Working Longer, Learning Longer

Countries around the world, both more and less developed, are experiencing shifts in age structure. Life expectancies have increased while fertility rates have declined, resulting in a greater proportion of the world’s population in older age groups and a smaller portion in traditional working age groups ( Bloom, Boersch-Supan, McGee, & Seike, 2011 ). Delaying retirement and increasing labor force participation at older ages could increase gross domestic product while also benefiting national wealth and public debt ( Eberstadt & Hodin, 2014 ; Franklin, 2014 ; Ogawa & Matsukura, 2005 ). In an effort to maintain continued economic growth and ensure the adequacy of pensions, many member countries of the Organisation for Economic Cooperation and Development (OECD) have recently begun to implement policies aimed at encouraging those in the 55+ age group to remain in the labor force as a means to increase overall participation rates ( European Commission, 2013 ). Countries featured in this issue of Public Policy & Aging Report illustrate a range of workforce development policies to encourage work at older ages. For example, the OECD has long recognized public and private investment in lifelong learning, from early childhood through retirement, as a strategy necessary to satisfy multiple economic, social, and educational policy objectives ( OECD, 1996 ). In this introductory piece, we visually illustrate key indicators that demonstrate the implications of population aging and why continued work at older ages is important to the economic future for many countries. This information sets the stage for workforce development policies and practices described in the country-specific articles in this issue. For both men and women, life expectancies have increased at a more rapid rate than have normal pension ages and this trend is expected to continue ( Figures 1 and 2 ). Normal pension, or retirement, age is defined as the age at which people can draw full retirement benefits without an actuarial adjustment; in most countries, this age is specified in legislation ( OECD, 2013 ). In the second half of the twentieth century, many OECD countries reduced pension eligibility ages: On average, normal pension ages for males fell from 64.5 years in 1958 to 62.2 years in 1992. Females also experienced a decline in normal pension age from 61.8 to 60.7 years over the same period ( Whitehouse, 2007 ). While early retirement was encouraged in many countries, this trend is reversing ( Bussolo, Koettl, & Sinnott, 2015 ), but perhaps not enough to offset increases in life expectancy. The growing gap between life expectancy and pension age is significant for labor, education, and pension policies: Collecting pension benefits for longer periods of time can jeopardize the solvency of social welfare programs and inhibit economic growth. Life expectancy at pension age captures the varying confluence and divergence of two trends (changes in life expectancy and changes in retirement age), reflects past work and retirement policies, and has implications for the future of labor force development. Male life expectancy at normal retirement age in selected countries, 1958–2050. Sources : Taiwan National Development Council (2014) , OECD (2013) , and Taiwan Ministry of the Interior (2014) . Female life expectancy at normal retirement age in selected countries, 1958–2050. Sources : Taiwan National Development Council (2014) , OECD (2013) , and Taiwan Ministry of the Interior (2014a) . The growing gap between life expectancy and pension age is significant for labor, education, and pension policies: Collecting pension benefits for longer periods of time can jeopardize the solvency of social welfare programs and inhibit economic growth. Between 1958 and 2010, the life expectancy at the normal pension age for males increased for each of the countries examined. Assuming no change in normal pension ages, this trend is expected to continue. Taiwan experienced the greatest increase between 1958 and 2010 and also the greatest increase projected to 2050. This trend is largely explained by the dramatic increase in life expectancy (from 61.3 years in 1958 to 76.1 years in 2010) rather than a sharp decrease in pension age. Germany experienced the smallest increase between 1958 and 2010 and also the smallest increase projected to 2050, probably due to stability of pension policies and relatively small increases in life expectancy at age 65 ( OECD, 2011a , 2011b ). The United States had the shortest life expectancy at normal pension age in 2010 and the United Kingdom has the shortest projected for 2050, probably due to older retirement ages ( OECD, 2011b ). Between 1958 and 2010, the life expectancy at normal pension age for females also increased in each of the countries examined. As with males, assuming no change in normal pension ages, this trend is expected to continue. Sweden experienced the greatest increase between 1958 and 2010 and also the greatest increase projected to 2050. Germany experienced the smallest increase between 1958 and 2010, whereas Australia is projected to have the smallest increase projected to 2050. Japan had the longest life expectancy at normal pension age in 2010 and projected for 2050, partially explained by a very high life expectancy and a relatively young pension age for women ( OECD, 2011a , 2011b ). The United States had the shortest life expectancy at normal pension age in 2010 and the United Kingdom has the shortest projected for 2050, and as with men, probably due to older retirement ages ( OECD, 2011b ). While availability of early pension benefits is positively associated with life expectancy at pension age, it is negatively associated with labor force participation for both men and women and inhibits work at older