Company practices regarding older workers

A survey of over 3,000 Portuguese companies reveals that older workers experience a number of difficulties when returning to the labour market after a period of unemployment. It also shows that older workers are frequently passed over for professional training and, in some cases, are forced into compulsory retirement.

The survey was compiled as part of a study, Older workers: Public policies and company practices (2.72Mb PDF; in Portuguese) (Trabalhadores mais velhos: políticas públicas e práticas empresariais), and published in 2003 by the Ministry for Social Security and Labour (Ministério da Segurança Social e do Trabalho). It aims to contribute to the debate on active ageing which is currently taking place in Portugal.

Active ageing is a government measure (included in the National Action Plan for Employment 2003-2006, 467Kb PDF; in Portuguese), which aims to reduce the economic and social effects of demographic trends in the welfare systems − namely, the imbalance between contributors to and beneficiaries of the welfare system and the ageing of the labour force.

The main objectives of the government’s active ageing initiative are: to bring inactive individuals of active age into the labour market; to discourage early retirement from the labour market; to extend the period of activity beyond retirement age; and to combat long-term unemployment among older people.

As part of the study, more than 3,000 companies were surveyed. Among the main findings, it was revealed that the majority of workers recruited, who are over 45 years of age (during the 12 months preceding the survey), typically:

  • are men;
  • are educated to a low level (primary school or less);
  • occupy low or non-qualified positions;
  • have fixed-term contracts and work full time - although part-time contracts were more common among workers over 55 years;
  • receive earnings that are, on average, higher than those of younger workers with the same level of education.

The survey also showed that companies with a 26-50% proportion of employees over 45 years old recruit more individuals above that age. However, a direct correlation was not found between the proportion of older workers and the total number of employees, or the age distribution of newly recruited personnel. The study demonstrates that the recruitment of people over 45 years old is significantly lower in companies with a younger age profile (up to 25% of employees over 45 years old): only 7.1% of the workers hired by these companies were 45 years or over. Most companies, the study showed, perceived 50 years of age as the age limit at which someone is considered to be old in terms of recruitment.

Further findings revealed that the larger the company is, the greater the number of older workers it recruits. Most companies with 50 or more employees recruited workers aged 45 or over.

Companies’ perceptions concerning age and training: degree of agreement with discriminatory phrases towards older workers (%)
Perceptions concerning age and training
Phrase Agree Neutral Disagree
It is always preferable to invest in the professional training of younger workers. 50.7 27.0 22.3
Older workers are less motivated to learn new things. 45.5 32.1 22.4
The older trainees have greater difficulties in learning. 42.5 39.3 18.2
It is harder for older people to make use of the acquired knowledge. 39.7 39.4 20.9
It is a waste to provide training to individuals who will only work for a few more years.* 9.6 31.4 59.1

* The total slightly exceeds 100%; this comes from the original source.

Source: Older workers: Public policies and company practices, 2003

Although 29.4% of the individuals who received training (during the last 12 months preceding the survey) were over 45 years of age, the study found that a considerable number of companies held discriminatory views in relation to the training of older workers. It concluded that just over 50% of the companies surveyed agreed with the phrase: ‘It is always preferable to invest in the professional training of younger workers’. Almost 10% agreed with the phrase: ‘It is a waste to provide training to individuals who will only work for a few more years’.

In the study, the companies were classified according to the number of phrases - out of the five quoted above - on which they agreed. Those agreeing with three or more phrases (34%) were considered to show prejudice; those agreeing with one or two phrases (46%) were considered to show little prejudice; and those agreeing with none (20%) were considered to show no prejudice. The mining and quarrying industry sector had the largest number of companies showing prejudice (47.7%), while the electricity, gas and water supply sector had the largest number, showing no prejudice (39.3%).

Companies’ human resources policies regarding age
Perceptions concerning age and training
Policy Yes No
No. % No. %
Every worker can stay in the company beyond retirement age, if they wish. 937 30.4 2,148 69.6
Some workers can stay in the company beyond retirement age, if they wish. 2,246 72.8 839 27.2
The company offers conditions/has mechanisms allowing a gradual transition to retirement. 634 20.6 2,451 0.8
The company values and aims for age diversity among its labour force. 2,272 73.6 813 26.4
The company prefers or encourages older workers to leave. 440 14.3 2,645 85.7
The company looks for younger staff as often as possible. 2,505 81.2 580 18.8

Source: Older workers: Public policies and company practices, 2003.

Overall, the study revealed that companies did not encourage their workers to leave and that they didn’t necessarily consider retirement age as a reason for having to leave. However, it concluded that few companies (21%) possessed mechanisms to facilitate a gradual transition towards retirement, and that the majority of companies (81.2%) tended to look for younger staff. This would seem to indicate that some companies have staff substitution practices which are unfavourable for older workers. Moreover, only 30% of the companies interviewed mentioned that ‘all workers can stay in the company beyond the formal retirement age, if they wish’.

Survey methodology

The questionnaire was mailed to a representative sample of 6,004 private companies, in October 2002. The companies come from all sectors of the Portuguese economy, excluding agriculture and fishing, the public sector and families with domestic employees. It was completed by human resources professionals or managers in the selected companies, and generated 3,202 responses, 3,085 of which were valid (51.38% response rate).

Reference

Pestana, N. N., Trabalhadores mais velhos: políticas públicas e práticas empresariais (Older workers: Public policies and company practices), Cadernos de Emprego e Relações de Trabalho No. 1, MSST/DGERT, Lisbon, 2003.

Further information

Further EU level research on ageing in the workplace is available on the Foundation’s website.

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