Italy
In the face of rapid population ageing and the trend towards early retirement, there is a need
to promote better employment opportunities for older people. Much has been said about
the need for reform of old-age pensions and early retirement schemes but this may not be
sufficient to raise employment rates for older people significantly or to reduce the future risk
of labour shortages. Both governments and firms will need to take active measures to adapt
wage-setting practices to ageing workforces, to address the extent to which other welfare
schemes act as pathways to early retirement, to tackle age discrimination and to improve
the job skills and working conditions of older workers. In addition, older workers will need to
change their own attitudes towards working longer and acquiring new skills. Little is known
about what countries have been doing or should be doing in these areas.
This report is based on the proceedings of a seminar and is published in English only.
However, a French translation of the Executive Summary and Recommendations has been
included in this volume.
In the same series:
Belgique
Czech Republic
Finland
Japan
Luxembourg
Norway
Spain
Suisse
Sweden
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-:HSTCQE=UV\UXU:
ISBN 92-64-01703-8
81 2004 14 1 P
Italy
This report on Italy is part of a series of around 20 OECD country reports that are intended
to fill this gap. Each report contains a survey of the main barriers to employment for older
workers, an assessment of the adequacy and effectiveness of existing measures to overcome
these barriers and a set of policy recommendations for further action by the public authorities
and social partners.
Ageing and Employment Policies
Ageing and Employment Policies
«
Ageing and Employment
Policies
Italy
Vieillissement et politiques
de l’emploi
Ageing and Employment Policies
(Vieillissement et politiques de l’emploi)
Italy
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960,
and which came into force on 30th September 1961, the Organisation for Economic
Co-operation and Development (OECD) shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a
rising standard of living in member countries, while maintaining financial
stability, and thus to contribute to the development of the world economy;
– to contribute to sound economic expansion in member as well as non-member
countries in the process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory
basis in accordance with international obligations.
The original member countries of the OECD are Austria, Belgium, Canada, Denmark,
France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.
The following countries became members subsequently through accession at the dates
indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia
(7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic
(21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea
(12th December 1996) and the Slovak Republic (14th December 2000). The Commission
of the European Communities takes part in the work of the OECD (Article 13 of the
OECD Convention).
© OECD 2004
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should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France.
FOREWORD –
3
FOREWORD
Older people offer tremendous potential value to businesses, the economy
and society. Unfortunately, they often represent an untapped and discriminatedagainst resource, as many public policy measures and private workplace
practices pose serious barriers to work, both paid and unpaid. Many of these
policies and practices are relics from a bygone era. There is a need to look
beyond traditional stereotypes about ageing in order to benefit from the growing
numbers of older citizens, many of whom would, in fact, choose to work for
longer given appropriate policies and workplace practices.
The OECD has reported extensively on public pension and early retirement
systems and the need for reforms of these systems to cope with population
ageing. However, these reforms will not be enough to encourage later
retirement and to reduce the risk of future labour shortages. Measures are also
required to adapt wage-setting practices to greying workforces, to tackle age
discrimination and negative attitudes to working at an older age, to improve job
skills of older people and their working conditions, and to better “activate”
older job-seekers. Relatively little is known about what countries have been, or
should be doing, in these areas. Therefore, in spring 2001, the OECD
Employment, Labour and Social Affairs Committee (ELSAC) decided to carry
out a thematic review of policies to improve labour market prospects for older
workers covering both supply-side and demand-side aspects.
For the purpose of this thematic review, it was decided to define older workers
as all workers aged 50 and over. The age of 50 is not meant to be a watershed in
and of itself in terms of defining who is old and who is not. Perceptions about being
old are inherently subjective and only loosely connected with chronological age.
