Thursday, April 30, 2009

Europe: First European Day on Solidarity between Generations

The European Commission declared April 29 the first "European Day on Solidarity between Generations." In conjunction with that, various events took place throughout Europe.
"Over the coming years, the first baby-boomers will be starting to retire. This marks the beginning of a fundamental shift in the balance between retirees and people of working age. We have to make sure that ageing will not undermine solidarity between generations", said Vladimír Špidla, Commissioner for Employment, Social Affairs and Equal Opportunities.
Among other things:
  • a conference on "Intergenerational Solidarity for Cohesive and Sustainable Societies" was organized by the Slovene Presidency in Brdo, seeking "to reinforce social links between generations as well as to initiate a shift in policy-making to promote greater solidarity between generations."
  • the results of a Flash Eurobarometer on "Intergenerational Solidarity" was released. It showed considerable disparity in views about the generations among older and younger people. With respect to working, 56% of Europeans believe that as people work to an older age, fewer jobs will be available to younger workers.
  • Eurofound launched a special website which brings together its recent findings, data and recommendations on issues related to the employment of older people, and active ageing issues, and the solidarity between generations.
Source: European Commission "Intergenerational solidarity: key to responding to demographic ageing" (April 28, 2009)

Tuesday, April 28, 2009

China: Study Points Pension Reform to Deal with Coming Age Wave

A report from the Center for Strategic & International Studies warns that the aging of China’s population could usher in a new era of slower economic growth and mounting social stress as tens of millions of Chinese arrive at old age over the next few decades without pensions and with inadequate family support. The authors of "China’s Long March to Retirement Reform: The Graying of the Middle Kingdom Revisited" evaluate recent government efforts to prepare for the challenge and outlines an ambitious new reform plan and argue that, despite the current economic situation, delay in addressing address the long-term aging challenge is not an option.

Among other things, Richard Jackson, Keisuke Nakashima, and Neil Howe present a plan that provides for a universal poverty backstop that would protect all Chinese against an uncertain old age, and that would also create a national and fully portable system of funded retirement accounts. This would allow China to care for a much larger number of older people without overburdening its smaller working generation and help China to maintain rates of savings, investment, and living standard growth as its population ages. With respect to retirement age:
The minimum retirement age would initially be set at 60 for men and 55 for women, just as it is in the current basic pension system. These low retirement ages are necessary because today’s older workers often do not have the skills to compete in China’s rapidly modernizing economy. But as these workers are replaced by younger and higher-skilled cohorts and as China’s population ages, longer work lives will not only become feasible, but essential. Our plan therefore provides for gradually raising the minimum retirement age for both sexes to age 65 by 2030, after which it would be indexed to longevity.
Sources: Center for Strategic & International Studies Summary (April 22, 2009); Reuters "Age wave to come crashing soon over China's economy" (April 27, 2009)

Sunday, April 19, 2009

AARP Research Report Explores New Means for Transitioning to Retirement

An AARP research report has been published exploring the concern that policies being explored to extend working lives—-and delay the claiming of Social Security benefits—-as a means to ensure workers' retirement security and Social Security's finances may inflict real hardship on some older workers who retire earlier because of health and related problems. Accordingly, in "Employment Support for the Transition to Retirement: Can a New Program Help Older Workers Continue to Work and Protect Those Who Cannot?", David Stapleton of Mathematica Policy Research, Inc., proposes a new program--Employment Support for the Transition to Retirement (ESTR)--that could help “break the deadlock” that stymies efforts to adopt policies that encourage later retirement.

Stapleton's vision of ESTR is that it would provide assistance to workers who experience large involuntary earnings losses as they approach age 62. It would provide a wide range of benefits, tailored to individual need—including wage subsidies and other work supports, health insurance subsidies, disability benefits, extended unemployment benefits, and employment counseling. While not individually new, what is new is the idea of a substantial and coordinated expansion of these elements in the context of retirement policy reform.

Source: AARP Research Report In Brief (April 2009)

Wednesday, April 08, 2009

Study Shows More Californians Working Longer

According to a report issued by the California Budget Project, employment rates of Californians at or near retirement age continued to rise even during the economic downturn. Specifically, in 2008, 63% of people age 55 to 64 were employed, up from 58.4% in 2000 and 54.8% in 1995 after having been fairly stable before then (1995 was just up 1.2% from 1979). For older workers, those 65 to 69, 29.7% were working in 2008, up from 22% in 2000.

When looking at the numbers on a gender basis, the Budget Project found that the trends for men and women aged 55 to 69 varied. While about half of women are still working, a figure that has climbed steadily from 32% in 1979, the percentage of working men declined from 58% in 1979 to 51% in 1995, then rebounded to 60.7% in 2008.

Looking more closely at the current economic downturn, older workers have been increasing their participation rates while they drop for younger workers. Thus, the share of Californians age 55 to 64 who were employed increased by 0.9% between 2007 and 2008 (from 62.1% to 63%) and the employment rate of Californians age 65 to 69 rose by 4.5% (from 25.2% to 29.7%), while the share of Californians age 25 to 54 who were employed declined by 1.2% 2007 and 2008.

Sources: California Budget Project Policy Points (April 2009); San Jose Mercury News "More Californians working later in life, especially women" (April 7, 2009)