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Work longer for a healthy economy and a happy home

10 May 2015
by Patrick Love
Helping to defeat RHS

Helping to defeat RHS

“There is no homogeneity in the solutions offered by industry to the two major issues of employment and retirement of the older worker, indicating not only the complex nature of the problem but also the lack of factual material upon which to base a solution.” That’s Dr W.M. Gafafer, writing in Public Health Reports in 1957. He filled the knowledge gap by looking at everything he could find, from employer surveys to “help wanted” ads in the papers. Some of what he reports sounds quaint today, like the retirement counsellors going round to see how ex-employees were getting on, but Gafafer’s analyses and conclusions are as pertinent as ever. He points out the lack of a systematic approach to the issues that an ageing workforce was likely to raise, and calls for both an “effective use of the skills of the elderly worker” and “a full life in retirement”.

Half a century later, the trends Dr Gafafer noted were more pronounced than ever. An OECD study called Live longer, work longer estimated that if work and retirement patterns didn’t change, the ratio of older inactive persons per worker would almost double from around 38% in the OECD area in 2000 to just over 70% in 2050. In Europe, the ratio could reach almost one older inactive person for every worker over the same period. The OECD calculated that with unchanged participation patterns and productivity growth, the growth of GDP per capita in the OECD area would decline to around 1.7 % per year over the following three decades, about 30% less than its rate between 1970 and 2000.

Assuming unchanged anything is rarely a winning strategy though, and in 2007, the year after the Live longer was published, growth of per capita GDP was wrecked not by the old, but by the bright young things in front of their computer screens in trading rooms around the world. A number of older works saw their private pensions wiped out or reduced to a pittance. Public pensions were hit by the austerity measures introduced to try to balance government budgets. The result was a number of older workers having to work longer whether they liked it or not, if they could find a job.

Even before the crisis, older workers had to fight a number of prejudices that the OECD argued were based on myth rather than evidence. As well as reducing employment opportunities for individual these myths could hamper reform efforts and the adoption of age-friendly employment practices. For example, the claim that fewer jobs for older workers results in more jobs for younger workers is unfounded. Likewise, the claims that working capacity systematically deteriorates with age is not supported by the many studies of employers and older workers the OECD carried out in country reviews. Older and younger workers each have relative strengths and weaknesses, a point made by Gafafer too, who found for example that employers looking for highly-skilled workers never mentioned age as a barrier to recruitment.

There is little evidence that work intensification in existing jobs is exerting pressure to retire early, or that older workers are just “too tired” to carry on working, although better-designed workstations and workflows would help them significantly (and other workers too).

Live longer, work longer paints a broad picture, and given the differences from one place to another, the OECD launched a series of in-depth country studies called Working better with age. You can find them here along with national policy reviews carried out after Live longer, as well as statistics on retirement and labour force status by age group.

We’re not talking about a return to the situation in the US in the 1890s Gafafer describes, where 68% of men aged 65+ were still working. Working better looks at people aged 55-64. In the OECD as a whole, 57.5% of this age group is employed, but the figures vary considerably from one country to another. The most industrious elders are to be found in Iceland, where 83.6% of them still have a job, followed by New Zealand (76.3%), Sweden (74%), Norway (72.2%), and Switzerland (71.5%). At the other end of the scale, the score drops to 31.4% for Turkey, 33.7% for Greece, and 35.8% for Slovenia.

Given the large differences between countries, the Working better reports focus on specific national characteristics and issues, but the report on Norway does give a brief summary of the opinion that underlies the various proposed reforms: “It is sometimes argued that the consequences of ageing could be offset by policies to encourage greater immigration, higher fertility, or faster labour productivity growth. While these developments would all help, they need to go hand in hand with attempts to better mobilise available labour reserves so as to sustain economic growth.”

Of course all this is looking essentially at the macroeconomics of ageing and employment. Marco Bertoni and Giorgio Brunello of Padua University studied the impact of retirement on what happens at home. The analysed interviews with nearly 840 Japanese women from the Osaka University Japanese Preference Parameters Study, a panel survey on behaviours, risk attitudes, habits formation and time preferences of the Japanese population. This provides empirical data on the “Retired Husband Syndrome” (RHS) that affects the mental health of wives of retired men around the world. “We have found that the husband’s retirement and its duration significantly affected the wife’s RHS, measured by increased stress, higher depression or inability to sleep. We have estimated that adding one year to the time spent by the husband in retirement increases the probability that the wife develops RHS symptoms by 5.8 to 13.7 percentage points, a sizeable effect.”

Useful links

OECD work on ageing and employment policies

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