'End of career' under debate

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In October 2004, the Belgian Prime Minister invited the social partners to participate in a 'conference on the end of career', highlighting the increasing attention that is being paid to early retirement and related issues. The issue is also an important one in negotiations over a new national intersectoral agreement for 2005-6, and the social partners have divergent views. This article reviews the current evidence and debate on the 'end of career'.

Debate over early retirement and other 'end of career' issues was relaunched by the government at an extraordinary cabinet meeting held in January 2004, and on 26 October the Prime Minister, Guy Verhofstadt, convened a 'conference on the end of career'. He invited the central social partner organisations to participate in a joint analysis of the situation, and then to table joint proposals in the coming months (BE0411302N). The issue is an important one in the run-up to the negotiation of a new intersectoral agreement for 2005-6 (BE0412301N), and indeed was described in November 2004 by the the National Federation of White-Collar Workers (Centrale Nationale des Employés/Landelijke Bedienden Centrale, CNE/LBC) as the key issue in the dialogue.

Background

During the 1990s, it was when reforming their pension schemes that many countries cited the demographic context of population ageing (eg declining fertility, greater life expectancy and living longer in good health). A reduction in government revenues also played a part in these changes. Today, the debate is focusing increasingly on keeping the over-50s in employment - 'active ageing' is seen as a new way of responding to the challenge of demographic ageing, and the issue is not so much pensions as the employment of older workers.

In EU terms, active ageing is understood to mean getting more and more older workers (aged over 50) into work, with the objectives of: an average employment employment rate of 50% for those aged 55-64 by 2010, set by the Stockholm European Council in March 2001 (EU0104208F); and gradually raising the average effective retirement age by about five years by 2010, set by the Barcelona European Council in March 2002 (EU0203205F). In Belgium, according to Eurostat figures, the employment rate for those aged 55-64 was 25.7% in 2002 and 28.1% in 2003, compared with 41.5% in the EU as a whole, and it is still falling among less skilled older workers. Moreover, the average age of leaving the labour market stands at 58.6 years for men and 58.4 for women in Belgium, compared with EU averages of 61 years for men and 60 for women. The average length of working career is estimated to be 36.6 years for Belgian men, against an EU average of 41.1 years. The Belgian data on retirement age and length of career are estimates calculated by the consultative Higher Council for Employment (Conseil Supérieur de l’Emploi/Hoge Raad van de Werkgelegenheid, CSE/HRW).

According to the Organisation for Economic Cooperation and Development (OECD), the debate on the low rate of labour participation of older workers in Belgium (BE9905271F) only got under way in the 1990s (Ageing and employment policies - Belgium, OECD, 2003), though more importance has been attached to this debate since the extraordinary cabinet meeting in January 2004. The socialist-liberal government has followed the recommendations of the Employment Minister, Frank Vandenbroucke, and has sketched the outlines of its thinking on ageing, and of an employment policy focusing on age and based on studies conducted by the Higher Council for Employment and the Committee for the Study of Ageing (Comité d’Etude sur le Vieillissement/Studiecommissie voor de Vergrijzing, CEV/SCvV). The latter was set under the law of 14 September 2001 on 'guaranteeing a continuing reduction of the public debt and of the establishment of an Ageing Fund'. It is charged with examining the budgetary and social consequences of ageing. It may also, on its own initiative or at the request, of the government, conduct specific studies on the subject of ageing. CEV/SCvV is coordinated by the Federal Planning Bureau (Bureau Fédéral du Plan/Federaal Planbureau), and comes under the Higher Council for Finances (Conseil supérieur des Finances/Hoge Raad van Financiën).

Figures

In its annual report published in April 2004, the CEV/SCvV has examined the macroeconomic and budgetary impact of a strengthened employment policy, adopting a technical approach and not seeking to evaluate the impact of substantive political measures. According to its projection, the long-term structural rate of unemployment will be 7.5% in 2030 (the CEV/SCvV says that the current rate of unemployment stands at 14.2%), an apparently optimistic figure said to be justified on a historical basis. This projection is based an increase in the employment rate corresponding to both changes in early retirement and a 20% fall in long-term structural unemployment. According to this projection, the impact of this development on the public budget will cause the 'cost of ageing' to fall in 2030 from 3.4% to 2.5% of GDP, that is to say a decrease of 0.9 percentage points. The study fine-tunes the projection on the basis of a 'small increase in productivity brought about by an increase in part-time working'. If this comes occurs, the budgetary cost of ageing will fall to a 2.7% increase in GDP.

The macroeconomic impact is linked by the CEV/SCvV to European objectives: 'The Lisbon objective (a global rate of employment of 70% in 2010), even if a strengthening of employment policy were simulated, will not be achieved. It will only be achieved in 2026, and the objective of a 50% rate of employment among the over-55s will be achieved in 2017 [ie seven years late]. The objective of a women’s rate of employment of 60% will be achieved in 2014 [ie four years late].' The increase in employment among older workers (estimated at 200,000 jobs) will be accompanied by a 'substitution effect' as 35,000 jobs will be lost among young people.

