international labour organization policy brief on employment and social protection indicators...

InternationalLabourOrganization

Policy Brief on Employment and Social Protection Indicators

Christina Behrendt (Social Protection Sector)Mariàngels Fortuny (Employment Sector)International Labour Office, Geneva

IMSERSO / European Centre / UNECE WorkshopMadrid, Spain, 14-16 April 2004


Overview

Part 1: Issues and trends in the region

Part 2: Indicators in the field of employment and social protection


I. Issues and Trends in the Region

Data: collected in the context of forthcoming ILO Report on Europe

Definition of Europe region and subregions


Life expectancy: In the last 50 years it has increased from 63 to 73 years and during the next 50 years a further increase to 80 is foreseen

Proportion of the population 60+

0

5

10

15

20

25

30

35

40

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

EU 15 + Iceland, Sw itzerland, Norw ay New EU member States

South Eastern Europe and Mediterranean Commonw ealth of Independent States


Velocity of ageing: increase of population share of people above age 60 and 80 (per cent) 1950-200 and 2000-2050

2517693.1165.41Commonwealth of Independent States

30698115.9754.72South Eastern Europe and Mediterranean

261137102.4770.97New EU member States

19620258.7656.16EU 15 + Iceland, Switzerland, Norway

2000-20501950-20002000-20501950-2000

80+60+

InternationalLabourOrganizationRecent trends

Paradox: Longer life expectancy not accompanied by longer working lives

Over the last decade, countries in the region: insufficient employment growth and some important employment losses

Early retirement or pre-pension benefit schemes: “solution” to mitigate labour market tensions and to promote youth employment

Substantial drop in the average retirement age and insufficient employment growth

InternationalLabourOrganizationAverage exit age from the labour force in 2002 by gender

55

56

57

58

59

60

61

62

63

64

65

Belgium

Denmark

German

y

Greece

Spain

France

Irelan

dIta

ly

Netherl

ands

Austria

Portug

al

Finland

Sweden

United

Kingdo

m

Norway

Bulgari

a

Czech

Repub

lic

Hunga

ryPola

nd

Roman

ia

Slovak

ia

males females

Barcelona Council: By 2010; increase of 5 years in the average retirement age.


Old age dependency ratios

0

10

20

30

40

50

60

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

EU 15 + Iceland, Switzerland, Norway New EU member States

South Eastern Europe and Mediterranean Commonwealth of Independent States

Increasing old age dependency: the working age population is expected to support an increasing number of old people


Older workers employment rate

0

10

20

30

40

50

60

70

Swed

en

Denm

ark

Unite

d Ki

ngdo

m

Portu

gal

Irela

nd

Finl

and

Neth

erla

nds

Spai

n

Gre

ece

Ger

man

y

Fran

ce

Aust

ria

Italy

Luxe

mbo

urg

Belg

ium

Esto

nia

Cypr

us

Latv

ia

Lith

uani

a

Czec

h Re

publ

ic

Rom

ania

Turk

ey

Mal

ta

Bulg

aria

Hung

ary

Pola

nd

Slov

enia

Slov

akia

EU 1

5

AC 1

0

Need to alter labour supply reduction policies; employment promotion is keyLisbon & Stockholm: By 2010 raising employment rates to 70% for working age population, 60% for women, 50% for older workers


Raising participation and employment of older workers depends on:

• changes in attitudes towards older people

• combating age discrimination

• important changes in in behaviour of employers and workers

• investing in employability measures is also key to extend working lives

• governments and social partners will need to cooperate in reforming legal and institutional frameworks

Above all… promoting productive and decent employment is crucial.

The promotion of full employment is a very effective measure to render the demographic pressures on social security schemes manageable


II. Indicators in the field of employment and social protection

Indicators on employment and social protection aspects, notably on economic activity and inactivity

Non-exhaustive set of indicators Largely based on existing data

InternationalLabourOrganizationIndicators should...

... be clear and straightforward

... be consistent

... be as comprehensive as possible without being overly complex

... be easily comparable across countries

... build on data that are relatively easily available and do not require much data collection effort from the part of governments and other bodies

... lend themselves to an unambiguous interpretation


Some examples for indicators

Worker to retiree ratio Labour force participation rates of older workers Employment to population ratio (for older workers

and total population) Unemployment rates and incidence of long-term

unemployment among older workers Life-long learning Average effective retirement age Old age pension coverage ratios (current

and future pensioners)


Worker to retiree ratio

Construction: Number of employed persons per person 65 and older, or, more precisely, per retiree. Data Source: ILO Labour Statistics; population data; Number of old age pensioners: household surveys, and in the future in the ILO Social Security Database.Comment: More precise than old age dependency ratio because indicator reflects actual rather than potential economic activity. Comparative data on the number of retiree hard to access for the time being, so thenumber of persons aged 65 and older might be used as a proxy.


