Future Manager Italy Insights
Author: Future Manager Research Center
The results of the recent researches conducted by OECD, demonstrate that most of the countries are ageing rapidly.
The suggestion is, indeed, to start taking actions in order to improve the labour market situation of older workers; some measures are necessary in order to put a brake on further improvements in living standards and lead to unsustainable increases in social expenditures.
Here some data from the last report of OECD: the median age of population is projected to increase from 40 years today to 45 years in the mid- 2050s, and the ratio of older people aged 65 and over to people of working age (15- 64) is projected to rise from 1 in 4 in 2019 to 2 in 5 in 2050.
Population ageing stemming from increases in life expectancy and low fertility rates has the potential to exert downward pressure on all components of potential growth.
However, behavioural changes and public choices in relation to ageing, as said before, could serve to counteract those effects to some extent. Ageing can be expected to reduce the labour supply over time, since fewer young workers will be entering the labour force and older workers will tend to have lower participation rates. Low fertility rates reduce the size of younger cohorts, which can ultimately be expected to reduce the labour supply and GDP per capita.
However, the increased life expectancy and policy reforms across the OECD countries has achieved older people (aged 55- 64) to be more active in the labour market than ever before.
But, greater efforts are required to promote the labour market inclusion of 55-64 year-olds in countries that lag behind, but also strengthening working lives beyond the age of 65, especially where participation rates of those aged 55-64 are already high.
Last but not least, in some emerging economies, there are key challenges that require a specific attention. It is necessary ensuring a smooth transition of young cohorts into the labour market, this should prevent the accoumulation of disadvantages that prevent or discourage working at an older age.
Many OECD countries have applied some policies aiming to find a solution to this situation; statutory retirement ages have increased in many countries where the “age 67” has become the “new 65” and several OECD countries are going even further. This is not sufficient to improve the incentives for older people to continue working longer; they must also have better opportunities to do so.
It is, also, essential promoting the employability of workers throughout their workling lives – with a view to enhancing employment opportunities at an older age- is a key requirement for longer, reawarding careers. In the context of population ageing, mobilising the potential labour force more fully and sustaining high productivity at an older age are critical.
This requires a healthy workforce with up-to-date skills, keeping this in mind brings us to think about ensuring older people maintain their employability and have access to better employment choices that will help them to navigate a labour market that will increasingly involve adaptation to changes in jobs and skill requirements.
Many countries have already implemented reforms to public pension, disability insurance, and other social insurance programs, for example by raising retirement ages or altering benefit formulas in a way that reduces program generosity, and many countries continue to contemplate implementing (further) reforms.
As policy makers continue to debate the future of social programs, they would have to consider the welfare implications, not only of improved longevity, but also the increasing gap in life expectancy by socioeconomic status.