Ageing and the Transition to Retirement

A Comparative Analysis of European Welfare States

Bert De Vroom, Einar Øverbye, Tony Maltby

• Publisher: Routledge
• Year: 2017
• Print ISBN:
  9781138263673
• eBook ISBN:
  9781351960250
• Topic: Politics & International Relations
• Subtopic: Personal Finance
• Index: Politics & International Relations

There are two conflicting trends in Europe: a demographic shift towards population ageing, and a massive decrease in the labour force participation of older workers (aged 50 years and over). This captivating book offers a refined and authoritative understanding of these trends and the two socio-economic concerns of most European welfare states that have been re-enforced as a consequence. These are: the increasing costs for welfare states to finance 'pathways' from employment to official retirement, and the threat of labour market shortages in the near future as a result of both the ageing process and the early exit of older workers. A variety of new policy initiatives can be observed emerging from these changes in many European countries - this book examines the different welfare state arrangements in nine EU countries plus Hungary, Slovenia and Norway. It considers ways of integrating older workers in the labour market along with differing perspectives on the relation between ageing and work.

Chapter 1

Introduction

Bert de Vroom, Tony Maltby, Maria Luisa Mirabile and Einar Øverbye

It is clear from a number of published sources that there are two conflicting trends in Europe. Firstly, a demographic shift towards population ageing and secondly, a massive decrease in the labour force participation of older workers (aged 50 and over). Both trends have reinforced two socioeconomic concerns of most European welfare states. These are the increasing costs for welfare states to finance the ‘pathways’ from employment to retirement, and the threat of labour market shortages in the near future as a result of the ageing process and the early exit of older workers.

This text arises out of the COST Action Al3, ‘Changing Labour Markets, Welfare Policies and Citizenship’ whose purpose is to examine the effects of social security systems and welfare institutions on the processes of social and political marginalisation in European countries. COST is an intergovernmental organisation for coordination of scientific and technical research, but primarily its focus is the coordination and formation of networks of ’working groups’ on a European level between nationally funded research projects. Some 80 experts, appointed by 17 countries, have participated in the COST A13 networks that remained in force for five years to 2003. For further information about the COST Action A13, see www.socsci.auc.dk/cost.

The working group ‘Ageing and Work’ was formed in early November 1998 and is one of the four network groupings within the larger COST A13 programme. Much of the content of this book has been presented to members of the working group through a series of scheduled meetings and seminars since 1998. However, as the nature of our work has particular scientific and policy value, our foremost aim was to disseminate it more widely, predominantly to academics and policy makers and hence this text. So the contents of this volume, written by members of the ‘Ageing and Work’ group alone, provides a unique policy picture of the current situation faced by ‘older workers’ within twelve European countries in relation to labour market exit and the impact of social policy in these countries.

From an early stage our method involved the compilation of country or national profiles as a basis of comparison and updated versions of these appear within this volume. These have revealed a variety of different characteristics and changes in the different states as a result of a combination of the implementation of different labour market policies, the current economic situation, and the country’s prevailing political philosophy. There is a divergence of extremes from countries where there is a high degree of regulation of the end of the working life, mitigated through a highly developed ‘welfare state’, to those where such regulation is achieved by the structures and policies of a liberal market economy. An example of each might be The Netherlands and Hungary or the UK during the 1980s respectively. The second discernable trend mentioned above is that of male ‘early exit’ from the labour market. This started 20-25 years ago in most countries and has resulted in a massive externalisation of ageing male workers and a very low labour force participation of older workers. Yet there are a number of differences in the nature and impact of these ‘early exit’ trends in Europe varying between high early exit countries (such as France, Finland and the Netherlands) to low early exit countries (such as Sweden, Norway and Iceland). A third trend - working in the opposite direction - is the entry of women into paid employment. This entry is to a large extent a cohort-phenomenon, where each birth cohort of young women enters the formal labour market in larger numbers than their immediate predecessors. Across time, younger female birth cohorts are gradually replacing older birth cohorts where homework still predominates. In due time, this cohort-transition is bound to increase the percentage of older women in the labour force. This may counteract the tendency towards early retirement, so dominant among the male half of the population. Finally, the ‘rise of the new middle classes’ which has characterised the period since World War II, is now gradually impacting on the structure of early retirement. The new middle classes are greying; implying that the social composition of birth cohorts bound for retirement is changing. Rather than being dominated by manual workers from agriculture and industry, birth cohorts now entering a life phase where early retirement is an option will to an increasing extent be composed of employees recruited from services or the professions; among them an ever-increasing percentage of women.

The book is divided neatly into three parts. Part I contains this introductory chapter together with an outline of our conceptual framework (De Vroom) (Chapter 2). Part III carries our conclusions and outlines some possibilities for future work. However, the majority of this text is devoted to the country profiles that comprise Part II. Each chapter within this section provides the reader with a definitive appraisal of each country written by an expert based in that country. Each of these chapters thus provides a unique insight into the social policy affecting older workers and collectively constitutes a valuable research resource.