However, in many countries, the age of 50 marks the beginning of a decline in
labour force participation rates by age. Moreover, to facilitate international
comparisons, it is preferable to refer to the same age group for all countries. Thus,
all references to “older workers” in this report should be taken as shorthand for
workers aged 50 and over (or in some cases, because of data constraints, workers
aged 55 and over), and should not be seen as implying that all workers in this group
are “old” per se.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
4 – FOREWORD
This report on Italy is one in a series of around 20 OECD country reports
that will be published as part of the older worker thematic review, which has
been developed by Raymond Torres. It has been prepared by Anne Sonnet from
the OECD and Andrea Baranzini from the Geneva School of Business
Administration, Jean-Marc Falter and Giovanni Ferro Luzzi from the University
of Geneva. Technical and statistical assistance was provided by
Alexandra Geroyannis and Clarisse Legendre. A draft of the report was
discussed at a seminar in Rome on 9 March 2004 on “Ageing and Employment
Policies in Italy”, which was organised by the Italian Ministry of Labour and
Social Policies. Discussants at the seminar included representatives of the
national authorities and the social partners, as well as several academics. The
final report, which incorporates the comments received at the seminar, is
published in this volume on the responsibility of the Secretary-General of the
OECD.
***
This report is based on the proceedings of a seminar and is published in
English only. However, a French translation of the Executive Summary and
Recommendations has been included in this volume (p. 19).
***
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
TABLE OF CONTENTS –
TABLE OF CONTENTS
EXECUTIVE SUMMARY AND RECOMMENDATIONS ........................ 9
The challenge ahead: a rapid ageing process and early labour market exit 9
What has been accomplished so far? ......................................................... 9
Areas where further reform is required ................................................... 11
RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS ............................... 19
INTRODUCTION...................................................................................... 31
Chapter 1. THE CHALLENGE AHEAD .................................................. 33
1.
2.
3.
The demographic challenge .......................................................... 33
Potential economic and social impacts.......................................... 36
Key issue: promoting higher rates of participation
among older people and better employment opportunities ............ 41
Chapter 2. CURRENT LABOUR MARKET SITUATION
OF OLDER WORKERS......................................................... 43
1.
2.
3.
4.
Activity and inactivity among older people .................................. 43
Employment situation of older workers ........................................ 46
Unemployment: a Southern, female and youth problem ............... 51
The transition to retirement: a complex picture............................ 54
Chapter 3. PROTECTING PEOPLE WHILE ENHANCING WORK
INCENTIVES: THE ROLE OF THE WELFARE SYSTEM .. 57
1.
2.
3.
4.
5.
Main challenges faced by the Italian welfare system .................... 57
The reforms of the 1990s and the current situation ....................... 61
The complementary pension system ............................................. 73
Other social protection instruments .............................................. 77
Key issue: working longer ............................................................ 79
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
5
6 – TABLE OF CONTENTS
Chapter 4. REMOVING DEMAND-SIDE BARRIERS............................ 83
1.
2.
3.
4.
Employment practices of firms..................................................... 83
Employment protection ................................................................ 85
Mobility and tenure ...................................................................... 89
Wage profile by age ..................................................................... 91
Chapter 5. STRENGTHENING EMPLOYABILITY................................ 95
1.
2.
3.
4.
Employment conditions................................................................ 95
Older people’s attitudes to work ................................................. 103
Educational attainment of older workers..................................... 106
Employment services for older people........................................ 116
Chapter 6. ENSURING POLICY COHERENCE AND
COMPREHENSIVENESS.................................................... 119
1.
2.
3.
4.
Alternative ways to boost participation and employment............ 119
Are older workers working at the expense of other workers?...... 120
Ensuring policy coherence.......................................................... 122
Conclusion ................................................................................. 123
BIBLIOGRAPHY .................................................................................... 125
List of Boxes
Box 3.1.
Box 3.2.
Box 3.3.
Box 4.1.
Box 4.2.
Box 5.1.
Box 5.2.
Box 5.3.
Box 5.4.
Reforms of the Italian pension system in the 1990s................. 63
Transferring the trattamento di fine rapporto (TFR)
to complementary pension funds ............................................. 77
Current pension reform proposals (May 2004) ........................ 80
The Biagi Law ........................................................................ 88
High separation rates for older Italian workers ........................ 89
Literacy skills fall with age ................................................... 110
Vocational training programmes for older workers ............... 114
Promoting lifelong learning and vocational training
among experienced workers: the new French agreement....... 115
The employment service network in Italy.............................. 118
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
TABLE OF CONTENTS –
List of Figures
Figure 1.1.
