.3 percent for the next 30 years, the OECD said.

Forecast for growth in employment for 2004 in member nations was low all-round. Spain topped the list, with a projected increase of 2.1 percent. Though nothing extraordinary, this was far ahead of its neighbors, none of whom reached higher than 1.4 percent (the U.S.’ figure). In the OECD prediction, Italy posted 1.2 percent, France 0.7 percent, the U.K. 0.5 percent and the Netherlands 0.1 percent. Japan was the only country to show negative figures, with a –0.2 percent growth forecast, according to the OECD.

Reforms are being reviewed by governments in many countries. These should include women, those on early retirement, single parents and the handicapped, not only the unemployed, the OECD said. It added that financial incentives were not enough. Subsidizing services like child care, encouraging more flexible hours for workers with families, and developing part-time work could likewise be efficient measures, particularly for women. To keep people on the job longer and later, the OECD also recommended eliminating incentives for early retirement.

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