Download - Early retirement in Denmark and the Netherlands A comparison of push and pull factors Introduction
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Early retirement in Denmark and the NetherlandsA comparison of push and pull factors
Introduction
Trends in labour participation and early exit
Push and pull factors- macro- meso- micro
Conclusions
Wim van Oorschot, Per Jensen
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Introduction
Early exit by older workers- from solution to problem- Council of Europe aims (Stockholm 2001, Barcelona 2002)
International comparative studies- larger N- effects of labour market (push) and incentive (pull) structures- unexplained variance
This study- inclusion of a range of other push and pull factors at various levels- N=2: Denmark and the Netherlands
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Trends: labour force participation rates
The Netherlands
0
20
40
60
80
100
1973 1983 1990 1995 2000 2003
M15-64 F15-64 M55-64 F5564
Denmark
0
20
40
60
80
100
1973 1983 1990 1995 2000 2003
M15-64 F15-64 M55-64 F55-64
Sources: OECD Employment Outlook 1989, 1997, 2004
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Trends: fulltime and part-time rates
0
2 0
4 0
6 0
8 0
1 0 0
F u l l - t i m e P a r t - t i m e
Source: SHARE-data: from table 5A.4 in (Boersch-Supan et al., 2005)
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Trends: average exit age 1
50
55
60
65
70
1950 1960 1970 1980 1990 1995
NL-men NL-w omen DK-men DK-w omen
Source: from Table II.1, p. 53 in Blöndal and Scarpetta (1998)
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Trends: average exit age 2
50
52
54
5658
60
62
64
1995 2000 2001 2002 2003
NL-men NL-w omen DK
Source::NL: CBS-data in SZW (2004)DK: Danmarks Nationale Reformprogram 2005
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Trends: pathways of early exit
NL Men
0
20
40
60
80
100
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Employed Unemployed Disability Pension Other
NL Women
0
20
40
60
80
100
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Employed Unemployed Disability Pension Other
DK Men
0%
20%
40%
60%
80%
100%
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Employed Unemployed Disability Pension Assistance Other
DK Women
0%
20%
40%
60%
80%
100%
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Employed Unemployed Disability Pension Assistance Other
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: macro - work opportunity
Source: SHARE-data
U n e m p lo y m e n t r a t e s D K
1
3
5
7
9
1 1
1 9 8 3 1 9 9 0 1 9 9 5 2 0 0 0 2 0 0 3
D K T 1 5 - 6 4 D K M 5 5 - 6 4
D K W 5 5 - 6 4
U n e m p lo y m e n t r a t e s N L
1
3
5
7
9
1 1
1 9 8 3 1 9 9 0 1 9 9 5 2 0 0 0 2 0 0 3
N L T 1 5 - 6 4 N L M 5 5 - 6 4
N L W 5 5 - 6 4
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: macro - employability
W o r k s ta tu s b y e d u c a t i o n a l l e v e l ,m a l e w o r k e r s , a g e 5 5 - 6 4
02 0
4 06 0
N L - l o w N L -m i d d l e
N L - h i g h D K - l o w D K -m i d d l e
D K - h i g h
E m p l o y e d U n e m p l o y e d R e t i r e d
Source: EU Labour Force Survey as presented in Blondal and Scarpetta 1998, Table II.4, p. 57
Source: OECD (2004a)
0
2 0
4 0
6 0
8 0
1 0 0
N L 2 5 -3 4
N L 3 5 -4 4
N L 4 5 -5 4
N L 5 5 -6 4
D K 2 5 -3 4
D K 3 5 -4 4
D K 4 5 -5 4
D K 5 5 -6 4
% a t l e a s t u p p e r s e c o n d a r y e d u c a t i o n
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: macro - incentive structure 1 Early pension
Netherlands DenmarkVUT: payg, from 58 but mostly 60, 70%-80%, 10 years in sectorOccupational pension: ‘Pre-pension’Differences between occupationsTypical: Benefit depends on age of retirement: 70% of previous wage at age 62, lower/higher if on retirement earlier/laterCapital funded (paid from a worker's occupational old age savings: actuarial equivalence)Retirement age: 55-65, with 62 as pivot Part-time pensionWorking one or two days per week less, with less than proportional wage decrease as from the age of 58-60 depending on collective agreement; relatively high take-up
Private pension. State support: tax deduction of premiums up to a maximum per year. Pension payments are taxed.
Efterløn: payg, from 60, 91% of max. unemploym. ben. with ceiling (100% of UB if from 62), 25 year contribution recordOccupational pensionRules differ between occupations. Typical: Benefits depend on contribution and age of retirement. Capital funded (paid from a worker's occupational old age savings: actuarial equivalence) Retirement age: 60 and up
Overgangsydelse, Delefterløn to flexible efterløn(part-time efterløn), Delpension
Private pension. State support: tax deduction of premiums up to a maximum per year. Pension payments are taxed.