Figure 1.2.
Figure 1.3.
Figure 1.4.
Figure 1.5.
Figure 2.1.
Figure 2.2.
Figure 2.3.
Figure 2.4.
Figure 2.5.
Figure 2.6.
Figure 2.7.
Figure 3.1.
Figure 3.2.
Figure 3.3.
Figure 4.1.
Figure 4.2.
Figure 4.3.
Figure 5.1.
Figure 5.2.
Figure 5.3.
Figure 5.4.
Life expectancy at birth and total fertility rate in Italy,
1970-2050 ........................................................................... 34
Demographic and economic dependency ratios,
2000-2050 ........................................................................... 35
Labour force growth in Italy, 1970-2050 ............................. 37
Labour force growth in OECD countries, 1950-2050 .......... 40
Ageing labour force over the next 50 years in Italy ............. 41
Estimates of mobilisable labour supply in Italy and
the OECD as a whole, 2001 ................................................ 46
Employment rates of older workers by gender
in OECD countries, 2002 .................................................... 47
Employment rates by age and gender in Italy, 1983-2002 ... 48
Employment rates by gender and region in Italy, 2002........ 49
Unemployment rates by age and gender
in OECD countries, 2002 .................................................... 50
Unemployment rates by age and gender in Italy,
1993-2002 ........................................................................... 51
Unemployment rates by age and educational attainment
in Italy, 2001 ....................................................................... 53
Average effective age of retirement by gender
in Italy, 1960-2002 .............................................................. 58
Effective and official age of retirement by gender
in OECD countries, 1997-2002 ........................................... 59
Public expenditure on old-age pensions
in some OECD countries, 2000-2050 .................................. 60
Job tenure by age and gender in selected
OECD countries, 2000 ........................................................ 90
Age-earnings profiles by gender
in Italy, 1991, 1995 and 2000 .............................................. 92
Age-earnings profiles by gender in selected
OECD countries, early 2000s .............................................. 93
Manual workers by age and gender, 2002 ........................... 97
Part-time work by age and gender
in OECD countries, 2002 .................................................... 99
Inactive persons of 55-64 who would like to work,
1997 .................................................................................. 105
Educational attainment of workers aged 50-64
by gender in some OECD countries, 2001......................... 107
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
7
8 – TABLE OF CONTENTS
Figure 5.5.
Figure 5.6.
Figure 5.7.
Figure 5.8.
Figure 6.1.
The rise expected in education level of
older workers, 2000-2025.................................................. 108
Employment rates by age, gender and
educational attainment in Italy, 2001................................. 109
Computer skills by age in Italy, 2000 ................................ 111
Incidence of job-related training for workers
by age in selected OECD countries ................................... 112
Younger workers are not substitutes for older workers ...... 121
List of Tables
Table 1.1
Table 1.2.
Table 2.1.
Table 2.2.
Table 2.3.
Table 3.1.
Table 3.2.
Table 3.3.
Table 3.4.
Table 3.5.
Table 4.1.
Table 5.1.
Table 5.2.
Table 5.3.
Table 5.4.
