If we accept that there are benefits from encouraging older people to stay on in the paid workforce, then we need to look at what influences their choices. Here I consider a range of policy options.
What policies make it easier and what policies make it harder to stay on?1
How policies have changed
Up to around the year 2000, early retirement was the aim in many countries, encouraged by special incentives, pension policies and access to disability benefits. At that time, governments, employers, and unions thought of early retirement as a way to tackle unemployment and industrial restructuring. There has now been a complete turnaround. It became clear that declining birth rates and population ageing would result in much slower growth in labour supply. By the 2020s, there could be more people leaving paid work (the baby-boomers) than coming in (much smaller cohorts following them). At the same time, the costs of population ageing became recognised. There is a now widespread commitment to encouraging older workers to stay on.
• Pension policies
As people live longer the period during which they need retirement income support increases. To tackle this, several countries have raised pension or mandatory retirement ages. For example, in Australia access to the aged pension is rising to 67 years by 2023. This is clearly a major policy lever to extend workforce participation. Other measures, singly or in combination, include cutting back entitlements, work-testing, income and asset testing and taxation changes.
• Retirement policies
Compulsory retirement has been abandoned in many countries, but others still retain it and it generally puts paid to continuing employment.
• Anti-age discrimination policies
Acknowledgment of age discrimination has lagged behind recognition of other forms of unfairness such as sex or racial discrimination. Age discrimination is clearly a barrier for older workers, but legislation is not the whole answer.
• Flexible work policies
Flexible work practices are essential for older people to gain the working conditions they favour. These include longer breaks and holidays; shorter hours, on a daily, weekly or annual basis; choices about night or shift work; and working at home. Legislation on flexible working conditions has mostly been related to child-care responsibilities or to provide opportunities for education and training. But there is growing interest in how it can address other labour market pressures – such as easing the transition to retirement.
• Holistic and adaptive approaches to workforce ageing
In Europe, some countries have adopted a broader approach to older workers’ well-being, health and work-life balance. The Workability Index was developed in Finland and envisages a proactive and preventive approach throughout working lives, to improve the quality of work and achieve better health through better management in the workplace. The key is ‘reciprocal adaptation’ – a process to keep up a worker’s capacity and establish a ‘fit’ with the job and to modify the job to suit the needs, values and interests of the worker as they age.
• Incentives and promotional activities
In some countries, businesses are given incentives to recruit older workers or job seekers. The Australian Government has developed a range of resources and services to help employers attract and retain “mature-age” workers (defined as 50 and over). The UK Government developed the Age Positive programme of awareness raising and education aimed at changing attitudes within organisations.
• Phased retirement
An abrupt break between working full-time and not working at all is becoming less common. For workers, reduced participation in paid work allows them time to pursue other activities and prepare for financial changes in retirement. For employers, retaining older workers over a transitional period allows valued knowledge and experience to remain with the firm and be used to mentor and train less experienced workers. Although the government can create an encouraging environment for older people through its policies, legislation and regulation, the ability to retire gradually and with some degree of control on the part of workers, will largely depend on employers’ practices.
• Assistance to working carers
Caring responsibilities influence decisions about workforce participation. As life expectancy increases, many working people in their fifties, sixties and even seventies have living parents, often in need of care and support. At the same time as governments are trying to extend labour force participation and delay retirement, they are also pursuing policies to support ageing at home (“in place”) with reliance on informal care. Middle-aged women are frequently expected to and frequently do take on eldercare responsibilities. Yet this group has increased its participation in paid work and this is likely to continue. Appropriate policy adjustments, including flexible working conditions and caring leave, linked to employment contracts, and sometimes day care arrangements for dependent elders, will benefit working carers.
Next time I will look at New Zealand policy settings. How do they measure up if we want to encourage older people to stay on in paid work?
Dr Judith A. Davey
Age Concern New Zealand voluntary policy advisor
Senior Research Associate, Institute for Governance and Policy Studies, Victoria University of Wellington
 The blogs draw on the findings of my contribution to the research project – Making Active Ageing a Reality – undertaken through the University of Waikato, funded by the Ministry of Business, Innovation and Employment.