The country profiles (comprising Chapters 3 to 15) are able to document the significant changes occurring in the relationship between work and the life course across the selected European countries. For example, the growth of ‘flexi jobs’ that requires in particular, the increasing request for a higher ‘flexibility in time and place’ and the increase of (quasi) ‘independent jobs’ (self employment, etc.) that will have an impact on the life course in general and might be a high risk of forced externalisation of older cohorts. However, the most important change in the life course of ageing workers documented within these chapters has been the growth in an early exit trend. This aside in a number of European states we can observe very recently, a decline in this trend, and even a number of initiatives to turn around the process of exit into the re-entry of older workers. This process is as yet at an early stage and it is difficult to predict exactly whether the massive early exit trend will be replaced by a similar re-entry trend in the coming years, or if the exit trend will at least become less steep.

To ensure some level of comparability the following three questions have been pursued in these country profiles in a number of ways and across different dimensions:

1.     How do changes in work and the life course affect the relationship between ageing and work?
2.     Which ‘pathways’ out of the working life are available and what programmes or initiatives have been developed to change early exit into late exit or to reintegrate older workers in the labour market?
3.     What is the individual perspective on the relation between ageing and work and how do different institutions design the life course?

The prime objective of this publication is to ‘map’ the most important institutional changes at the end of the working life. Each of these chapters provides authoritative descriptions and analyses and bases this analysis around these fundamental questions. Although the prime objective of this analysis is not the development of a theoretical perspective, we have had to use and develop a conceptual framework to inform and extend our work. This conceptual framework is based on the idea of ‘age-arrangements’ and arises out of the work of the COST group. We have distinguished different ‘age-arrangements’ in European welfare states that have a particular effect on the organisation and institutionalisation of the ‘end of the working life’. These three dominant age-arrangements are early exit, late-exit and reintegration of older workers. In Chapter 2, where this theoretical framework is outlined, we interpret the different age-arrangements as the particular ‘policy-outcome’ of the combination of age-culture, age-programmes and actor-constellations in a particular welfare state.

As we indicated above and is documented for each country in Part II of this volume, one of the fundamental changes in the relation between work and the life course - in particular for older workers - has been the process of early exit in the past 20-25 years. This process has been conceptualised, analysed and described here in terms of ’exit pathways’. These pathways out of the labour market were basically (combined) welfare state programmes to bridge the gap between paid work and the official retirement income, usually in the form of a retirement pension. In some countries welfare state exit pathways were also combined or substituted by private arrangements. The concept of exit pathways does not mean that early exit as a massive societal development was rationally governed, or that early exit was the result of purposive macro-policy action. Different actors (or actor systems) - both on the individual, family, firm, intermediary and state level - have used the possibilities of existing welfare state programmes, or have invented new programmes to solve a variety of different short term problems, or to fulfil different short term purposes and short term interests. There has never been an overall generalised plan to fundamentally change the overall life course in the way has it has been produced. Just because the massive process of early exit was more the unintended outcome of a variety of different actions and for different purposes, the end of the working life has become ‘deregulated’. The gradual increase of women in the (elderly) labour force further facilitates fuzzy transitions between paid and unpaid work (including leisure) at the end of the working career, as women are more prone to combine formal labour force participation and non-market activities. The period at the end of the working life is not any more regulated by a universal and predictable principle. At the same time the early exit process has resulted in an increasing debate on the importance of work and retirement in modern societies, related to citizenship dimensions. It also highlights changing relations within the family. As the male breadwinner model gradually becomes less dominant in older birth cohorts, retirement must to a larger extent be studied as a joint household decision involving the coordination of end-of-career plans for two individuals, rather than a individual (male) decision.

Consequently, a variety of new policy initiatives can be observed in many European countries and supported by a variety of European Commission led policy statements. After years of excluding older workers from the labour market, there is an observable trend in many countries to ‘reintegrate’ them again through a variety of policy mechanisms. The combination of two trends, an ageing society and the massive early exit from the labour market of past decades, has also resulted in redefinitions of the social meaning of ageing, older workers, the transition from work to retirement and - on a more general level - the meaning of social citizenship. In conclusion, this book offers a refined and authoritative understanding of the changing nature and mechanisms associated with the end of the working life and how it is organised under different ‘welfare state’ arrangements in nine EU countries plus Hungary, Slovenia and Norway.

Chapter 2

Age-arrangements, Age-culture and Social Citizenship: A Conceptual Framework for an Institutional and Social Analysis

Bert de Vroom

Throughout our discussions we have developed and refined a theoretical framework to describe, analyse and compare various policy developments within the field of ‘ageing and work’ in various European countries making up our COST A13 network of ‘experts’. What follows is a consolidation of this endeavour, an attempt to consider the various interrelationships between the three guiding foci of our discussions: changing labour markets, changing ‘welfare states’ and citizenship. We do not consider it to be a final statement (what theoretical framework ever is) but what is presented here we consider to be scientifically rigorous and appropriate to the task. It informs the analysis in each of the country profiles following in Chapters 3 to 15 and provides a provisional theoretical blueprint for our future work.