ages. Thus, policies in many OECD countries in the 1970s and 1980s that encouraged early retirement resulted in lower rates of labor force participation for older workers especially men. As suggested by the earlier examination of life expectancy at normal pension age and dependency ratios, this model is not sustainable and the trend to encourage retirement at younger ages has reversed ( Bussolo et al., 2015 ; European Commission, 2013 ). Labor force participation rates for males age 55–64 in many OECD countries showed a pattern of decline, marked in some cases, from the 1980s onwards, with a recent return to levels similar to those last seen in the 1970s. In contrast, rates have substantially increased for older females over the same period. Increases in female labor force participation are a result of many factors, including a decline in fertility rates, increased levels of education, improvements in gender equity that created more employment opportunities, and the availability of flexible work arrangements ( Hegewisch & Gornick, 2011 ; Jaumotte, 2003 ; Lim, 2002 ). It is doubtful that continued increases in labor force participation at older ages can be achieved by changes in pension policies alone. For older workers to be successful in an increasingly global, technology and knowledge-based economy, policies that facilitate skill upgrading throughout the life course are necessary to achieve higher rates of labor force participation. For older workers to be successful in an increasingly global, technology and knowledge-based economy, policies that facilitate skill upgrading throughout the life course are necessary to achieve higher rates of labor force participation. With two exceptions, male labor force participation rates for age 55–64 in the countries examined were relatively stable between 1980 and 2013 ( Figure 3 ). Male labor force participation rates of age 55–64 in selected countries, 1980–2013. Note . OECD data for labor force participation are not available for the United Kingdom in 1980 and are only available for Brazil in 2013. Sources : Taiwan National Statistics (2014) and OECD (2014) . In 2013, Japan had the highest labor force participation rate (83.5%) and Taiwan had the lowest (59.7%). Taiwan experienced the largest decline in labor force participation between 1980 (72.7%) and 2013 (59.7%). This decline was likely due to regional unemployment rates for older males ( Chiu & Chen, 2012 ). Germany experienced a sharp decline in labor force participation between 1980 (67.3%) and 2000 (52.4%) but saw a marked reversal of this trend by 2013 (74.4%). This pattern of labor force participation rates is similar to several other OECD countries (e.g., Australia, Sweden, and United Kingdom). Continued trends of growth in labor force participation rates at older ages will be necessary to achieve increased retirement ages. Females age 55–64 experienced substantial increases in labor force participation in all of the countries we examined ( Figure 4 ). Female labor force participation rates of age 55–64 in selected countries, 1980–2013. Note . OECD data for labor force participation are not available for the United Kingdom in 1980 and are only available for Brazil in 2013. Sources : Taiwan National Statistics (2014) and OECD (2014) . In 2013, Sweden had the highest labor force participation rate (73.5%) while Taiwan had the lowest (29.7%). Because of generous pension policies, Taiwanese women tend to retire at a relatively young age, but this may change with increased levels of education ( Cheng & Loichinger, 2015 ). Australia experienced the largest increase in labor force participation for women between 1980 (21.8%) and 2013 (55.8%). Japan had the smallest increase in labor force participation between 1980 (45.3%) and 2013 (55.8%). In addition to changing pension policies, an effective mechanism to encourage work at older ages is investing in employees through job training and modifying workplaces ( Bussolo et al., 2015 ). Funding workforce development programs, often referred to as “adult education” or “lifelong learning,” is generally viewed as a shared responsibility among the government, employers, and individuals (e.g., European Commission, 2012 ; Gara, 2012 ; OECD, 2004 ). There are wide variations among countries in how this is achieved. In some countries, individuals are the primary funders, while in others, the government or employers provide the majority of the funding. Several recommendations regarding lifelong learning were identified by the OECD (2004) , including the importance of personal empowerment in choosing what, how, when, and where to learn, and the need for cofinancing between public and private sources with the government focusing its resources on the disadvantaged. A challenge faced by most countries is providing remedial workforce development opportunities to low-income and other disadvantaged groups, who are less likely to participate in training ( European Commission, 2013 ; Lerman, McKernan, & Riegg, 2004 ; OECD, 2004 , 2005 ). Important, however, will be efforts to build a broad learning culture, going beyond the provision of basic skills and compensatory education, to promote greater on-going participation in learning across the adult population. Considered from a life course perspective, an effective long-term response to low training participation by older workers also means addressing the skill needs of today’s young and mid-career workers. Positive learning experiences at an earlier career stage will mean greater individual choice and better employment decisions and labor market outcomes when older ( OECD, 2006 ). We would like to acknowledge the contributions of Karl Chow, Miami University, and Jennjou Chen, National Chengchi University, for providing data and preparing the charts included in this article.