1.3 Demographic change in Europe
1.3.1 Data on demographic change in Europe
electricity companies the full impact of an ageing workforce will not be felt
for another five to ten years, after which many companies report that up to
half of their work force will be eligible for retirement.
European Commissionís projection of an ageing population and of labour force
shortages has resulted in a policy priority to increase the employment rates of
older people. This has been an important element of the EUís Lisbonstrategy and has continued to be a
priority in recent European Union policies. While the employment rate of older workers has been growing in recent
years, the European Commission argues that many more older workers would like
to be working Ė in the EU 27 it was found that 7 per cent of
economically inactive people between the ages of 55 and 64 years would have
liked to work. Data also shows that older workers have benefited from the
knowledge based economy with a higher skills profile in employment than in the
past (European Commission 2007).
Some facts about demographic change in Europe
- Demographic change occurs because people are living longer. By 2030, the number of older workers (defined as those aged between 66 and 64 years of age) will rise by 24 million.
- In the next decade people over the age of 40 years will be the majority of the population in Europe, while in Germany and Italy, this will be 60 percent of the population. As a result there will be a significant shrinking of people of working age, while those over the age of 65 years will represent more than 30 per cent of the population the European Union.
- The total number of 50-65 year olds in the five biggest EU economies, representing two thirds of European GDP, will rise by 16 percent and those in their 20s to 40s will decline by nearly 10 percent.
- Average life expectancy has risen and the number of people over the age of 80 years will grow by some 180 per cent by 2050.
- This change is accompanied by a corresponding reduction in the fertility rate across Europe, which today is below the level that is needed to replace the current population, and lower numbers of younger people entering the labour market.
- The ratio of dependent young to older people of working age will increase from 49 per cent in 2005 to 66 per cent in 2030.
1 breaks down the findings of the 2005 European Working Conditions survey by
sector and occupation. It found that just over 40 per cent of workers in the
electricity, gas and water sector were over the age of 45 years, of whom just
under one half were over the age of 55 years.†
Figure 1 also shows that older workers are more prevalent in managerial
positions than in clerical, plan and machine operative, and craft occupations.
Figure 1: Age distribution of employment by sector and occupation
Working Conditions Survey, 2005
1.3.2 European Union policy measures on employment and demographic ageing
measures developed by the European Union have stressed the importance of
increasing employment rates of older workers in order to address demographic
ageing and a reduced supply of younger people entering the labour market:
2003 European Employment Strategy, which aimed to create more and better jobs
and the increasing labour market participation for all groups of workers, developed
special measures to remove discrimination and barriers related to age. The
Strategy refers to the importance of active ageing in the workplace and for
measures to enable older workers to remain in the labour market for longer
periods of time (European Commission 2003).
Employment Guidelines, 2005-2008, highlighted the urgent need for measures to
attract and retain more people in employment, to improve the adaptability of
workers and enterprises, and to invest in human capital through better
education and skills. Guidelines 17, 18 and 20 specifically addresses the need
to increase the employment rates of older people and younger people, the need
to promote a life-cycle approach that particularly targets younger and older
workers, and the need for measures to match labour market needs with an ageing
workforce (European Commission 2005).
Specific European Commissions reports have recommended that governments and the social partners take action on demographic ageing:
- The 2002 report of the European Council and the European Commission, Increasing labour force participation and promoting active ageing, has recommended that a life-cycle approach be implemented to enhance the participation of older workers in the labour market (European Commission 2002).
- The European Commissionís 2005 Green Paper, Confronting Demographic Change: A new solidarity between the generations, recommends that new forms of intergenerational solidarity need to be achieved across the working life-cycle, in areas such as mutual respect and transfer of skills and knowledge (European Commission 2005).
- As a follow up to the Green Paper, the European Commissionís 2006 Communication The demographic future of Europe Ė from challenge to opportunity, reiterated the importance of addressing the challenge of an ageing population and opportunities that arise from people having longer, productive lives in improved health (European Commission 2006).
- The European Commissionís 2007 Communication Promoting solidarity between the generations, stressed the importance of intergenerational solidarity and better work-life balance that are based on equal opportunities. In particular, the Communication highlights the importance of increasing the labour force participation of women.
related to increasing the participation of older people in the workplace have
been established at three recent European Councilís meetings:
- The 2000 Lisbon European Council established the strategic goal for the EU of more employment, economic reform and social cohesion in a knowledge based economy. It recommended that the employment rate should be increased overall to 70 per cent, and for women to 60 per cent by 2010.
- The 2001 Stockholm European Council established an EU target for an employment rate of 50 per cent of older women and men (between the ages of 55 and 64 years) by 2010.
- The 2020 Barcelona European Council concluded that there should be a progressive increase of around five years in the average age at which people retire by 2010.
