L emploi des seniors en Allemagne : la mobilisation de plusieurs leviers 15 e colloque du COR Emploi des seniors et vieillissement actif en Europe Prof. Axel Börsch-Supan, Ph.D. Munich Center for the Economics of Aging (MEA) Les colloques du COR Maison de la Chimie 30 novembre 2017
Outline 1. Change in employment of older workers 1980-2014 2. Labor market and pension reforms 3. Which policy did it? 4. Summersault backwards in 2014
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Employment of older workers in Germany : How Germany moved from laggard to European vanguard? International comparison Labor force participation age 60-64 Men Women 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Japan Sweden Netherlands Germany UK Canada Denmark Spain Italy Belgium France Belgium Canada Denmark 70% 60% 50% 40% 30% 20% 10% 0% SE US JP CA DE UK DK NL ES FR IT BE BE CA DK Source: OECD
Secular trends? Counterfactual LFP Men 55-69 Actual LFP Education constant Education and health constant Education, health and spouse LFP constant Source: GSOEP Source: Börsch-Supan and Ferrari 2016
Secular trends? Counterfactual LFP Actual LFP Women 55-69 Education constant Education and health constant Education, health and spouse LFP constant Source: GSOEP Source: Börsch-Supan and Ferrari 2016
Outline 1. Change in employment of older workers 2. Labor market and pension reforms: Agenda 2010, plus delayed 1992 reform 3. Which policy did it? 4. Summersault backwards in 2014
German Agenda 2010 Reforms Germany 2001: GDP growth 0.8%, unemployment 9.4% Labor market policies ( Hartz I-IV ): 1. Unemployment benefits limited to 1 year 2. Thereafter (low level) social assistance 3. Strict job search and training requirements 4. Labor market flexibilization: 1 jobs, Mini jobs, temporary work contracts, labor leasing 5. Organizational reforms ( German labor agency )
Pension policies: Employment of older workers in Germany : How Germany moved from laggard to European vanguard? Agenda 2010 and other reforms Germany 2035: 34 mio workers, 28 mio pensioners 1992: Gradual introduction of actuarial adjustments 1. Quasi-NDC system: sustainability factor indexes benefits to system dependency ratio (+ wages) 2. Cuts offset by (a) basic assistance ( Grundsicherung ) (b) voluntary saving accounts ( Riester pensions ) 3. Gradual increase in retirement age and closure of certain pathways into early retirement 2014: Introduction of retirement at 63
Outline Employment of older workers in Germany : How Germany moved from laggard to European vanguard? 1. Change in employment of older workers 2. Changes in labor market and pension policies 3. Which policy did it? 4. Summersault backwards in 2014
Employment rates, 2007 and 2011 Men Women 1,00 0,90 0,80 0,70 0,60 0,50 0,40 0,30 0,20 2007 2007 2011 Denmark 2011 2007 1,00 0,90 0,80 0,70 0,60 0,50 0,40 0,30 0,20 2007 2011 2007 Denmark 2011 2007 0,10 0,10 0,00 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 0,00 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 Source: MEA @ MPISOC
Employment rate [%] 90 80 25_54 70 60 55_64 50 40 30 15_24 Change of employment by age range 20 Source: OECD
Focus on older workers Beschäftigungsquoten in Deutschland in Prozent Employment rate [%] Headwind through more employment in spite of tailwind through demography 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 52,9 52,3 29,2 52,1 51,0 27,5 51,0 49,3 26,0 50,1 48,3 23,4 50,0 47,5 20,5 48,8 46,0 18,5 47,6 45,1 15,7 47,0 44,7 14,9 47,4 43,2 14,2 48,0 42,5 13,1 49,0 42,5 12,5 49,4 40,0 11,8 15 bis unter 65 Jahre 55 bis unter 60 Jahre 60 bis unter 65 Jahre
Average retirement age Men Source: Deutsche Rentenversicherung
Average retirement age Women Source: Deutsche Rentenversicherung
