This document discusses the impact of population aging on the labor market and implications for structural change. Key points include: smaller birth cohorts will lead to relatively fewer working-age individuals; longer lifespans mean more older individuals who are healthier; addressing the future labor shortfall will require strategies like increased immigration, higher fertility rates, higher productivity, and longer working lives. Data shows employment rates increasing for older age groups from 2000-2009, especially for those aged 55-64, with Nordic countries having the highest rates for older workers. Structural changes may require older workers to bear costs of labor market adjustment, and policies aim to support job search and reemployment for older individuals.

1. Impact of ageing on the labour
market – implications for structural
change
Donald Storrie
European Monitoring Centre for Change (EMCC)
at
European Foundation for the Improvement of Living and Working Conditions

2. Demographic and
labour force trends
Smaller birth cohorts
- smaller populations in near future
- relatively fewer of working age (20-64)
Longer life expectancy and will continue
to increase
- relatively fewer of working age (20-64)
- but of better health.

3. How to make up
the labour shortfall?
• More immigration – not enough!
• Higher fertility – too late!
(current youth problems more relevant)
• Higher productivity – a cop out!
• Work Longer!

4. Employment rates 2000 – 2009 MEN
1 00
90
80
70
60
50
40
30
20
10
0
2 000 2 001 2 002 2 003 2 004 2 005 2 006 2 007 2 008 2 009
M e n (1 5-2 4) M e n (2 5-54) M e n (55-6 4) M e n (1 5-6 4)

5. Employment rates 2000 – 2009 WOMEN
1 00
90
80
70
60
50
40
30
20
10
0
2 000 2 001 2 002 2 003 2 004 2 005 2 006 2 007 2 008 2 009
W o m e n (1 5-2 4) W o m e n (2 5-54) W o m e n (55-6 4) W o m e n (1 5-6 4)

6. Employment rate of 55-64 year olds in 2009
SE
EE
UK
DK
DE
CY
FI
NL
LV
LT
IE
PT
CZ
BG
EU27
ES
RO
EL
AT
SK
FR
LU
IT
SI
BE
HU
PL
MT
0 10 20 30 40 50 60 70 80

7. Employment rate of 55-64 year old men in 2009
SE
CY
UK
NL
DK
DE
IE
CZ
EE
EL
PT
ES
LT
SK
EU 2 7
FI
BG
LV
RO
AT
IT
LU
SI
MT
PL
BE
FR
HU
0 10 20 30 40 50 60 70 80

8. Employment rate of 55-64 year old women in 2009
SE
EE
FI
LV
DK
UK
DE
LT
NL
PT
IE
CY
BG
EU 2 7
FR
CZ
RO
ES
AT
LU
EL
BE
HU
SK
IT
SI
PL
MT
0 10 20 30 40 50 60 70 80

9. Shifting age structure in the recession 2008 Q2 to 2010 Q2 (ELFS)
Low High
education education
jobs jobs

10. Age and structural change
• With older labour force more older workers
will bear costs of labour market
adjustment
• Large scale early pension of older (male
industrial) workers as in 70s and 80s has
declined– see this recession.
• No evidence that “job sacrifice” by the old
benefits the young.
• If wages > productivity for older workers –
higher unit labour costs

11. A stylised graph of wage,
productivity and age
Wage
€
Labour
productivity
AGE

12. Low re-employment
rates of older workers
• Search for insider wage in the external LM
• Discrimination
• Lack of effort from employment services
• The “easy” early
retirement/disability/sickness pension option
• Skills inflexibility (versus experience knowledge)
• Short payback time for human capital investment

13. Job search for older workers
• New labour market authority mind set
• Coaching
• Complementary training
• Realistic wage claims
Wage (and social security contribution) subsidies?
- with youth unemployment (perhaps youth
subsidies) !
- Age targeting!

14. Why employment rates for
older workers will increase
• Labour shortages
• Continual decline in physically demanding work
• Continual improvement in health
• Older cohorts will be better educated (and LLL)
• More (older) women become employed
• Relatively more old workers will press down their
relative wage
• Policy? pension reform?

15. Thank you !
EMCC: http://www.eurofound.europa.eu/emcc/
Eurofound: http://www.eurofound.europa.eu/