Statistics Estonia and the Office of the Minister for Population and Ethnic Affairs have published two studies investigating employment among older people. The studies outlined and analysed the reasons for retirement, the different employment patterns of older persons and job satisfaction among this age group. Although older people have a relatively high employment rate in Estonia, several aspects still need improvement to support employment in older age.
About the studies
The study ‘Retirement of the elderly from the labour market’ (Eakate taandumine tööturult (in Estonian, 135Kb PDF)) by Statistics Estonia (Statistikaamet) analysed the employment patterns and transition to retirement among 50–69 year old people, based on 2006 Estonian Labour Force Survey (LFS) data. Statistics Estonia has conducted the LFS on a regular basis since 1995. The target population of the survey is working age residents of Estonia and the results are representative of the whole population.
A second study, ‘Well-being of elderly persons in Estonia in 2007 compared to families with children and non-Estonians’ (Eakate heaolu Eestis 2007 – võrdlus lastega perede ning mitte-eestlaste rühmaga (in Estonian, 327 Kb PDF)), was carried out by the Office of the Minister for Population and Ethnic Affairs (Rahvastikuministri büroo). This study mainly derives from the 2006 European Social Survey (ESS) data. The ESS is based on interviews with 1,517 persons, 398 of whom were older than 63 years.
More part-time work
Research shows that the practice of part-time work increases with age: while just 3% of men and 2% of women aged 50–54 years are working part time, this indicator increased to 15% and 36% respectively in the 65–69 age group. Nevertheless, only a modest proportion of people responded that they would be motivated to continue working if part-time work were offered, amounting to 10% of men and 15% of women aged 50–69 years.
The reasons that the survey respondents gave for working part time show that more than 50% of those of pensionable age do not want a full-time job. However, persons aged between 50 years and the pensionable age mostly work part time for involuntary reasons. For example, about 30% of the latter group work part time due to a shortage of production orders or work, while around 30% have not found full-time work and 15% do not work full time because of injury, illness or disability.
High employment rate despite low flexibility
In addition, other forms of flexible work are not available. For example, just 6% of those aged over 50 years could work at home frequently and 4% only sometimes. Only 3% had the option of using telework arrangements. Thus, it can be concluded that increasing the availability of flexible working arrangements would be useful to encourage older people to remain in the labour market.
Despite the low availability of flexible forms of work, the employment of older persons is relatively high in Estonia – even exceeding the Lisbon target of a 50% employment rate for 2010. This is partly due to the shortage of labour in the years of economic growth, low pension insurance and limited early retirement pension provisions.
Lower job quality
The quality of jobs available is different for older workers; compared with the total population, older workers are more often unskilled workers, plant and machine operators or assemblers, or skilled workers in agriculture and fishing. The proportion of older people is lower among skilled workers, service and sales workers, technicians and associate professionals, or clerks. Thus, it is concluded that after reaching retirement age, older persons have two options for staying in employment: those with higher education or professional experience continue working as professionals, managers or highly qualified clerks, while others must keep or find an unskilled job.
Different working time arrangements and a relatively high share of unskilled workers result in lower remuneration. Average monthly net income in Estonia in 2006 was EEK 7,570 (about €484 as at 24 July 2009); however, almost 40% of older people earned between EEK 2,001 and 4,000 (€128–€256).
Good job satisfaction
Despite these differences, older persons’ job satisfaction is comparable to all other groups. Furthermore, those aged 63 years and older are more often satisfied with their work remuneration than are other people.
Impact of pension system
The average retirement age is higher in Estonia than in many other European Union Member States, standing at 65 years for men and 61.4 years for women, compared with an EU average of 60.7 and 59.4 years respectively. According to Statistics Estonia, the main reason for retirement is reaching the statutory retirement age (37%); other reasons include the loss of work (20%), reaching the mandatory retirement age for occupations where an age limit has been imposed, such as miners (18%) and incapacity to work (12%).
The high average retirement age and the relatively high employment rate of older people show that the Estonian pension insurance system fosters labour supply among this age group. For example, pensions are also paid to working pensioners, except in the case of early retirement. However, pensions are low, with the average monthly old age pension representing 31% of average gross wages and salaries in 2007; older persons are therefore forced to stay in employment to maintain their standard of living.
Kirsti Nurmela and Liina Osila, PRAXIS Centre for Policy Studies