Work after retirement: Government and companies’ policy trends in Italy Principi A., Checcucci,...

transcript

Work after retirement:

Government and companies’ policy trends in Italy

Principi A., Checcucci, P., Di Rosa, M. and Lamura, G.

IFA 11TH GLOBAL CONFERENCE ON AGEING

INCOME SECURITY, SOCIAL PROTECTION/SOCIAL SECURITY AND POVERTY PREVENTION

Prague, 28th May-1st June 2012

INRCA - Italian National Institute of Health and Science on Ageing

Centre for Socio-Economic Research on Ageing

Via S. Margherita 5, 60124, Ancona, Italy; e-mail: a.principi@inrca.it

Contents of the presentation

• National background data

• Work after retirement: a free or a “forced” choice for individuals?

• Organisational drivers

• Relevant governmental policies

• Conclusions and recommendations

Labour market EU 27Employment rate of older workers (55-64 years)

Source: Eurostat

1999 2002 2005 2008 2011

Sweden

Germany

Denmark

Estonia

Finland

United Kingdom

Netherlands

Cyprus

Latvia

Lithuania

Ireland

Portugal

Czech Republic

Bulgaria

Austria

Slovakia

France

Romania

Greece

Luxembourg

Belgium

Poland

Hungary

Slovenia

Labour Market 34 OECD countriesEffective retirement age compared to official retirement age, 2004-2009

Effective Official b

Source: OECD

Retired people working, in Italy (N)2008-2011

2008 2009 2010

M F T M F T M F T

55-59 134,870 72,581 207,451 131,373 74,904 206,277 115,080 71,373 186,453

60-64 252,004 107,959 359,963 272,175 110,057 382,232 264,563 112,434 376,997

65-69 198,995 62,660 261,655 201,426 65,057 266,483 189,095 63,766 252,861

70-74 111,745 29,587 141,332 124,250 32,644 156,894 126,304 34,361 160,665

75-79 44,299 11,532 55,831 48,850 12,408 61,258 49,188 12,870 62,058

80+ 17,090 5,811 22,901 19,797 6,300 26,097 21,319 6,776 28,095

TOT 55+

759,003 290,130 1,049,133 797,871 301,370 1,099,241 765,549 301,580 1,067,129

Source: INRCA elaboration on INPS data

Retired people working:the role of gender

• In 2010, working pensioners 55+ were 6.9% of total pensioners 55+ (15,342,012).

• Retired workers men 55+ were 10.7% of total retired men 55+ (i.e. 7,130,880)

• Retired workers women 55+ were 3.7% of total retired women 55+ (i.e. 8,211,132).

Source: INRCA elaboration on INPS data

Work after retirement: data from surveys on individuals

• BANK OF ITALY - SURVEY ON ITALIAN HOUSEHOLD BUDGETS (Banca d’Italia: Indagine sui bilanci delle famiglie italiane)

– The surveys’ sample consists of approximately 8,000 families (24,000 individuals), distributed in about 300 Italian municipalities.

• ISTAT – “CROSS SECTIONAL UDB” IT-SILC (ISTAT: Indagine sui redditi e le condizioni di vita delle famiglie IT-SILC)

– The sample includes about 20,000 households and 50,000 individuals.

• ISTAT - LABOUR FORCE SURVEY (ISTAT: Indagine sulle forze lavoro)

– A sample of over 300,000 Italian families (about 800,000 individuals yearly in different wawes) distributed in 1,300 Italian municipalities is interviewed.

Work after retirement: prevalence in Italy (N)

Data source Bank of ItalyISTAT IT-

SILCISTAT-

Labour force

Year 2004 2010 2007 2010 2007 2011

Total sample 20,581 19,836 45,133 40,836 171,496 163,578

Total workers 7,183 6,864 19,891 17,698 61,922 56,205

Working pensioners

2.7% 4.7% 5.4% 5.5% 0.3% 0.2%

Retired workers: main characteristics

• Women are increasing; • Mostly married (63 to 80%) but divorced/separated are

increasing;• High educated people are less represented;

Work after retirement: individual driversIndications from national experts and the literature

Economic need:

• 63% of retired people with pension income lower than 1,000 euros monthly;

• One retired person in four has a pension income under 500 euros monthly;

• Until January 2012, good substitution (wage/pension) rate: 80%;

• Economic need of their adult children

Work after retirement: individual driversIndications from the case studies

Economic need:

• Gastronomist counter operator in a Supermarket 73 years-old

• Main reason for work after retirement (full-time contract): to help economically his 3 adult children with work/economic problems

• Chorister in a lyric choir 65 years-old

• Secondary reason for work after retirement (short fixed-term contracts): the supplemental income is very helpful

Work after retirement: individual drivers

Indications from national experts and the literature

a) Demand-driven opportunities:

b) Personal interest in the work-desire to remain active;

• Rewarding jobs;

• High status jobs (top managers, directors, etc.);

• Intellettual jobs (instead of hard and repetitive ones)

Work after retirement: individual driversIndications from the case studies

a) Demand-driven opportunities

• Professor in a University 66 years-old

• An offer to retire being re-hired as pensioner, under better (income from work+new wage) financial conditions for him (flexible contract)

b) Personal interest in the work-desire to remain active

• Chorister in a lyric choir 65 years-old

• Main reason for work after retirement (short fixed-term contracts): great passion for this job;

• Gastronomist counter operator in a Supermarket 73 years-old

• Secondary reason for work after retirement (full-time contract): the retired worker enjoys his work and considers himself as “the luckiest person in the world”.