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: macro - incentive structure 1 Disability - Unemployment
Netherlands Denmark
WAO: disability benefitBenefit depends on degree of disability: max. 70% of previous wageDuration depends on age: 6 years from age of 59Pay-as-you-go funded
Fortidspension: disability benefitA flat rate benefit, with separate levels for singles and couples. Until 2003, four different benefit levels dependent on degree of employability, and people above 50 could be granted disability pension for non-medical reasons, e.g. low labour market chances. Duration unlimited Pay-as-you-go funded
WW: unemployment benefitDuration and level depend on work record, max. 70% of previous wage, max.5 yearsPay-as-you-go funded
Unemployment insuranceBenefit level is 90% of previous wage with low ceiling Duration is max. 4 years (max. 5 years for 55+ til efterløn, 30 months for 60+)Pay-as-you-go funded
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: macro - incentive structure 2
Replacement rates (Source: EU 2003)
0,76 APW
APW 1,5APW
Early pension NL Single, 60 86 72 77NL: VUTDK: Efterloen
DK Single, 60 68 42 28
NL Couple, 60, one earner 95 77 78
DK Couple, 60, one earner 73 47 32
NL Couple, 60, two earner, two children 79 83 86
DK Couple, 60, two earner, two children 95 62 53
Longterm unemployment NL Single, 50 88 52 34Social assistance DK Single, 50 60 37 24
NL Couple, 50, one earner 98 77 52
DK Couple, 50, one earner 60 38 26
NL Couple, 50, two earner, two children 50 31 26
DK Couple, 50, two earner, two children 98 67 48
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: macro - incentive structure 2
Source: EU. (2003). Remain in or withdraw from the labour market? A comparative study on incentives. Brussels: European Commission, DG for Economic and Financial Affairs.
Replacement rates (Source: EU 2003)
0,76 APW
APW 1,5APW
Disability benefit NL Single, 50 82 60 66NL: WAODK: Fortidspension
DK Single, 50 142 88 58
NL Couple, 50, one earner 99 74 77
DK Couple, 50, one earner 113 72 49
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Push and pull: macro - incentive structure 3
OECD (2003)
Relative income of households with a head 65+, over period 1983-1994:DK: 73,4%NL: 87,5%
Heinrich (2000) ECHP-data
Persons 65+ in bottom two deciles of income distributionDK: 47%NL: 22%
Poverty rates among persons 65+DK: 10%NL: 4%
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: meso Hiring and firing
Age discrimination NL: 2004 Act on Equal Treatment by Age, 2003 …. by disability DK:. 2004, age and handicap added to national law that prohibits making distinctions on the labour market. CLA’s comply with 1999 EU Directive on age discrimination. Tradition in DK that the state does not legislate relationships between employees and employers.
Is there age discrimination? (European Working Condition Survey 2000) NL: 10% of older workers say ‘yes’ DK: 1%
Hiring intensity of older workers (50-64 years) OECD (2005)
NL: 0,35 DK: 0,41
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: meso Pay
NL + DK: Min. wage for older workers is the same as for younger workersNL + DK: No government wage subsidies for older workersNL + DK: tax and/or wage subsidy provisions for employers to employ disabled workers
Employer’s beliefs and attitudesDutch employers associate an ageing workforce with rising labour costs, resistance to change, increasing absenteeism, less enthusiasm for new technology, no increase in productivity (Remery et al., 2003). Among Dutch employers the general saying is ‘Who am I to stop an employee if (s)he wants to go on early retirement?’ (Van Dalen & Henkens, 2003)
DK …?…employers association has since the late 1980s launched campaigns encouraging their member firms to hire older workers. Among knowledge intensive firms it is increasingly becoming trendy to retain older workers. Not in unskilled manual work places.
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: meso
Employer’s policies for retaining older workers (survey data)
Sources: Netherlands (Remery et al., 2003), Denmark (Holt & Joergensen, 2003): (all data from 2000)
NL DK
Age limits for irregular work 35
Exemption from working overtime for older workers 34
Flexible working hours 47
Part-time early retirement/part-time pre-pension 51
Reduced working hours with proportional lower wage 41
Additional leave/ increased holiday 62
Reduced working hours without any or only a partly wage decrease 17
Reducing workload for older workers 41
Less demanding or other type of work 34
Training programs for older workers 21
Training and education 35
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: meso
Objective work conditionsEuropean Working Conditions Survey 2000:
…there is little difference in the degree to which Dutch and Danish (older) workers report to have been exposed to vibrations of machinery, loud noises, extreme temperatures, damps, dust and fumes, dangerous substances.