The Higher Council for Employment (CSE/HRW) was established in 1995 (BE9708114N), with the role of monitoring measures relating to employment promotion and specific employment policy. Since May 2000, it has been tasked with focusing more closely on European employment policy. The CSE/HRW is chaired by the Minister of Employment, and brings together academics, technical experts from the Federal Planning Bureau, and senior officials from the regional employment services and the National Employment and Placement Service (Office National de l’Emploi/Rijkdienst voor Arbeidsvoorziening). In its 2004 report, published in June, the Council stresses the role of financial incentives in the field of early retirement, and in the 'good practice' of other European countries in the employment of older workers. It points out that Flanders will confront a more acute situation than either Wallonia or the Brussels region in terms of the ageing of the working-age population, and that there is already evidence of labour shortages. The report also finds that employment rates fall with age, and the problem of retirement mainly concerns the unskilled and medium-skilled. In addition, the CSE/HRW presents the various forms of early retirement from the labour market, highlighting their reciprocal importance:

  • the statutory early retirement scheme that provides for the opportunity to leave before the statutory age of 65 covers 15% of the 50-64 age group;
  • the invalidity scheme covers 6.7% of the 50-64 age group;
  • the 'older unemployed worker' scheme accounts for 8% of the 50-64 age group (ie unemployed workers who are not job-seekers). The age of entry to this scheme has been gradually increased from 50 in 2001 to 58 in 2004; and
  • the collectively agreed full-time early retirement ('pre-pension') scheme embraces 5.9% of the 50-64 age group, and allows those covered to retire at 58 (the collectively agreed half-time early retirement scheme accounts for 0.1% of the 50-64 age group). In enterprises acknowledged to be in financial difficulties or undergoing restructuring, there are exemptions lowering the entry age to 50.

As a corollary to the low employment rate among older workers, the CSE/HRW stresses their high 'inactivity rate'. It argues that this results from an absence of a wish or need to work among older people, from discouragement in job-seeking, or from a status that allows them to be no longer available on the labour market. In other words, the CSE/HRW does not highlight the role of employers, which is what the OECD focuses on, arguing that the evidence suggests that Belgian employers have been pursuing a 'policy of detachment' towards their older workers for years. CSE/HRW also plays down the fact that, quite apart from any change in attitudes in relation to early retirement, there are few training opportunities and job openings for the over-50s - the OECD says that there is evidence that the labour market is virtual non-existent for those over the age of 50. Lastly, one might query the inactivity figures, and suggest that the fact that the rates for Belgian women are consistently higher than for the EU 15 on average (44.4% compared with 33.7% for those aged 50-64, 72.9% compared with 50.9% for those aged 55-59, and 93.1% compared with 81.8% for those aged 60-64) actually conceals a large proportion of women staying at home, whose 'inactive' status might be queried.

Views of social partners and government

Although figures for the low level of labour market participation by the over-50s in Belgium are known, the social partners disagree on their interpretation. As long as the economic situation fails to improve and the rate of unemployment remains high, especially among young people, the trade unions find it difficult to try and put older workers (back) into employment, particularly as they think that such measures could weaken the position of older workers ever further. The unions unanimously defend early retirement: 'The extension of existing early retirement provisions is also crucial', according to the president of the Federation of Liberal Trade Unions of Belgium (Centrale Générale des Syndicats Libéraux de Belgique/Algemene Centrale der Liberale Vakbonden van België, CGSLB/ACLVB). The Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) argues that it is vital for early retirement to be maintained 'for the victims of restructuring exercises, relocations and closures, and for workers worn out by the increasing demands of competitiveness'.

A summary of the thinking and the positions of the trade unions on 'end of career' matters is set out in a provocatively entitled work published in Flemish in November 2004 - '50 lies about ageing'. The author, Gilbert De Swert, head of research at the Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV), says that 'it is necessary to stimulate productivity, and rather than encourage people to work for longer, to increase rates of employment by reabsorbing young people, women and foreign citizens who are unemployed'. He adds that 'abolition of early retirement does not automatically lead to there being more people employed: employers do not want older workers'. CSC/ACV summarises its position as follows: 'the rate of employment must be increased by creating more jobs, and possibly by working longer than we do today. However, there is no point in panicking.'

