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    Canada
  • United States
    United States
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    Mexico
  • Brazil
    Brazil
  • United Kingdom
    United Kingdom
  • Germany
    Germany
  • Turkey
    Turkey
  • Israel
    Israel
  • South Africa
    South Africa
  • China
    China
  • Korea
    Korea
  • Japan
    Japan
Brazil
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Brazil

Productive Opportunity

Tapping productive opportunity among the older population is not a priority for the Brazilian government, which has focused on addressing immediate development issues, such as poverty, inequality, and credit booms. Social welfare programs have used direct cash payments as the primary tool to support vulnerable groups, creating a disincentive for labor force participation. Looking ahead, the government has pledged to undertake potential reform as part of its efforts to pursue long-term fiscal sustainability, but it has attracted widespread opposition.

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Canada
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Canada

Productive Opportunity

Canada has seen a deceleration in its workforce growth over the past decade, with the trend expected to continue as the baby boom generation retires. In response, the government has placed greater emphasis on broadening the labor force participation of all citizens, including older people. However, the transition from the Harper administration, which favored fiscal conservatism, to the more liberal Trudeau administration, which is prioritizing increased public spending and social supports, has resulted in a different policy direction with respect to older workers. The change is evidenced in the Trudeau administration’s decision to cancel a planned increase in the pensionable age of the basic Old Age Security to 67 in 2023, citing the importance of protecting vulnerable seniors. Instead, the new administration has stated its intention to increase incentives for those who are willing and able to remain in the labor force.

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China
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China

Productive Opportunity

The Chinese government has thus far missed the productive opportunity that the older labor force represents. As in other countries, older Chinese workers face barriers, including age discrimination by employers and lack of relevant skills. In contrast to its efforts to improve social infrastructure for older adults, the government has paid much less attention to providing training to improve their employability and to cultivating age-friendly workplaces. The lack of legal protection for the rights and interests of older adults who resume working post-retirement also inhibits this population from re-entering the labor force.

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Germany
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Germany

Productive Opportunity

Germany’s older adult labor force participation rate remains low but is growing rapidly. Germany’s “baby boom” generation will begin to reach the retirement age of 65 in 2019, which will set off a dramatic acceleration in the shrinking of its labor force. In order to address this, the government has undertaken retirement reforms, including raising the pensionable age and introducing flexible retirement options, and has established programs to provide employment opportunities, education, and training, and to improve workplace conditions for older employees.

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Israel
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Israel

Productive Opportunity

Israel has relatively high older-age labor force participation, compared with other OECD countries, partly due to its pension system and retirement age reform in the early 2000s. As the population continues to age, the government is paying greater attention to older adults’ economic participation. A variety of policies and programs have been put in place, often in collaboration with NGOs, to create employment opportunities for older adults and to improve their employability, with an emerging focus on helping older job-seekers tackle online job applications. One potential policy that could also immediately boost older adults’ participation in the labor force would be to raise women’s retirement age, an idea that has been controversial.

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Japan
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Japan

Productive Opportunity

Japan has the world’s most rapidly shrinking population ages 15 through 64, a trend that has elevated the importance of mobilizing the older workforce to boost economic growth and to meet public pension obligations. This economic imperative aligns with the interests of Japanese seniors, who have indicated a strong desire to remain active and employed. The government has adopted a variety of policy measures to increase workforce participation among older people, ranging from reforming the retirement system to assisting older people w ith job seeking. However, employers have yet to recognize fully the productive potential of the older population, thus far tending to hire older workers out of social or legal obligation. As a result, a mismatch persists between the skills and abilities of older job seekers and the nature of job positions available to them, leading to missed opportunity for the economy as a whole.

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Korea
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Korea

Productive Opportunity

The Korean government has been seeking to facilitate economic participation of both current and future retirees. To address the needs of today’s older population, whose high level of interest in employment is driven mainly by poverty, the government has augmented assistance to improve their skills and employability. Meanwhile, in the pursuit of fiscal sustainability of the public pension system, the government has been working to extend the retirement age to allow older people who are about to retire to stay in the workforce, including the promotion of a controversial wage peak system. These policies have been met with criticism, due to a widely held zero-sum perception that older workers’ participation in the workforce takes away job opportunities for younger people. However, given the educational attainment of baby boomers, the government’s effort to increase older adults’ participation in the workforce could yield positive results for the economy as the society ages.

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Mexico
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Mexico

Productive Opportunity

Older adults in Mexico work longer, on average, than their peers in most other OECD countries. However, this high labor force-participation rate is largely driven by the high poverty rate associated with the country’s large informal economy. The government has focused on alleviating poverty through a non-contributory pension scheme, with less focus on tapping the productive potential of its older population. Despite the desire to work, many older Mexicans face rampant ageism among employers, and local organizations report that this often begins at as early as age 35. Efforts to provide further education and training to help the older population gain employment remain scarce, and even moreso outside of large urban areas.

