Income from work after retirement in the EU Acknowledgements This research report draws heavily on unpublished country reports on Austria, Poland and Sweden by Mats Kullander, Emilia Johansson and Jenny Nordlöw (Oxford Research), on the UK by Deborah Smeaton, Sandra Vegeris and Karen Mackinnon (Policy Studies Institute, University of Westminster), on the Czech Republic by Martin Nekola, Markéta Nekolová and Martin Potůček (Charles University), on Germany by Gerhard Naegele, Jens Maylandt and Lena Mörbitz (Dortmund University) and on Italy by Andrea Principi, Pietro Checcucci and Mirko Di Rosa (INRCA). The report also benefited from help provided by Sonia de Paz Cobo (Universidad Rey Juan Carlos). Further gratitude goes to participants in symposia at the Cardi conference in Dublin, 2–4 November 2011; the IFA conference in Prague, 28 May–1 June 2012; the ESRC seminar in Canterbury, 4 May 2012; and Eurofound’s Expert Workshops in Brussels, 26 July 2011 and 15 June 2012. In particular, much-appreciated extensive written feedback on draft versions of this consolidated research report was received from Rachelle Pascoe-Deslauriers (University of Strathclyde), Annie Jolivet (Institut de Recherches Economiques et Sociales, IRES), Sara Rix (American Association of Retired Persons, AARP) and Asghar Zaidi (European Centre for Social Welfare Policy and Research). Please cite this publication as follows: Eurofound (2012), Income from work after retirement in the EU, Publications Office of the European Union, Luxembourg. Authors: Hans Dubois and Robert Anderson Project: Income after retirement Wyattville Road, Loughlinstown, Dublin 18, Ireland - Tel: (+353 1) 204 31 00 - Fax: (+353 1) 282 42 09 / 282 64 56 email: [email protected] - website: www.eurofound.europa.eu Income from work after retirement in the EU Wyattville Road, Loughlinstown, Dublin 18, Ireland - Tel: (+353 1) 204 31 00 - Fax: (+353 1) 282 42 09 / 282 64 56 email: [email protected] - website: www.eurofound.europa.eu Cataloguing data can be found at the end of this publication. Luxembourg: Publications Office of the European Union, 2012 doi:10.2806/42416 ISBN 978-92-897-1098-5 © European Foundation for the Improvement of Living and Working Conditions, 2012 For rights of translation or reproduction, applications should be made to the Director, European Foundation for the Improvement of Living and Working Conditions, Wyattville Road, Loughlinstown, Dublin 18, Ireland. The European Foundation for the Improvement of Living and Working Conditions (Eurofound) is an autonomous body of the European Union, created to assist in the formulation of future policy on social and work-related matters. Further information can be found on the Foundation website at www.eurofound.europa.eu European Foundation for the Improvement of Living and Working Conditions Wyattville Road Loughlinstown Dublin 18 Ireland Telephone: (+353 1) 204 31 00 Fax: (+353 1) 282 42 09 / 282 64 56 Email: [email protected] www.eurofound.europa.eu Printed in Luxembourg The paper used in this book is chlorine-free and comes from managed forests in northern Europe. For every tree felled, at least one new tree is planted. v Table of contents Executive summary 1 Introduction 5 Policy relevance 5 How common is it? 5 Difference from work before retirement 7 1 — Concepts and data collection 9 Concepts 9 Measuring work after retirement 9 Data collection 11 2 — Trends in adequacy and sustainability of retirement income 13 Income adequacy 13 Income sustainability 19 3 — Characterising and explaining trends in work after retirement 23 Explaining working after retirement 23 Characterising working retirees 30 Characterising work after retirement 33 Employment clusters 43 4 — Government policies 45 Labour market 45 Age barriers and discrimination 45 Financial incentives 50 Avoiding need 55 5 — Company initiatives 57 Motivation for companies 57 Facilitating by informing 60 Facilitating by pooling 61 Facilitating by flexibility 61 Facilitating by training 66 Facilitating by tailor-made approaches 67 vii 6 — Retiree initiatives 69 7 — Conclusions 71 Explaining work after retirement in the EU 71 Characterising work after retirement in the EU 72 What can governments do? 72 What can companies do? 73 What can retirees do? 74 Bibliography 77 viii List of case studies Case study 1: German newspaper 24 Case study 2: Italian supermarket 25 Case study 3: German research institute 27 Case study 4: UK public healthcare provider 30 Case study 5: Swedish self-employed consultants 40 Case study 6: Czech government ministry 49 Case study 7: Italian public university 53 Case study 8: Czech security company 54 Case study 9: Czech senior job agency 57 Case study 10: Polish ship R&D centre 58 Case study 11: Swedish senior