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 Employment of older workers in Germany : How Germany moved from laggard to European vanguard? Pathways to retirement 68 67 66 65 64 63 62 61 60 59 1992 reform gradually closes pathways without actuarial adjustment Regular Old-Age Pension Long-term insured 35+ (without Long-term insured 35+ (with Women (without Women (with Unemployed (without 58 Source: Börsch-Supan and Rausch 2017 Unemployed (with adjustments) Invalid (without
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 Employment of older workers in Germany : How Germany moved from laggard to European vanguard? Pathways to retirement 68 67 66 65 64 63 62 61 60 1996: closure of unemployment pathway accelerated; actuarial adjustments also for invalidity pathway Regular Old-Age Pension Long-term insured 35+ (without Long-term insured 35+ (with Women (without Women (with Unemployed (without 59 58 Source: Börsch-Supan and Rausch 2017 Unemployed (with adjustments) Invalid (without Invalid (with
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 Employment of older workers in Germany : How Germany moved from laggard to European vanguard? Pathways to retirement 68 67 66 65 64 63 62 61 60 59 2007: Gradual increase of retirement age in all pathways Regular Old-Age Pension Long-term insured 35+ (without Long-term insured 35+ (with Women (without Women (with Unemployed (without Unemployed (with adjustments) Invalid (without Invalid (with 58 Source: Börsch-Supan and Rausch 2017 Long-term insured 45+ (without Disability Pension (without adjustments) Disability Pension 40+
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 ITAX Pension claiming Employment of older workers in Germany : How Germany moved from laggard to European vanguard? Tax on working longer Implicit tax and claiming at 60 60% 50% 40% 30% 20% 10% 0% -10% -20% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% ITAX 60 Men Claiming Age 60 Men only, Source: Börsch-Supan and Rausch 2017
First conclusions: Not really due to secular trends in health, education etc. Not only due to general labor market reforms Main effect due to pension policies. Combination of: o introducing actuarial adjustments o closing pathways (women, unemployment) o raising retirement age
4. Summersault backwards in 2014: 68 67 66 65 64 63 62 61 60 59 58 Retirement with 63 Regular Old-Age Pension Long-term insured 35+ (without Long-term insured 35+ (with Women (without Women (with Unemployed (without Unemployed (with adjustments) Invalid (without Invalid (with Long-term insured 45+ (without Disability Pension (without adjustments) Disability Pension 40+ Source: Börsch-Supan and Rausch 2017
Long-term workers (45+ years) Men Women 100% krank 100% krank 95% 1.8 years 2.5 years self mini 95% 1.3 years 1.9 years self mini 90% sonst ausbild 90% sonst ausbild 85% schule 85% schule 80% 39.0 years Zivi pflege 80% Zivi pflege 75% 34.4 years kinder alg_all SVP 75% 32.6 years 36.7 years kinder alg_all SVP 70% WZ35 WZ45 70% WZ35 WZ45 Source: Börsch-Supan, Coppola, Rausch (2014) based on SHARE
harmed by arduous/unhealthy work 3,5 3 2,5 Month with illness (Age 50 59) Men Women 2 1,5 1 0,5 0 WZ35 WZ45 WZ35 WZ45 Männer Frauen Source: Börsch-Supan, Coppola, Rausch (2014) based on SHARE
. and relatively low life-time income? 1,4 Men Männer 1,4 Women Frauen 1,2 1,2 1 1 0,8 0,8 0,6 0,4 EP = 46.2 EP = 44.4 0,6 0,4 EP = 35.9 EP = 33.1 0,2 0,2 0 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 0 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 Alter Alter less than 45y more than 45y less than 45y more than 45y Source: Börsch-Supan, Coppola, Rausch (2014) based on SHARE
Conclusions Not much evidence for secular effects (health, educ,...) Agenda 2010 reforms increased employment in all age ranges but MUCH more so in 55-64 range Not one but many pension reform mechanisms: 1992 gradual introduction of actuarial adjustments Closure of entire pathways (women, unemployed) 2007 gradual increase of retirement age in all pathways Distributional impact softened by minimum pension 2014 reversal: wrong targets, politically ineffective