Tuesday, March 22, 2011

Poland: World Bank Report Recommends Raising Older Worker Participation

A report from the World Bank asserts that the main potential for increasing labor force participation in Poland is among older workers and women. If older workers in Poland were as active as they are in Germany, then the Polish gross domestic product would be up to 6% higher.

Employment is a major focus of the World Bank's report--"Europe 2020 Poland: Fueling Growth and Competitiveness in Poland Through Employment, Skills, and Innovation". A higher employment rate is also critical given the aging population and the growing life expectancy.
The difference between Poland and other EU countries is greatest in the case of older workers, which reflects in large part the, until recently, very generous rules governing early retirement. Specifically, only 35 percent of persons aged 55–64 are economically active in Poland (table 2) compared with the EU average of 51 percent, 58 percent in Chile and 62 percent in Korea (2009 data). This is a significant gap. Closing it is particularly important because the Polish population is aging, and if the gap is not closed, the pension system will be fiscally unsustainable (as will be further elaborated)
The report recommends raising economic activity among older workers (and older female workers, in particular), through reform of social security benefits and development of flexible forms of employment, particularly of part-time employment, increasing skills, and raising the retirement age--specifically by adjusting the retirement age of women to that of men (age 65).

For example, the report notes that "if the number of inactive women aged 55–59 fell by 10 percent the overall employment/population ratio would increase by nearly 0.5 percentage points. In contrast, a 10 percent fall in inactivity among women aged 20–24 would lead to a less than 0.1-percentage-point increase in the overall employment rate." Furthermore, older workers in Poland are provided with incentives to withdraw from the labor force. The availability of disability pensions and early retirement options might make inactivity the preferred choice for many older workers. I

Source: World Bank Press Release (March 21, 2011)

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