Participation rates by age and gender, 2000......................... 36
Labour force growth under various scenarios in Italy,
2000-2050 ........................................................................... 38
Labour market status by age and gender in Italy
and OECD, 2001................................................................. 44
Unemployment rates by age, gender and region in Italy,
2002 .................................................................................... 52
Incidence of long-term unemployment
in some OECD countries, 2002 ........................................... 53
Decomposition of changes in old-age pension expenditures
spending in OECD countries, 2000-2050 ............................ 62
Projected distribution of Italian pensioners
under old and new schemes, 2002-2050 .............................. 65
The gradual increase in the requirements
for seniority pensions in Italy .............................................. 68
Gross replacement rates of the pension system in Italy,
2003-2050............................................................................ 70
Importance of the complementary pension system in Italy,
2001 .................................................................................... 76
Overall strictness of protection against individual dismissals
in OECD countries in 2003 ................................................. 86
Italian older employees by industry and occupation, 2001... 96
Temporary work contracts in some OECD countries,
2002 .................................................................................. 100
Measures of job satisfaction in Italy, 1995 ........................ 103
Changes in retirement expectations in Italy,
1989/91-1995/98 ............................................................... 105
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
EXECUTIVE SUMMARY AND RECOMMENDATIONS
–9
EXECUTIVE SUMMARY AND RECOMMENDATIONS
The challenge ahead: a rapid ageing process and early labour market exit
A rapid process of population ageing is currently underway in Italy and is
more pronounced than in most other OECD countries. Since the early 1970s,
fertility rates have declined steeply and, today, are among the lowest in the
world. At the same time, longevity has increased significantly. Together, these
two factors explain why Italy currently has the highest old-age dependency ratio
among OECD countries after Sweden. The old-age dependency ratio (number
of individuals 65 and over as a proportion of population aged 20-64) reached
almost 30% in 2000 and will more than double by 2050. Only Japan is expected
to have a much higher ratio in 2050.
These demographic trends are likely to result in slower long-term
economic growth and will put increased strain on public expenditures that are
already high by the standard of other OECD countries. Exacerbating these
problems is the fact the Italian pension system is particularly expensive, and it
still encourages early withdrawal from the labour market. Consequently, older
workers in Italy tend to exit the labour market earlier than in most other OECD
countries. Indeed, the employment rate of older people is particularly low in
Italy. In 2002, only 56% of men aged 50-64 were employed and the
corresponding proportion for women was 27%, 13 and 21 percentage points
below the OECD average respectively. Italy is also one of the countries where
the gap between the employment rate of older men and women is the largest.
The pay-off to encouraging older workers to remain longer in the
workforce could be considerable in terms of higher economic growth as well as
financial sustainability and social adequacy of social protection systems.
What has been accomplished so far?
The 1990s were marked by three major pension reforms (1992, Amato
Reform; 1995, Dini Reform; and 1997, Prodi Reform). As a result of these
reforms, the new system, while remaining financed on a pay-as-you-go basis,
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
10 – EXECUTIVE SUMMARY AND RECOMMENDATIONS
will make public pensions more neutral vis-à-vis work-retirement decisions. In
particular, like in Sweden, the new pension system provides for a link between
pensions and contributions. Pension entitlements will be close to being
actuarially neutral and retirement arrangements are going to be periodically
brought in line with longer life expectancy. Flexibility in the age of retirement is
possible as retiring early means a smaller pension and retiring later a larger one.
These reforms in the public system are accompanied by the launching of a
complementary pension system. The prospective fall in pension replacement
rates will be possibly offset by a lengthening of working lives and by the
development of the complementary pension system.
The pension reforms enacted in the mid-1990s represent important steps
toward ensuring the financial sustainability of the system in the long run.
However, there are major problems in the short term, including: a very long
transition period (the full effects of the reforms will only be felt in 2035);
discontinuities in entitlements due to the ten-year revision to account for longer
life expectancy;1 and a lack of information available to individuals on the
effects of the reforms on their pension rights. Thus, in the absence of further
reforms, early retirement is likely to remain for some time to come a
well-entrenched practice. In the longer run, the system’s social sustainability is
in danger as, with unchanged retirement patterns, future retirees would well
receive much lower pensions than the individuals currently retiring, so inflating
the ranks of the elderly who will be reliant on the old-age safety net.
The objective of new pension measures under discussion is to increase
employment among older workers and not simply, as the reforms enacted
during the 1990s, to safeguard the financial viability of the system vis-à-vis
population ageing. The government intention is also to boost the slow
development of complementary pension schemes. However, the design of these
measures should comply with the overall coherence of the new pension system
as shaped by previous reforms. In particular, while increasing the minimum age
thresholds for retirement in line with prospective improvements in life
expectancy appears to be a sound strategy, it also seems to be a sensible
approach to preserve some flexibility in the age of retirement along the
actuarially neutral lines introduced by the previous reforms. Softening abrupt
discontinuities in the rules across cohorts is also a key issue for equity as well as
for efficiency reasons, as the retirement incentives embedded into pension rules
differ across cohorts because of the reforms enacted in the last decade.