Labour force participation rates of older workersConstruction: Number of older workers (55-64) in the labour force as a percentage of the population in this age group. Gender break-down possible.

Data Source: ILO Labour Statistics.

Comment: Indicator plays a central role for projecting the future supply of labour. Participation rates of older workers have declined markedly in many countries, being much lower for older women.


Employment to population ratio for older workersConstruction: Employed population aged 55-64 as a proportion of the population in this age group. Gender break-down possibleData Source: ILO Labour Statistics.Comment: Provides information on the ability of an economy to provide jobs for older workers. Employment rates of older people especially of older men have declined steeply in some countries. However, employment rates are strongly correlated with education level. Better educated older people remain longer in employment.


Employment to population ratio (general)Construction: Employed population as a proportion of the total working-age population. Gender break-down possible.

Data Source: ILO Labour Statistics.

Comment: Provides information on the ability of an economy to create jobs. As employment is the single most effective lever for adapting to demographic changes in the future, this indicator gives a good account of societies’ ability to cope with these challenges.


Unemployment rates and the incidence of long term unemployment among older people

Construction: Unemployment rate: proportion of the labour force that does not have a job but is available and actively looking for work. Long term unemployment rate: unemployed for one year or longer as a percentage of the labour force. Gender break-down possible.Data Source: ILO Labour Statistics.Comment: Unemployment rates of older workers tends to be lower than the overall unemployment rate. Nevertheless, long term unemployment rates for older people in many countries are rather high, reflecting serious unemployment problems for this age group. Cross-national comparisons of unemployment rates of older workers may be biased because of different institutional pathways into retirement.


Life-long learning

Construction: Percentage of the adult (25-64) population (men and women) participating in education and training (persons aged 25 to 64 who stated that they received education or training in the four weeks preceding the survey).

Data Source: For both numerator and the denominator EU Labour Force Survey from EUROSTAT. Information collected relates to all education or training whether or not relevant to the respondent's current or possible future job.


Average effective retirement age

Construction: Average age at which active persons (men and women) definitely withdraw from the labour market. Gender break-down possible.Data Source: EUROSTAT; Labour Force Surveys.Comment: Estimations based on a probability model considering the relative changes of activity rates from one year to another at a specific age. The activity rate reflects the labour force (employed and unemployed population) as a percentage of the total population for a given age.


Average effective retirement age for men

62.7

59.461.2

59.957.8 57.8 58.7 58.1 57.8 57.4

54.056.0 56.5

54.5

68.5

64.4 63.762.6 62.4 61.7 61.6

60.4 60.3 59.7 59.6 59.4 58.8

77.7

71.4

67.0 66.7 66.5 66.5 65.9 65.0 64.1 63.9

66.3

63.061.8

63.464.6

50

55

60

65

70

75

80

Japa

n

Uni

ted

Sta

tes

Nor

way

Sw

eden

Uni

ted

Kin

gdom

Can

ada

Den

mar

k

Spa

in

Net

herla

nds

Wes

t Ger

man

y

Pol

and

Finl

and

Fran

ce

Italy

age

of w

ithdr

awal

from

the

labo

ur fo

rce,

m

en 1

994-

99

first quartile

median

third quartile

Source: Based on Scherer (2002).

InternationalLabourOrganizationAverage effective retirement age for women

58.5 59.1

61.6

59.057.5

58.457.2 57.8

56.2 56.9 56.8 56.9

53.452.2

67.7

64.7 64.663.4

62.361.0 60.4 60.1 59.8 59.8 59.8 59.7

57.956.1

78.3

73.2

67.168.8

65.4 64.9 64.5

62.4

64.6

62.4 62.5 62.3 61.9 61.4

50

55

60

65

70

75

80

Japa

n

Uni

ted

Sta

tes

Nor

way

Sw

eden

Uni

ted

Kin

gdom

Can

ada

Den

mar

k

Spa

in

Net

herl

ands

Wes

t Ger

man

y

Pol

and

Fin

land

Fra

nce

Ital

y

age

of w

ithdr

awal

from

the

labo

ur fo

rce,

wom

en 1

994-

99

first quartile

median

third quartile

Source: Based on Scherer (2002).


Old age pension coverage ratio

Construction: Proportion of the population aged 65 and older who receive an old-age pension. Gender break-down possible.

Data Source: EUROSTAT, household surveys, in the future also ILO Social Security Inquiry.

Comment: Definition of “old age pension” should be wide in order to take account of different institutional settings in each country. Relatively easy for current pensioner generation, «prospective» indicator on future pensioner generations more problematic.


Conclusions

Indicators are important policy instrument, but it is important to be aware of their limitations

Main challenge is to define a set of indicators that is flexible enough to reflect countries with different institutional structures in a consistent way

Realistic and pragmatic approach that largely builds on existing data collection efforts

international labour organization policy brief on employment and social protection indicators...

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