Employability of older workersEU Labor Force Survey:
‘yes’ to ‘…received some education or training in the past 4 weeks?’
Employed older workers (50-64): DK 14%, NL 12%Unemployed older workers (50-64): DK 14%, NL 6%
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: micro
Job satisfaction and control
J o b s a t i s f a c t i o n a n d c o n t r o l i n j o b b y c o u n t r y a n d a g e ( a v e r a g e s )
( E V S 1 9 9 9 / 2 0 0 0 )
56789
NL
<2
5
NL
25
-
49
NL
50
-
65
DK
<2
5
DK
25
-
49
DK
50
-
65
J o b s a t i s f a c t i o n J o b c o n t r o l
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: micro Retirement preferences
Esser (2004) Eurobarometer 2003, >=25 years of age
5 9 , 25 8 , 3
6 2 , 16 1 , 2
5 0
5 5
6 0
6 5
N l m e n N l w o m e n D k m e n D k w o m e n
A v e r a g e p r e f e r r e d r e t i r e m e n t a g e
5 , 86 , 7
4 , 95 , 8
0
2
4
6
8
1 0
N l m e n N l w o m e n D k m e n D k w o m e n
A v e r a g e N y e a r s e a r l i e r t h a n 6 5 / 6 7
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: micro Work ethic
European Values Survey (1999/2000)
1 = To fully develop your talents, you need to have a job2 = It is humiliating to receive money without having to work for it3 = People who don’t work turn lazy4 = Work is a duty towards society5 = Work should always come first, even if it means less spare time(1 = strongly disagree – 5 = strongly agree)
W o r k e t h ic o f o ld e r w o r k e r s ( 5 0 - 6 5 y e a r s ; a v e r a g e s ; E V S 1 9 9 9 / 2 0 0 0 )
012345
1 2 3 4 5
N L D K
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Push and pull: micro Work orientation
European Values Survey (1999/2000)
W o r k o r ie n t a t io n s o f o ld e r w o r k e r s ( 5 0 - 6 5 y e a r s ; % ; E V S 1 9 9 9 / 2 0 0 0 )
02 04 06 08 0
N L D K
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Conclusions
Higher participation rates and average retirement ages in DK than in NL
Macro level+/- Work opportunity rather similar+ DK: Higher educated, better employability+ DK: Less attractive incentives: fewer alternative pathways used, lower replacement rates of exit routes, pension income relatively lower
Meso level+ DK: Less age discrimination+ DK: Higher hiring intensity ? DK: Less part-time exit possibilities+ DK: More training and education+/- Objective working conditions
Micro level+ DK: Higher job satisfaction and control+ DK: Higher preference ages for retirement+ DK: Higher work ethic+ DK: More intrinsic work motivation
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
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Conclusions
Center for Comparative Welfare Studies CCWS, Aalborg UniversityDepartment of Sociology, Tilburg University
All in all
In Denmark
…less push out of work,
and
…less pull into retirement
than in the Netherlands
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References
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Esser, I. (2004). Continued work or retirement? Preferred exit-age in Western-European countries. Stockholm: Swedish Institute for Social Research SOFI.
EU. (2003). Remain in or withdraw from the labour market? A comparative study on incentives. Brussels: European Commission, DG for Economic and Financial Affairs.
Euwals, R., Van Vuuren, D., & Wolthoff, R. (2004). Prepensioen en arbeidsparticipatie ouderen. Den Haag: Centraal Planbureau.
Fouarge, D., Schils, T., & Huynen, B. (2004). To retire or continue working? An analysis of the early retirement behaviour of Dutch workers. Tilburg: Institute for Labor Studies OSA.
Heinrich, G. (2000). Affluence and poverty in old age: Evidence from the European Community Household Panel. Differdange: CEPS/INSTEAD.
Holt, H., & Joergensen, M. (2003). Virksomheders sociale engagement: Aarbog 2003. Copenhagen: Institute for Social Research SFI.
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Countries. Paris: Organisation for Economic Co-operation and Development.OECD. (2005). Ageing and employment policies: Netherlands. Paris: OECD.Remery, C., Henkens, K., Schippers, J., & Ekamper, P. (2003). Managing an aging workforce and a tight labor market:
Views held by Dutch employers. Population Research and Policy Review, 22, 21-40.SZW. (2004). Kabinetsstandpunt: Stimuleren langer werken van ouderen: reactie op aanbevelingen van de Taskforce
Ouderen en Arbeid. Den Haag: Ministerie van Sociale Zaken en Werkgelegenheid (29 april 2004).Van Dalen, H., & Henkens, K. (2003). De dubbele moraal rond langer werken. ESB (31 Oktober), 514-516.Wolthoff, R., & Van Vuuren, D. (2004). Prepensioen en de arbeidsparticipatie van ouderen. De Actuaris(November), 16-17.