1.
The first of such revisions, important in order to signal the well-functioning of the
mechanism, is due in 2005.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
EXECUTIVE SUMMARY AND RECOMMENDATIONS
– 11
Beyond the current debate, there is concern that reform discussions are too
polarised on pension issues. Removing barriers to employment of older workers
requires a comprehensive reform of all aspects of the welfare system and the
labour market, which goes much beyond the reform of the pension system. Low
employment among older people in Italy is the result of several factors: early
access to pensions among men and principally in the Centre-North; and low
employment at earlier stages of the life cycle among women, especially in the
Mezzogiorno. The already enacted changes in the orientation of labour market
policies determined by the Biagi Law are steps in the right direction. In
particular, the progressive shift towards a more flexible labour market, with
more flexible wage-bargaining institutions and more focus upon insertion and
reinsertion policies and lifelong learning schemes, should improve employment
chances for older workers.
Areas where further reform is required
The Italian authorities are well aware of the risk of a widening gap in
employment rates with those European countries which have already launched a
strategy to promote employment opportunities for older workers.
Therefore, it is crucial for Italy to aim at a comprehensive and well
co-ordinated set of policies, including not just pension reform but also effective
labour market and social policies. This requires action on a number of fronts, on
both the supply and demand sides. All barriers to the hiring and retention of
older workers need to be tackled. It is vital that the employability of older
workers be enhanced. The promotion of unemployment insurance and
assistance benefits should be put higher on the policy agenda together with the
development of effective employment services throughout the territory.
Transforming undeclared work into regular employment should be actively
pursued, particularly in the South.
Action on all of these fronts clearly implies co-operation and co-ordination
across a range of ministerial responsibilities and among central, regional and
local authorities. In particular, it is necessary to: i) encourage employers to
review their employment practices with respect to age and reduce other
demand-side barriers; ii) promote the employability of older workers; and
iii) ensure more effective employment services for older job-seekers.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
12 – EXECUTIVE SUMMARY AND RECOMMENDATIONS
Tackling demand-side barriers
Employers may be reluctant to hire or retain older workers for several
reasons. First, employers may simply have negative perceptions about the work
abilities of older workers and they may discriminate against these workers in
favour of younger ones. The evidence suggests that there is a problem of age
discrimination in Italy, although it is very difficult to determine how pervasive
this problem is. By 2006, all EU countries will be required to comply with the
EU Directive on non-discrimination, including on the grounds of age. At least
implicitly, the Italian law already covers the age aspect. It is however crucial to
critically review actual human resources practices related to age in
implementing fully the EU Directive. Mutual learning based on good practices
in companies in Italy and an exchange of views on the different strategies in
OECD countries can help identify the most effective policies in this field.
Second, wages, which are usually set through negotiations between the
social partners, are generally linked to age or length of service. As a result,
individual wages tend to grow with age, irrespective of productivity
developments. For employers, seniority wages can serve a purpose of “tying”
employees into the firm and discouraging them from quitting. For employees,
seniority pay scales are meant to reward experience. However, when costs are
judged to be excessive in relation to productivity, older workers are the first to
be encouraged to leave. In some countries, such as Germany and Switzerland,
seniority wages have become less important over time and greater weight is
given to the skills and productivity of individual workers.
Finally, while rising the average effective age of retirement is a desirable
objective, it is important to consider the quality of the jobs that older people are
able to occupy if they remain longer in the labour market. Long hours of work,
which is an issue in Italy, may be particularly onerous for older workers.
Gradual retirement transitions could be developed. There is a need to adapt the
work environment and work tasks to the needs of older workers. More
generally, improving occupational health and safety for workers of all ages will
assist future generations of older workers to remain in employment longer.