The number of people aged 65 years and
over will increase by 52.3 per cent before 2030; at the same time, fertility
rates are not expected to grow as employees reach retirement age (European
Commission 2005). To accommodate this situation, the EU is committed to raising
employment rates to over 70 per cent, which requires that member states
introduce policy measures aimed at encouraging older workers to remain in
employment. Older workers, however, face a number of barriers in the labour
market. Older workers are often less well qualified, they may possess outdated
skills and work in production-related industries, all of which make older
workers more susceptible to unemployment.
2 shows progress made in achieving the European Commissionís targets for
increasing the labour force participation of older workers, between the ages of
55 and 64 years, to an employment rate of 50 per cent. Only eight out of 27
countries (Sweden, Denmark, UK, Estonia, Finland, Ireland, Cyprus and Portugal) have reached or had gone beyond the
target, while some countries had only reached a 30 per cent target (Italy, Malta, Poland, Slovakia and Slovenia). Nevertheless, compared to younger
people, older workers accounted for around one-third of the rise in employment
between 2004 and 2005, whereas employment rates of younger people have fallen
significantly (European Foundation 2008).††
Figure 2: Employment rates of older workers, by country, 2006 (%)
Eurostat, LFS main indicators, 2007
3 shows that between 2001 and 2006 the employment rate of older workers across
the EU27 increased by 5.8 percentage points. Employment rates in the EU27 were
43.5 per cent in 2006, with an average rate of men of 52.7 per cent and of
women of 34.9 per cent. Older women had a much lower employment rate, reaching
50 per cent only in Denmark, Estonia, Finland and Sweden.
Figure 3: Employment rates of older workers, by sex, EU27, 2001Ė2006 (%)
Eurostat, Structural indicators, 2007
2002 European Council in Barcelonaset the target of increasing the average
exit age by five years by 2010. Figure 4 shows that in 2006 the average exit
age from the labour force in 2006 in the EU27 were 61.2 years. There were
differences between the member states with the highest average exist ages found
in Romania at 64.3 years, and Ireland and Bulgaria both at 64.1 years. Malta at 58.5 years and France at 58.8 years had the lowest average
Figure 4: Average exit age from the labour force, 2006 (years)
No data for Belgium, Cyprus, Hungary, Luxembourg, Poland, Portugal and
Slovakia. Source: Eurostat, Structural indicators, 2007
Survey evidence on demographic ageing
Working Conditions Survey: working conditions of an ageing workforce (2008)
Analysis has been carried out of the
working conditions of older workers, based on data from the European Working
Conditions Survey. The survey covered 31 countries in Europe in 2005. The report of
these findings finds significant differences between younger and older workers:
- Older workers have less exposure to physical risks in the workplace, enjoy a higher level of autonomy and a lower level of work intensity, than younger workers. However, they are less likely to be involved in new organisational developments, and in participating in training and development.
- Outside of the workplace middle-aged workers have a higher level of responsibility for caring for dependent relatives than do younger workers; they also report a lower level of satisfaction with work-life balance.
- Job quality and job satisfaction are key factors in the sustainability of work and in retaining older workers in the labour market.
- Discrimination by age increases as people get older, with older women citing the most significant levels of discrimination in the workplace.
- In some countries there is a decline in earnings in the older age groups of workers (particularly significant in the UK, Ireland and Eastern European countries).
- Older workers are also found to have high levels of attachment to their work, have high levels of performance in their jobs, and good attendance at work.
Institute, Demographic Fitness Survey (2007)
The Adeco Instituteís 2007 Demographic
Fitness Survey of European companies suggest that companies need to improve
their demographic fitness and to recognise the importance of this to business
success. The survey of demographic changes took place in companies in
. Companies ranked
demographic change along with globalisation and technological progress as among
the most significant challenges they face. However, the survey found that many
companies still had a great deal to do in order to improve their readiness for
demographic change. Many companies are affected by a skills shortage,
particularly of specialists in technology and engineers. The Demographic
Fitness Index measures five factors that influence a firmís ability to leverage
an ageing workforce: career management, lifelong learning, knowledge
management, health management and diversity management.
survey on managing an ageing workforce (2006)
A study on age and employment provides examples of
how some companies are beginning to address the issue of managing an ageing
workforce. The report, based on 41 company case studies in 11 EU
Members States, including the Czech Republic, Finland, France, Germany,
Hungary, Italy, Lithuania, the Netherlands, Poland, Portugal and the UK,
provides an overview of national developments and makes recommendations for
maintaining older workers in employment. The report emphasises the importance of protecting older workers from redundancy while in
employment, through ongoing training, in the context of lifelong learning,
aimed at keeping employeesí skills and knowledge up to date. The involvement
and support of top management, human resources and line managers were
considered essential for the success of age management policies in companies.
Furthermore, policy-awareness activities, particularly in large companies, and
the inclusion of employee representatives in company policy development were
all deemed necessary.