Raising the retirement age: What implications for senior employment?
Emmanuel Macron has been calling for the statutory retirement age to be lowered to 64 or 65 for several months. The measure, which is due to be presented on Tuesday 10 January, would increase the employment rate of seniors, according to the government.
Unpopular, decried, contested… The pension reform that Emmanuel Macron is striving for is due to be unveiled by the government this Tuesday, with the flagship being the lowering of the statutory retirement age being panned by the government as a solution to make up for the system’s deficit.
With wind opposed to this reform, the unions are already considering calling on the French to take to the streets to prevent the text from being passed. “The age parameter is the most unfair and most anti-redistribution,” said Laurent Berger, Secretary General of the CFDT, with the Parisian.
The postponement of the retirement age should be a consistent measure for the government. As the lifespan of the French grows longer, more work should be done. Where the manager also wants to act on retirement at 64 or 65, it is about the employment rate of seniors. According to the latest data from DARES, the employment rate of 55-64 year olds was 56% in year 4e In the first quarter of 2021 and in the same year, 75% of those aged 55-59, 35.5% of those aged 60-64 and 8.6% of those aged 65-69 were employed. A proportion below the European average and in some countries such as Germany or Sweden the employment rate for seniors exceeds 70%.
Elderly victims of prejudice
“At 50 you still have 15 years of work ahead of you, so it’s heresy to be stuck looking for a job 15 years before finishing work,” says Valérie Gruau, founder of the website seniorsavotreservice.com, which connects active or retired seniors with employers. We tend to think that after 50 or 55 years we are overwhelmed and can no longer contribute to the company. It’s all these completely absurd prejudices that are rooted in mentalities that need to be broken so that companies look at seniors differently,” she explains.
In fact, more experienced employees are often unpopular with employers. Salary expectations that are too high, not sufficiently trained in new technologies, not flexible enough… Many brakes and prejudices put a spanner in the works for seniors looking for work. According to INSEE, the unemployment rate for people over 50 is 5.1% in the third quarter of 2022. Older people are also more affected by long-term unemployment (more than two years).
According to a study by the Robert Half Institute on senior employment, 63% of hiring employees aged 44-55 have not been approached by recruiters in the last six months, compared to 26% for those aged 18-34.
Educate companies about the qualities of seniors
Above all, however, seniors are experienced employees who have qualities that benefit companies. “These are people with great relational qualities, what we call ‘soft skills’, who have great adaptability, who handle stress well, who approach problems more calmly, who know how to work as a team, who are ready to go, who are more autonomous. These are mainly profiles that once they have found a job, they will remain in the position much more loyally because they know that finding work is difficult. They will therefore stay much longer, there will be less turnover with these profiles,” says Valérie Gruau. The latter also considers the argument that the over-50s are not suitable for working on new technologies to be an outdated prejudice, since the majority of over-50s work regularly with computers and mobile phones.
In particular, according to the senior employment expert, the government should launch major communication campaigns with companies to inform them of the qualities of senior profiles, rather than set up coercive or sanction systems, as some unions have argued. Prime Minister Elisabeth Borne had put forward the idea of creating an “index” on senior employment, similar to the system created for gender equality in business.
Raising the statutory retirement age
However, the government proposes raising the statutory retirement age as the most effective way of securing the employment of older workers who, as they have to retire later, should keep their jobs longer. A “mechanical” effect, as the Prime Minister said.
The previous pension reform, which affected the statutory retirement age in 2010, pushed that age back from 60 to 62 years. According to an INSEE study on the short-term effects of this shift, published in 2017, the 2010 reform led to an increase in the employment of older people, but at the same time it also increased unemployment in this age group. “The increase in employment induced by the reform is mainly reflected in an increase in employment, but also in unemployment, even in inactivity (besides retirement). The reform has reduced the likelihood that seniors between age 60 and their new AOD (minimum age at which a contributor can liquidate their retirement Editor’s note)”, analyzes INSEE.
“All in all, the main short-term effect of the reform would have been to freeze the situations reached when approaching sixty while awaiting the new age of access to retirement: this is, above all, an increase in the duration of employment of those still active between the ages of 58 and 60 years ago that the reform would have enabled an increase in overall employment,” adds the Institute for Statistics.
In the longer term, according to the latest report from the Conseil d’orientation des Retraites (COR), “the activity rate and the employment rate of seniors (55-64 years) have increased since the early 2000s. , more rapidly since 2011 under the influence of pension reforms. (… ) Thus, the shift in retirement ages since 2010 has been accompanied by an increase in pre-retirement length of employment, but to a lesser extent in unemployment duration,” says the report. “While there has been progress in senior employment in recent years , the issue of transitions to retirement remains relevant as a significant proportion of insured persons go through periods of unemployment or inactivity between their final retirement and retirement (ie on the date of the liquidation of their rights)”, it is also stated.
So if raising the statutory retirement age allows older workers to stay in the labor force longer and thereby increase the employment rate of those over 55, the government must also consider the case of unemployed older people and their later transition into retirement.
OTHER LEVERS EXIST
However, raising the statutory retirement age would not be the only lever to compensate for the system deficit. Increasing the labor force participation rate of seniors could balance the pension system without touching the statutory retirement age, according to economists. In fact, a study published last June by Sciences Po’s Demographic and Economic Change Chair, supervised by economist Jean-Hervé Lorenzi, shows that increasing the employment rate of seniors by 10 percentage points (i.e. from 56% to 66 % ), an equilibrium could be reached. In other words, this would halve unemployment among the elderly by ‘doubling VET spending’ for that age group. According to their calculations, by maintaining the “current age standards”, namely the statutory retirement age of 62 and increasing the contribution period to 43, a “balance” could be achieved by 2035. This would also allow, according to these economists, to restore the hardship criteria that were abolished in 2017, which allowed earlier retirement for people in a difficult job.
According to Valérie Gruau, access to training for seniors is one of the main areas of work. “The issue of education is fundamental because we offer much less education to people over 50 or 55 than we do to young people and that’s a mistake because it keeps people motivated to continue to become competent and productive. Pôle Emploi must continue to offer support that goes beyond technical training, such as: B. Workshops to update your CV”.
The government has also hypothesized that it would encourage accumulation of work and retirement by allowing retirees who continue to contribute to receive an increase in their pension, giving seniors on low pensions some additional income can benefit. All of these arbitrations are yet to be debated in the coming weeks.