As stated in the Introduction, our method of comparison was firstly, to draw up ‘national profiles’ that provided a broad descriptive analysis of the main policy areas and the socioeconomic impact of various labour market policies upon ‘older workers’. The second phase was to develop these single country comparisons through an evaluation of pairs of countries (and in some cases groups of three). Yet out of this it became apparent that in order to add analytical refinement as well as a common analytical framework and scientific rigour to our analyses across these countries, we needed a framework for this analysis. It was at our Rome meeting that we developed the following framework and this has guided all our subsequent work. When we refer to ‘older workers’ we understand this to comprise (as identified through the country reports) those workers (employees, home workers and self employed persons) ranging between 40 and 70 years, although for the most part this lies with the range of 55 to 65 years.

The development of our theoretical framework started from the assumption that there are three processes involved in relation to labour market policies for older workers. These were originally identified as:

1. exit of older workers from paid work (and the labour market) and includes ‘early exit’;
2. entry of older workers into paid work (and the labour market) and may involve re-entry (for example, following a period of unemployment); and
3. retention of older workers in paid work (and the labour market).

Our early analyses were able to ascertain that each of these is uniformly operationalised through a variety of societal mechanisms and affected and implemented by a variety of social and public policy outputs and programmes, what we shall refer to here as ‘institutions’. For our purposes three types of ‘institutions’ can be distinguished: ‘age culture’, ‘age programmes’ and ‘actor constellations’.

Nevertheless, based on further explorative empirical and theoretical investigation by the members of the research group in the different European countries, we have been able to refine this somewhat simplistic delineation or typology. We have distinguished four general ‘age-arrangements’:

1. mobilisation and institutionalisation of a process in which older workers will leave employment before the official age of retirement (usually the pension age) but through a complex variety of mechanisms (‘early exit’);
2. mobilisation and institutionalisation of a process in which older workers will not use or see no desire to use early exit choices (‘late exit’);
3. institutionalisation of a high level of labour participation of older workers (‘retention’); and finally
4. mobilisation and institutionalisation of a process of getting older (retired, not-working) people back to work (‘re-entering’).

Each arrangement represents a particular method of structuring the shift to retirement (and the formal end of the working life). They represent, at the same time, different normative concepts on the meaning of old age, work, non-work and retirement. These age-arrangements reflect the variety within the European region and specifically those contained within our established network. We consider this typology of age-arrangements to be our central methodological tool since it guarantees a common and comparative perspective for all researchers. Through the concept of age-arrangement and its explicit focus on how institutional as well as normative and cultural forms of integration and exclusion of the ageing population can function, the project has endeavoured to broaden the dominant perspective in the European discussion. So far the focus in this discussion has been upon the impending systemic and economic crisis of pension systems and continuing difficulties and problems in the labour market. This project has broadened this somewhat narrow perspective and taken the so-called ‘problems of citizenship’ and integration as an equally important basis for analysis. In what follows we elucidate the central concepts of our project and present this framework in diagrammatic form (see Figure 2.1). Firstly, we turn to a description of what we refer to as ‘age-culture’.

Age-culture

Age-culture is the shorthand description of social norms, values, ideals or perceptions in society that structure the ideas of the age-work relationship. This interpretation of institutions is the dominant one in sociology. So far, we can distinguish two ‘extreme’ cultures in this context. On the one side we can find examples such as the ‘Norwegian culture’, which is based upon a broadly accepted and institutionalised societal norm that older workers have a right (and duty) to participate in the labour market (work as the dominant right). This culture was reflected until recently for example, in the age criterion of 70 as the official pension age (and the age for entering the public pension scheme), and the relatively high labour force participation of older workers (from an int...

Table of contents

• Cover-Page
• Title Page
• Copyright Page
• Content Page
• List of Figures
• List of Tables
• List of Contributors
• Acknowledgements
• 1 Introduction
• 2 Age-arrangements, Age-culture and Social Citizenship: A Conceptual Framework for an Institutional and Social Analysis
• 3 Norway: Still High Employment among Older Workers
• 4 Ageing and Work: From ‘Early’ Exit to ‘Late’ Exit in Denmark
• 5 From Early Exit Culture to the Policy of Active Ageing: The Case of Finland
• 6 Early Retirement in Germany
• 7 The Shift from Early to Late Exit: Changing Institutional Conditions and Individual Preferences: The Case of The Netherlands
• 8 Belgium: From Early to Progressive Retirement?
• 9 France: A Country with a Deep Early Exit Culture
• 10 A ‘New Deal’ for Older Workers in the United Kingdom?
• 11 Ageing and the Labour Market in Hungary
• 12 The Older Population in the Labour Market in Slovenia: Situation and Policies
• 13 Ageing and Work in Italy
• 14 Ageing and Work in Spain: The End of Working Life?
• 15 Conclusions
• Index