Introduction
As the demographic landscape continues to shift, with the share of the population aged 65 and over in the OECD projected to reach 27% by 2050, the imperative to promote the employment and employability of older workers becomes paramount. Not only is this essential for ensuring the sustainability of pension systems, but it also addresses the looming labour market shortages that accompany an aging workforce.
Statutory Changes and Incentives
The recently released Pensions at a Glance 2023 underscores the collective efforts of OECD countries to navigate the challenges posed by an aging population. Initiatives include increasing statutory retirement ages, curbing early retirement, and offering incentives for extended working lives. This multifaceted approach aims to foster employability, enhance job mobility, and bolster the overall labour supply of older workers.
Projected Retirement Age Trends
Normal retirement ages are set to rise in 23 out of 38 OECD countries, with an average of 66.3 years for men and 65.8 years for women entering the workforce today. Notably, Denmark, Estonia, Italy, the Netherlands, and Sweden are considering raising the normal retirement age to 70 years or beyond, contingent on projected life-expectancy gains and legislated links to life expectancy.
Increasing Labour Force Participation
The OECD reports a substantial surge in the labour force participation of older workers, with the employment rate of individuals aged 55 to 64 reaching a record 64% in the second quarter of 2023, reflecting an increase of almost 8 percentage points over the past decade. However, despite these positive trends, challenges persist, including difficulties in skill maintenance, limited access to quality jobs, and the risk of inadequate pensions due to short and unstable working careers.
Insights from OECD Secretary-General Mathias Cormann
Mathias Cormann, the Secretary-General of the OECD, emphasizes the importance of targeted support for training and efforts to ensure healthy working conditions. Cormann asserts that addressing the employment prospects of older workers through such measures will contribute to the financial sustainability of pension systems while guaranteeing decent incomes in retirement.
Special Pension Policies and Occupational Challenges
This edition of Pensions at a Glance delves into the impact of special pension policies in OECD countries, particularly focusing on workers in hazardous and arduous jobs. The report examines access to early retirement through occupation-specific schemes and special rules within general pension schemes. Emphasizing the prevention of health problems and reskilling initiatives to transition workers out of strenuous work before significant health deterioration, the OECD advocates for targeted support through work injury, sickness, and disability insurance rather than relying solely on special old-age pension schemes.
Recommendations for a Sustainable Future
To address the challenges posed by an aging workforce, the OECD suggests improving the regulation of work-time and workplace safety. Additionally, the report emphasizes the need for strengthened roles for labour inspection bodies and occupational health services to ensure the well-being of older workers and facilitate their continued contribution to the workforce.
Conclusion
The OECD’s Pensions at a Glance 2023 provides a comprehensive assessment of the evolving landscape surrounding pension systems and the employment sustainability of older workers. By navigating the complexities of an aging population, policymakers and stakeholders can implement targeted strategies to ensure the financial security of pension systems and support the well-being of the workforce throughout their extended careers and into retirement.