Organisational drivers

• Economic: to reduce staff costs (University);• Regulatory:

– Internal: internal rule who protect “seniors” (Choir);– External: to improve the performance in the light of

the legislation (University);

• Sensitiveness by the employer (Supermarket);• Work experience of the retired worker

(Supermarket).

Indications from the case studies

Governmental policies • The full combination of employment and pension income is allowed

from January 2009 (DL n. 112/2008 as enforced by Law n. 133/2008). • Flexible working opportunities:

Job on call (lavoro a chiamata) addressed to under 25 year-olds, over 45 year-old workers and older pensioners; the workers are at the employer’s disposal (full-time or part-time) and they are hired through typical seasonal contracts;

Job sharing, implying that two workers should share/divide the same job The division of work can be both vertical (1 week each) or horizontal (both working some hours each in the same day). In case of firing or resigning of one worker the contract is automatically terminated for both, but the second worker can be shifted to a standard (full/part-time) contract. Job sharing cannot be used by Public Organizations;

Job placement contracts (contratto di inserimento), especially aimed at placing or replacing disadvantaged workers (among which over 50 year-old unemployed) in the labour market by providing individual training programs within a fixed-term job;

Temping (lavoro interinale), which in case of contracts longer than six months, provides disadvantaged unemployed persons (including over 50 year-old ones) with individual replacement training programs. This measure can also be used for pensioners.

Governmental policiesExperiences from the case studies (organisations currently

employing retired workers):

1) Employers do not recognise any current governmental policies to support work after retirement;

2) Employers do not wish any future governmental policies to this purpose;

3) Employers suggest governmental policies to support work for young people (in October 2011 unemployment rate 29.2% vs 8.5% of all population)

Governmental policies:the “Fornero” reform

Year Old-age pension

(years of age)

Seniority pension/early retirement*

(Years of contribution)

Men Women Men Women

2012 66 62 42+1 month 41+1 month

2013 42+2 months 41+2 months

2014 42+3 months 41+3 months

2018 66 66

2026 67 67

* Economic disadvantages for those people who retire before 62

Economic conditions of future pensioners

• The transition from the wage-based to the contribution-based system, will ensure that future pension income will be lower than in the past.

• The pension substitution rate is going to fall from the current 80% to 60% of the last received salary.

• The scenario is worsened by the fragmented and unstable careers who are building current workers, due to a labour market difficult to access, also in the light of the economic crisis.

• This means that future pensioners will be poorer than current ones: probably they will no longer able to help their adult children in economic terms and they will need to work after retirement to a greater extent to survive themselves.

Governmental policies

The impact of the “Fornero” reform on work after retirement

• In the short term:– The increased staturory retirement age will probably lead to a

decline of the phenomenon since there will be a retrenchment of pensioners who will enter later than in the past in their condition of retired people.

• In the long term:– The low pension income of the “new pensioners” will probably

lead to a considerable growth of the phenomenon due to economic need.

An “incentive” to work after retirement

Conclusions and recommendations (1/4)• “Not only for money”: to prevent pension inadequacy

– After the enforcement of the 2012 pension reform, pension inadequacy is viewed as the main problem for future retired people.

– A prolonged working life does not necessarily mean “less” retired workers in the long term, but simply older (and probably poorer) retired workers.

– The government and social partners should consider right from now measures to both prevent pension inadequacy.

– To combat undeclared work: this will increase their contribution and so the magnitude of their pension.

Conclusions and recommendations (2/4)• To combat intergenerational conflicts

– Adult vs. older people• A category of mature, unemployed people have several difficulties to join the

labour market. They are at risk of long term unemployment. Their working career is fragmented and their pension income will be very low.

– Younger vs. older people• Youth unemployment is a very sensitive issue in Italy. Unemployment of

younger people is high, and e.g. employers call for support to work for younger people.

– Difficult to accept a promotion of work after retirement in this context: it is important to grasp the message that experience and skills of retired people are important, and that younger generations should not pay the cost of this in terms of difficulties to access the labour market.

Conclusions and recommendations (3/4)

• Too few work after retirement for interest or pleasure? To improve working conditions.

– All case studies underlined the importance of this driver (i.e. personal interest, pleasure), being in one case (i.e. the Choir) the main one.

– The government, social partners and employers should strive to “go beyond” a pension reform: to improve working conditions of older workers before and after their retirement, through e.g. life-long learning, a better environment at work.

Conclusions and recommendations (4/4)

• Dedicated policies more appealing for employers.

– The evidence from case studies indicates that employers do not recognise measures supporting work after retirement in the Italian context: they do not know any policies or measures to this aim.

– The government and social partners should consider this issue during collective bargaining, trying to implement measures more appealing for employers to hire retired people.

Thank you.

Work after retirement: Government and companies’ policy trends in Italy Principi A., Checcucci,...

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