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South Africa
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South Africa

Productive Opportunity

Older adults in South Africa participate in the labor force at very low levels largely due to the provision of a non-contributory pension. Since the early 1900s, the Old Age Grant, which serves as South Africa’s only nationwide public pension scheme, has been available to adults age 60 and older who pass a means test. It is received by the overwhelming majority of the older population.

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Turkey
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Turkey

Productive Opportunity

The large gender disparity in the labor force, due to women retaining the central role in managing household responsibilities, has been a central obstacle to tapping the productive potential of Turkey’s older population. A push by the government to encourage families to have more children could further exacerbate this issue. As a society grappling with rising youth unemployment, economic engagement for older adults has not been elevated to a public policy priority, although ongoing gradual increases in the pensionable age are expected to boost participation in the labor force. Today, Turkey has the lowest normal pensionable age for men and women within the OECD.

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United Kingdom
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United Kingdom

Productive Opportunity

Recognizing the economic potential of their aging population, the British government has sought to foster more age-friendly labor markets. In addition to reforming the pension and public benefit system to provide incentives to stay in the labor force, a range of other policies have been pursued with this objective in mind, including those that provide assistance to help older adults go back to work. However, research by Age UK has shown poor outcomes for many older workers who face a range of challenges such as hourly cutbacks, insecure employment, and difficulty transitioning in the tech-based economy. While the labor-participation rate is increasing, there remains notable age discrimination in the workplace in spite of legislative programs over many years attempting to address it.

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United States
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United States

Productive Opportunity

Older Americans’ labor force participation rate has increased dramatically over the past several decades and is up by more than 50 percent over the period of 2000 through 2017, with participation by older women growing over 70 percent during that period. The labor force participation rate for both men and women is expected to grow further to reach 21.7 percent by 2024. The upward trend is a result of converging factors, including acute economic shocks, which adversely impacted retirement accounts, a shift toward employee-driven benefit plans, and an increasing number of older adults electing to remain in the labor force. As Americans are living longer lives and need greater economic security, a growing number are seeking to stay at or return to work.

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Productive Opportunity

Countries around the world are grappling with how to sustain long-term economic growth and competitiveness amid shrinking labor forces. Older people are a key to this puzzle – while large disparities exist, and inequality is on the rise in many countries, this group, as a whole, is living longer and healthier, possesses valuable experience and expertise, and increasingly seeks to remain active and productive. Tapping this productive opportunity requires actions beyond pension reforms; while it has been the primary strategy of governments to date, this approach fails to address the real barriers to older adults’ continuing participation in the labor force. Still in early days, countries around the world are experimenting with more holistic approaches ranging from structural reforms introducing greater flexibility into work and retirement, to combatting softer barriers in employer behaviors like ageism, and to providing older adults with targeted support to remain in or re-enter the workforce.

photo of a man operating machinery in a factory

Among the world’s top 20 economies – a group that accounts for 80 percent of global GDP – India is the only country that will not see its population ages 15 through 64 shrink as a percentage of its total population through 2050. As traditionally defined working-age populations shrink, the percentage of the population age 65 and older in these 20 economies will more than double. This trend shows no signs of reversing – those age 14 and under today account for 22 percent of the population on average. This will fall to 17 percent by 2050.

Missed Opportunity

While inequality persists in life expectancy, health, and education across groups, older people, as a whole, are living longer and healthier and are increasingly better educated. Across the 12 ARC countries, the desire among older adults to remain productively engaged outstrips the opportunity to do so. Most countries are still using or targeting age 65 as the statutory retirement age or pensionable age. This benchmark was first set by Germany – the first modern nation to introduce an old-age pension – more than one century ago, when average life expectancy of Germans was below 40 years. Locked into an outdated mindset of using an arbitrary chronological age and failing to embrace a more flexible and holistic approach to retirement, governments are unable to fully realize the productive opportunity among their older populations.

According to a 2017 survey conducted by Aegon in 15 countries, 57 percent of respondents envision continuing some form of work in retirement, and only 31 percent plan to stop working altogether and enter full retirement. While financial security is the primary driver, 56 percent of respondents cited “to keep active/keep my brain alert” as an important reason to stay productive in retirement, and 38 percent would do so because they enjoy their work.

Percentage of Population with Secondary or Higher Education in ARC Countries

Industrialized Economies

Industrialized Economies

(Sources: Barro R. & J.W. Lee, v. 2.1, Feb. 2016; FP Analytics)




Emerging Economies

Emerging Economies

(Sources: Barro R. & J.W. Lee, v. 2.1, Feb. 2016; FP Analytics)

Tackling Barriers in Employer Practice

The biggest stumbling block to older people’s labor force participation comes from employers, who very often have discriminated against older workers and are locked into a rigid, binary mindset of retirement. This area also represents the biggest gap for policy efforts, as demonstrated in the lack of government focus on anti-ageism legislation and enforcement. Nevertheless, while labor market structures vary by country, encouraging progress is being made where mandatory retirement is eliminated, support is provided for employment of older adults, flexibility is introduced into retirement, and efforts are made to facilitate older workers’ productive engagement.

