Prof. Dr. Gerhard Naegele/Dr. Jürgen Bauknecht

1. Prof. Dr. Gerhard Naegele/Dr. Jürgen Bauknecht German `s way to raise the employment rates of older workers and to prolong working lives – an attempt to understand better retirement behaviour and attitudes IAGG-ER 8th Congress, Symposium on “Political Answers to demographic questions in different welfare regimes – Delaying labour market exit” Dublin, Ireland, April 23, 2015

2. Introduction (1) • Since the beginning of the new century been remarkable increase in the official employment rate of older workers • There are different explanations which in practice act together: demographic composition of the workforce, new retirement/pension regulations, financial incentives, changed and/or improved employability of the younger cohorts of o.ws. (positive cohort effects), women staying longer in working life, improved working conditions, more corporate age management , increase of precarious jobs • However which factor is counting most ? • Among others with distinctive higher employment rates • Higher qualified (mainly male) workers • (among them primarily members of white collar occupational groups) • Older workers with tailor-made (needed) qualifications • Self employed (among them many with an academic background) • No older (previously) unemployed

3. Key actorgroups and strategies in Germany`sretirement and olderworkerpolicies National/ Federal/state policies Individual strategies Policy fields and main groups of actors Social partners activities Corporate measures

4. Employment Rate 2000 and 2011 (Age and Gender) Employmentrates Germany (2000 and 2011, all agegroups and gender) Male Female Age Source: Federal Statistical Office; calculations: BiB

5. Labour forceparticipation of olderworkers(2002 and 2012, 55-59, 60-65, age and gender)

6. Male Employment Rates and formal educationalstatus(2004 - 2013, age and gender)

7. Conceptionalization of “retirement in Germany • In the past in Germany the socio-political discussions about retirement was dominated by economists, pension and labourmarket experts • In consequence, retirement has primarily been treated from both an economic as well as from the perspective to regulate the budgets of the social security, particularly the public pension schemes • This approach mirrors a narrow understanding of retirement and in consequence has led to “narrow” policy answers with limited success • Socio gerontologists favor an interdisciplinary approach looking behind the contextual framework conditions and asking for push and pull factors particularly concerning the working and/or private living conditions of the retiring people/retirees (e.g. work-life-balance)

8. Retirement in the view of key actor groups (1) • Policy makers, retirement as … • Instrument to regulate labourmarkets • Instrument to shape the generational contract • Instrument to regulate social security expenditures • Economy/corporations, retirementas … • Instrument to regulate manpower/to adapt personnel policy needs • Point of reference for own in-company retirement-ages • Instrument to regulate personnel costs

9. Retirement in the view of key actor groups (2) • Trade unions, retirement as … • Instrument to humanize labourworld • Guarantor of an old-age income free from paid work • Olderworkers, retirementas … • Structural and expected event in a normal working life-course • Changing the social status (“status passage”) • Point of reference for further planning individual life courses (“late freedom”; Rosenmayr) • Beginning of a (“well earned”) phase of life with less obligations • No more need to work for money in order to reach one`s own self subsistence • Retirement as a critical life event and as a developmental task

10. I National policies (1) • Closing respectively impeding early retirement exit routes • Impeding the access to invalidity pensions (1996, 2001) • Reduction of early-invalid pensions through actuarial cuts (2007) • Stop of the partial retirement scheme (which was mainly used as “block-model”) • Labourmarket approaches (among others) • Legally opposing age discrimination in employment (2006) • Reduction of unemployment benefits in case of early exit (2005) • Activating and supportive/counselling programs for older job seekers • Wage-subsidies • Awareness campaigns favoring older job seekers/workers • Promoting further vocational training

11. I National policies (2) • Postponing official retirement age (“Rentemit 67”) (2007) • Gradually increasing of the legal retirement age from 65 to 67 (2029) (monthly and later in monthly steps for each consecutive year) • Early retirement still possible however with pension reductions (actuarial cuts by 0.3 % per month retiring earlier up to 18 % at max.) • currentlymorethan 50 % of all newpensionshitbyactuarialcuts • pensionsreducedby 18 % foronethird of theearlyretireesconcerned • so far in average the retirement decision of older workers in Germany could be postponed by around 1 year • However: July 2014: Softening the “Rentemit 67” by introducing a new “Rentemit 63” for long-term insured • Employees with a contribution period of 45 years allowed to draw pensions at the age of 63 without any reductions (up to 400.000 user)

12. Affectedcohortsby „Rente mit 67“ Source: Own presentation (Data taken from: R+V Versicherung (2014). Altersvorsorge. Gesetzliche Rente. URL: http://www.ruv.de/de/r_v_ratgeber/altersvorsorge/gesetzliche_rente/2_rente_mit_67.jsp (Last access: 17/10/2014)

13. Indexing retirement age in line with further life expectency ? • Life-expectancy indexed retirement policies would lead to a further deepening in retirement-related social inequalities • taking into account that both the rising further-life expectancy as well as the gained years in health state is not at all true for members of the lower social classes • In consequence lower social class members would be discriminated threefold: • (1) eventually even less years in work through needing to retire earlier • (2) thus even more pension reductions and lower standard of living although • (3) their pension contributions in former (shorter) active working life in a pay-as-go-system helps the “winners” from the higher socio-economic groups to realize even more a higher standard of living