Some commentators perceive a certain contradiction on the employers’ side. While the Federation of Belgian Enterprises (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO) advocates measures aimed at a more active end of career by making employees shoulder more responsibility and signing up to the EU logic of 'making work pay', ('working longer has got to bring in more money', according to a FEB/VBO 'masterplan' issued in July 2004), enterprises continue to be involved in drawing up early retirement schemes. Some have drawn comparisons between the situation of Belgian enterprises and the situation in France (FR0406106F) where researchers have found that older workers continue to be stigmatised: 'Although older workers may not be overtly discriminated against, many managers continue to stigmatise them through stereotypes relating to their skills and work attitudes' ('Les entreprises face au vieillissement de leurs effectifs', C Minni and A Topiol, in Dossier : Les travailleurs âgés face à l’emploi, Economie et Statistique, n° 368, April 2004). It should be borne in mind that Belgian employers’ positions take their inspiration from EU proposals such as limiting the number of early retirements and keeping employees at work until they are older.

The position of Prime Minister Verhofstadt (Flemish liberal) appears rooted in the logic of the EU's European employment strategy. It oscillates between: announcements in the media - such as the presentation of '31 paths on end of career' in his 12 October declaration of general policy to parliament, and the launch of the 'conference on the end of career' at the Palais d’Egmont on 26 October with the social partners; and a wish to maintain social dialogue. While stating that he would not touch the current benefits of early retirees and older job-seekers, the Prime Minister subscribes to the EU remedy that proposes a reduced use of early exit from the labour market and an increase in the real length of careers.

Commentary

The end-of-career debate has reached Belgium at last, and a key issue is the interpretation of why it has taken so long. If the EU level has played a role, it might be as a way of taking the end-of-career issue into consideration in a genuinely tripartite way. However emblematic it may be, it is to the credit of the 'conference on the end of career' that it has brought all the social partners around the table notwithstanding their differing views on the subject. In France, recognition of the Pension Stewardship Council (Conseil d’Orientation des Retraites), which has examined similar issues, suffered in its early days from the absence of employer representatives (FR0201112F).

The end-of-career debate is also contributing to the national negotiations for the intersectoral agreement covering 2005-6. On the trade union side, the key issues are wage increases, flexibility and early retirement (BE0412301N), and the unions are asking for the current agreement on the latter issue to be extended (at the time of writing this report, it is not known what influence this demand will have on the content of the agreement).

During negotiations, early retirement is seen as a crucial and symbolic issue. Crucial because it represents a negotiating tool for the trade unions in the event of collective redundancies and closures of enterprises - they prefer an early retiree to another unemployed worker. Symbolic because, as noted above, collectively agreed early retirement concerns only 5.9% of workers aged between 50 and 64. Invalidity and unemployment are the two most important reasons for leaving the labour market in all older age-bands, except for men aged between 60 and 64. One might also ask why the angle of approach focusing on early retirement is relevant in budgetary terms. The CEV/SCvV figures measure the budgetary cost of early retirement (they accounted for only 0.4% of GDP in 2002 while expenditure on pensions came to 9.2% and healthcare 6.6%): in the view of Robert Plasman, a researcher at the Free University of Brussels, the figures indicate that 'early retirement is only the tip of the iceberg: by attacking the problem by simply discouraging early retirement, we will fail to meet the objective' (quoted in La Libre Belgique on 2 November 2004).

If the CEV/SCvV’s projections were to be followed, how would we manage the substitution effect that would be triggered by this situation (getting 200,000 older workers into employment and losing 35,000 jobs for young people)? And then, how would we deal with the 'communicating-vases' syndrome that affects even the countries regarded as embodying EU good practice in terms of ageing at work, such as Sweden and the Netherlands? Although it is not possible to make a cause-and-effect link, Swedish specialists say that restructuring of the country's pension scheme has been accompanied by greater use of invalidity schemes by people as young as 40: 'But it is important to remember that not everyone in the labour force is employed. A major problem that has emerged in the past five years is the increasing share of people on sickness benefits' ('Labor force participation among workers approaching retirement in Sweden', A Sundén, inLe vieillissement actif en Belgique. Séminaire national, Brussels, September 2004). The same phenomenon has been observed in the Netherlands, where part-time working has pushed employment rates up: 'Older employees are no longer on early retirement but are unemployed. While the total number of unemployed people has increased by 15.4% in 2003, the number of those unemployed aged over 57.5 years has increased by 26%' (Ageing and work in Europe, European Foundation for the Improvement in Living and Working Conditions, 2004). In brief, there are no shortcuts. This is an issue that calls for a global approach.

Lastly, and to take one final example, how are we to make sense of the view expressed by the CSE/HRW that 'it is highly skilled men that have really benefited most from early retirement formulas in the last few years'? This question prompts a further hypothesis: could at least some instances of early retirement could be seen as a form of disenchantment, of a gap between the world of work as some workers represent it to themselves, and as it has become? This raises a question - beyond the scope of this article - of whether it is the productive system itself, modes of organisation in enterprises and, more broadly, the dominant norms in force in work that help to foster this intention to retire. (Thibauld Moulaert, IST, Catholic University of Leuven, Louvain-la-Neuve)

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