Helga Hejny, Ph.D. Middlesex

University

Implications of

population ageing for

the labour market

Implications of

population ageing for

the labour market

The structure of the presentationThe structure of the presentation

• The demographic ageing problem

• Young and older workers: the lump of labour

fallacy

• The youth unemployment: UK and Italy

• The European policies

The demographic ageingThe demographic ageing

Three main factors of an aged workforce:

Low birth Low

mortality

Asymmetrical age structure =

ageing workforce

Higher life

expectancy of

older people

The composition of the workforce: projected working

age population and total employment EU25

Young and Older workers: the lump of

labour fallacy

Young and Older workers: the lump of

labour fallacy

The impact of the ageing population:

•Productivity

•Economic growth

Member States pressures:

DEMOGRAPHIC CHANGE

���� Rising pension costs

ECONOMIC RECESSION

���� Unemployment

Vulnerable workers:

�Young workers: “last-in-first-out principle” the last to

be hired and the first to be dismissed

�Older workers: “ageism” reinforces a negative image of

older persons as dependent people with declines in intellect, cognitive

and physical performance

GOVERNMENTS RESPONSES:

-Increase participation rate - raise the retirement age

- increase taxes for pension costs

“THE LUMP-OF-LABOUR FALLACY”:

The amount of work available to labour is fixed

�The amount of work is not static

�Older and younger workers hold different

characteristics

REACTIONS TO THE

GENERAL ECONOMIC CONDITIONS OF A

COUNTRY

The youth unemployment: UK and

Italy

The youth unemployment: UK and

Italy

UK: Pension reforms (1980/1990) motivated by public

finance considerations rather that unemployment.

Today severe youth unemployment trend:

•May-July 2012, 1.02 million young people (aged 16-24)

unemployed (37,000 more than the same quarter in 2011)

•June 2010 show that 19,6% of young people under 25 are

unemployed

THE HIGHTEST YOUTH UNEMPLOYMENT RATE IN 17 YEARS

The general causes:

� Financial Crisis

� Public Sector cuts

� Lack of qualifications

� Lack of experience

The general causes:

� Financial Crisis

� Public Sector cuts

� Lack of qualifications

� Lack of experience

ITALY: Has the second oldest population in the

European Countries. The Italian pension spending

higher than in any other western industrial country

even after the reduced incentives for early

retirement.

Some critics:

-Some apprenticeship schemes do not encourage

permanent contracts

-Short-term contracts that rarely lead to long-term

contracts

Italy has the second

oldest population in

the European Union

countries, with one in

six citizens aged over

65

Italy has the second

oldest population in

the European Union

countries, with one in

six citizens aged over

65

Those who are over 80

represent 5.6% of the

entire population

Those who are over 80

represent 5.6% of the

entire population

the Italian youth unemployment

rate has increased from 24% in

2007 to about 32% in 2011 and

jumped to 39.3% in 2012

the Italian youth unemployment

rate has increased from 24% in

2007 to about 32% in 2011 and

jumped to 39.3% in 2012

The European policiesThe European policies

European Strategy:

“ Youth- Investing and Empowering”

The strategy follow up to the renewed social agenda announced

by European Commission 2008

Youth

education

Youth

educationEmploymentEmployment

European Commission in 2011: Recommendation

for the Euro Area for SMART, SUSTAINABLE and

INCLUSIVE GROWTH

�pension system, unemployment, education and

training, , fighting segmentation, taxation system

ConclusionsConclusions

Increase in educational level not only for young

workers but for older workers

More balance between older and younger

workers : avoiding age discrimination in

employment

� Combat economic crisis keeping active the

two workforce cohorts

THANK YOU!THANK YOU!