job agency 59 Case study 12: Polish cleaning company 59 Case study 13: Dutch retiree job agency 60 Case study 14: Dutch collective agreement for working retirees 61 Case study 15: Swedish tools company 62 Case study 16: UK DIY and garden centre 63 Case study 17: German engineering company 64 Case study 18: German public employment agency 64 Case study 19: UK warranties provider 65 Case study 20: Austrian graphics equipment company 66 Case study 21: Italian choir 66 Case study 22: Austrian electronics company 67 Case study 23: UK cooperative 68 Case study 24: Austrian business consultancy 70 ix Executive summary Introduction EU social and employment policies increasingly emphasise extending working life and increasing effective retirement age. Over the past few years, it has become more common for Europeans to work beyond the age at which they are entitled to a statutory or occupational pension. The employment rate among 65- to 69-year-olds increased from 8.8% in 2005 to 10.5% in 2011 – a remarkable development, especially in a time of economic crisis. In this European Year of Active Ageing and Solidarity between Generations, a special Eurobarometer reported that one-third of people wanted to continue working beyond the pension age, with 6 out of 10 thinking that people should be able to do so. This study investigates retirees’ motivations to take up paid work and how they relate to income adequacy. It explores who these working retirees are, characterises the work they are doing and concludes with lessons for policymakers and employers. Evidence comes from literature, analyses of EU databases and seven country studies. Policy context The European Commission’s 2012 White Paper on pensions highlights the challenges of demographic ageing for the sustainability of adequate pensions systems. Member States have been raising retirement ages and discouraging early retirement arrangements. Increased employment rates among people below and above the retirement age will have a positive impact on sustainability of pension systems. Key findings Since 2005, employment rates among people aged 65 and over have shown the largest increases in Finland, the UK, Lithuania, Germany and Austria. Motivational factors ■ Additional income is a motivation. For those retirees who work, it provides over half their income. ■ Around one-fifth work because of financial need. They tend to have low incomes and work under insecure conditions. ■ For most, motivation largely comes from other factors: work brings contact with colleagues and clients, learning and opportunities to contribute to society. Profile of working retirees ■ Working retirees are often younger and male. Retirees are more likely to work if they are highly educated, live in urban areas or have a mortgage. ■ Nevertheless, recent growth in employment rates has come from female retirees and retirees with a medium level of education in particular. ■ Among retirees who do not work, a significant proportion would like to work but cannot find suitable employment. Many were already disadvantaged in the labour market well before retirement. 1 Income from work after retirement in the EU Employment contract ■ The majority work part time. ■ About half are self-employed; often, however, they work as a one-person enterprise for a single employer. ■ Almost one-fifth of working retirees have a temporary contract. This is higher than for other age groups and also more often reflects the worker’s preference. ■ Some carry out undeclared work. ■ Retirees work relatively often in the agriculture and fisheries sector and the professional, scientific and technical activities sector. Reasons for employing retirees ■ As society is ageing, retirees form an increasing proportion of an organisation’s client base. A workforce with retirees helps companies to understand these clients’ preferences and to relate to them. ■ Organisations appreciate that retirees are often open to accepting flexible work arrangements. ■ Cost savings result from postponing recruiting and training new employees. ■ Employers highlight a particularly high work motivation among retirees. Policy pointers Lessons for policymakers ■ Work after retirement can be enriching and rewarding, but promoting it may have negative impacts. It can be seen to erode the right to enjoy retirement; it risks marginalising people who might not be in a position to work or who contribute to society, for example, by caring and volunteering; and regardless of macro-level evidence pointing to the contrary, it conflicts with public perceptions that older people are reducing employment chances for younger people. ■ Pension adequacy should be guaranteed to avoid retirees having to work because of financial need. ■ Millions of Europeans beyond