According to the 2012 EU Active Ageing survey, more than one in five respondents have either witnessed or been the subject of discrimination in the workplace because they are perceived to be too old. A lack of opportunities to retire gradually by progressively reducing working hours was the most important reason for people age 55 and older to stop working, as cited by 72 percent of respondents. Moreover, 70 percent cited employers’ negative perceptions of older employees as an important obstacle that stops those age 55 or older from working.

The Irodori Project in Japan

In Kamikatsu, a small rural town in Katsuura District, Tokushima Prefecture, nearly half of the population is older than 65, and 86 percent of homes are connected to the internet through a fiber-optic network. It is the site of “Irodori,” a cooperative selling brightly colored leaves. Through the “Irodori” project, local farmers sell some 320 different kinds of leaves grown in the local mountains and fields, which are used for Japanese-style table settings. Senior farmers can access market information, receive orders, and manage shipments via special trackball-controlled computers placed in agricultural cooperatives, and more recently, through the use of special tablet devices that were developed in partnership with telecom operator NTT DoCoMo. Kamikatsu now has a market share of 90 percent for the Irodori leaf and has become a model for how ICT can be leveraged to contribute to the economic development of older adults and rural areas.

Support for Older Adults

Support for older adults’ employability is essential to enhance their competitiveness in the job market, where they tend to be disadvantaged. Compared with barriers in employer practices, this area has drawn greater attention and resources, but government programs tend to be limited to the most vulnerable or offer general support to job seekers rather than tailored offerings that address the specific needs of older workers. However, best practices are emerging that deliberately tap the productive opportunity of experienced professionals and integrate continuing education for older adults into national endeavors to promote lifelong learning.

Across OECD countries, nearly 40 percent of job seekers age 55 or older were unemployed for at least one year in 2016, more than one-quarter higher than the general population. The longer older people remain unemployed, the greater the risk of losing relevant skills or of dropping out of the labor force altogether.

According to a 2016 UNESCO survey of more than 130 countries, 70 percent reported having enacted new policies on adult learning and education (ALE) since 2009, but only 9 percent of countries reported that seniors or retirees are an especially important group for their ALE policies.

Korea Supports Lifelong Learning for Seniors

While Korea has achieved significant improvement in education over the past several decades, and its population ages 20 through 40 has the highest average years of total schooling among the ARC countries, it also has the greatest disparity in educational attainment between older and younger populations. In response, the government has integrated continuing education for older adults into its national endeavors to promote lifelong learning. Korea introduced the First National Lifelong Learning Promotion Plan in 2002, aiming to augment national competitiveness and improve the quality of life of its citizens, and has updated it every five to six years. Realizing the potential of lifelong learning to improve older people’s economic participation and active aging, in the latest Third Plan for 2013-2017, the government placed an emphasis on supporting later-life education, in coordination with relevant policy efforts with local governments. The plan utilizes colleges and local schools as learning centers to provide greater access to educational opportunities for older adults. The Ministry of Education expects that this third plan will help to increase the learning-participation rate of the general population, including older adults, by 15 percent from the 2012 level.

Key Takeaways

Across the 12 ARC countries and around the world, despite variations in culture, economic development, and labor market structure, societies are looking for remedies to a clear and present challenge to their continued growth and competitiveness – the relative shrinking of their working-age populations. Today, the discussion of remedies is unduly focused on reducing the burden associated with a growing retired population, and marked by rigid conceptions of working and perceived zero-sum tradeoffs that only serve to exacerbate intergenerational tension. Comprehensive and enforced anti-discrimination policies are a vital but insufficient first step. While still limited in scope and scale, and often led by non-governmental actors, innovative programs from around the world are bearing fruit and demonstrating the value of a more holistic approach that:

 
  • Introduces flexibility into work, allowing for phased retirement, entrepreneurship, and part-time work;
  • Addresses the unique challenges and needs of older workers, offering tailored support and training;
  • Recognizes older workers as a rich resource that can be tapped to help address broader societal challenges.

Percentage of Population Ages 15-64 of the Total Population

  • 1950
  • 1955
  • 1960
  • 1965
  • 1970
  • 1975
  • 1980
  • 1985
  • 1990
  • 1995
  • 2000
  • 2005
  • 2010
  • 2015
  • 2020
  • 2025
  • 2030
  • 2035
  • 2040
  • 2045
  • 2050

(Sources: United Nations, Department of Economic and Social Affairs, Population Division; FP Analytics)

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