14. II.1 The role of the trade unions • They needed a much longer time in accepting the shift of paradigm • Many still opposing “Rentemit 67” as well as among those who helped “Rentemit 63” for long-term insured to come into force • One of the recently introduced union-initiatives is to promote employment prospects of o.ws. by “collective bargaining of demographic change” (e.g. Chemical Industry, Iron and Steel Industry. German Rail, Company agreements) • The issue of social inequality arises because collective agreements only cover certain sectors of industry and very often do not reach small and medium sized companies

15. II.2 The role of employers • Until turn of the century primarily favoring early retirement • Today a more positive perception of age as factor of production to be noticed • Mainly business reasons for introducing corporate age management (in particular qualified labour shortage, exit of baby boomers) • However: Age management not widespread, • So far only a small number of older workers is profiting (mainly in larger (“unionized”) companies), distribution mirrors social inequalities • Research confirms an positive impact of age management on both work satisfaction as well as on occupational productivity of o.ws.

16. Corporate age-management measures from business´ and employee´s perspective

17. II.3 Collective agreement on demographic change in the Iron and Steel Industry (2012) Aims • Create age oriented working conditions • Promote health and well-being of employees • Support and improve employability • Provide options for early exit and/or a smooth transition to retirement • Rejuvenate the workforce Measures/Instruments • Obligatory analysis of age structure (in cooperation with works council) • Implement respective measures (e.g. health promotion, training, peak load reduction, age mixed teams, organisation of working time, redeployment) • Initiative for early exit/smooth transition to retirement • Fund “Demographic change” • Evaluation

18. II.3 Evaluation of the collective agreement in the Iron and Steel Industry by SfS/FfG (2012/13) – first results • Collective agreements accepted as one (of more) corporate answers to the demographic pressure • Collective agreements seen as “growing” agreements which have to be developed mutually between work councils and management • Health – related programmes mainly aiming at individual health training and less at in-company health-protection • So far hardly any initiative concerning age-related re-structuring of workplaces and working time in order to reduce labour requirements • Steel-typical workplaces less qualified for new forms of age diversity

19. III.1 Older workers - the prime key-actor group (1) • Many positive cohort effects favouremployment in later life (“age-work-paradoxon”/Walker) • However differentiation of old age is also true for older workers • Differenciations after problem-groups and disadvantages necessary • A life-cycle/course perspective is necessary for both to understand older workers better as well as to improve their employability (e.g. life-cycle oriented personnel poilicies”) • Socio gerontologists recommend the broader concepts of workability and employability as points of departure for corporate measures aiming at prolonging working lives

20. III. 2 5 worker`slifecycles relevant forcorporate „lifecycleorientedpersonnelpolicies“ • Occupational lifecycle (from choice of occupation to retirement) • Corporate lifecycle (relating to the time from joining to leaving a company) • Job-related lifecycle (from taking up to leaving a position) • Family lifecycle (from parenting to care-giving to parents/dependants) • Biosocial lifecycle (orientation on “age-related” changes in performance) Source: 6th Federal report on senior citizens in Germany 2010

21. III.3 Older workers - the prime key-actor group (2) • Compared to previous cohorts – today`s older/ageing workers • Expect to need to work longer but the majority does not want • Only about half of them is optimistic to reach 67 in work • This is confirmed by official retirement data • Are prepared to invest into their own employability • Have clear ideas which support is needed to work longer • Regard the employers as primarily responsible to help them doing so • Regard job satisfaction of one of the major drivers to work longer • Focus increasingly the individual work-life-balance (particularly women) • Regard family biography and generational relations and obligations as important retirement decisions • Only a minority would like to work longer (after official retirement age), mainly due to intrinsic reasons, less to financial reasons (however future cohorts ?)

22. Interim conclusions – the case Germany • “Shift of paradigm” partly realized (e.g. increasing activity rates) • But not widespread in German companies (as measured by age-management, collective agreements) • A interdisciplinary retirement/working-longer perspective is missing • Pure pension policies without resounding success if not supported by in-corporate measures, LLL, enabling and motivating strategies … • Working longer and working beyond retirement socially selective • Many “problem-groups” not able to meet the policy expectations, (still) need to retire earlier and thus are “punished” by pension cuts • The unemployment pathway into retirement still widespread • In all the “shift of paradigm” in retirement and o.w. policies in Germany are marked by (old) social inequalities (“Matthäus-principle”) • The challenge of motivating o.ws. to work longer remains • An overarching, comprehensive enabling-strategy is needed • MOPACT looks after “social innovative” solutions (e.g. co-ordinated measures, “policy-mix”, life-course orientation”)

23. Thank you for your attention! Prof. Dr. Gerhard Naegele/Dr. Jürgen Bauknecht Institute of Gerontology at TU Dortmund Evinger Platz 13 44339 Dortmund Germany fon +49 (0) 231 - 72 84 88 – 10 fax  +49 (0) 231 - 72 84 88 – 55 web www.ffg.uni-dortmund.de