Thus, corporate practices should be reviewed on the following basis:
•
Implement fully the European Directive on Age Discrimination in consultation
with the social partners. The European Directive on discrimination, including
on the grounds of age, should be implemented fully. The social partners should
be consulted in the implementation of the legislation in order to ensure its
effectiveness and minimise any additional costs to employers.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
EXECUTIVE SUMMARY AND RECOMMENDATIONS
– 13
•
Improve working conditions. Working conditions have to be adapted to the
needs of older workers in order to enhance their retention prospects and
their ability to adapt to change. Firms should facilitate job rotation to better
suit the needs of older workers. For example, older workers could be
exempted from working night shifts.
•
Identify best practices among firms in Italy which promote employment
opportunities for older workers. The social partners should publicise
examples of best practice among firms towards older workers to illustrate
the positive contribution of older workers to firm performance.
Beyond these practices, there are cases where wage practices and
employment regulations may also affect labour demand for older workers. First,
wage scales based on seniority may discourage firms from retaining older
workers. Second, there is evidence of segmentation in the Italian labour market.
Employment protection remains high for insiders, while a wide range of flexible
contracts have developed and informal employment remains an issue, especially
in the South. Young workers face serious difficulties in settling into good
careers while, for older workers, the only mobility possible is to retire early,
often with the encouragement of firms.
The following course of action should be envisaged for collective
bargaining practices:
•
Review wage practices based on age or length of service. The social
partners should take into account the adverse effects for the
employment of older workers of scales linking wage to age or length
of service. When fixing wages in a decentralised fashion, this link
should be weakened by giving greater weight to the skills and
productivity of individual workers. Establishing a more flexible and
decentralised wage bargaining system should serve to facilitate this
process.
•
Review employment protection legislation. The current rules of
employment protection for workers on regular contracts are overly
strict, while at the same time leaving workers on non-regular forms of
employment with inadequate protection. The result is that older
workers on regular contracts tend to be reluctant to move to other jobs,
thereby affecting their employability. New forms of employment are
not attractive enough to experienced and older workers. Therefore,
there is a need for improving protection of new forms of employment,
while easing some of the rules governing regular contracts.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
14 – EXECUTIVE SUMMARY AND RECOMMENDATIONS
•
Minimise the individual risk of precariousness. The individual risk of
precariousness and of a further segmentation of the labour market
should be tackled as a priority in the new orientation of labour market
policies under the Biagi Law.
•
Develop gradual retirement transition and part-time work.
Opportunities for part-time work should be expanded and made more
flexible in order to promote employment for older workers.
•
Facilitate transition to formal employment among early retirees. It is
common knowledge that some early retirees continue to work
informally at a pace that suits them in order to supplement their
income. It is important to find ways of reintegrating this type of work
into the formal labour market.
Enhancing the employability of older workers
Up-to-date skills are key aspects of employability that will affect the
ability of older workers to find and keep a job and influence their retirement
decisions.
The level of educational attainment for older workers is very low in Italy,
compared with their younger counterparts. Furthermore, older workers engage
in much less job-related training than younger ones. The reason could be the
general unwillingness of older persons to undergo training, or the fact that the
content or curriculum of designated courses may not be very attractive to them
or that they do not see much “return” from it compared with their present
situation of high wages and attractive pensions.
Clearly the experience of workers at younger ages will have an impact on their
labour market decisions and outcomes when older. For example, mid-career
workers who have ample opportunities for upgrading their skills may be better
placed in terms of labour market outcomes when older than those with fewer
opportunities. Thus, some policy interventions should, in fact, focus on workers
before age 50 in order to improve their labour market prospects when older.
In general, there would appear to be scope to deepen and broaden the delivery
of training opportunities. Promoting opportunities for employees to actually find
time to participate in training is of great importance. The new measure to allow
employees to get temporary leave from their job to pursue training is promising.
Systems to recognise, certify and validate competences acquired on-the-job are also
crucial to motivate workers to engage in training.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
EXECUTIVE SUMMARY AND RECOMMENDATIONS
– 15
The following initiatives are recommended:
•
Encourage upgrading of education levels and participation in lifelong
learning. Higher education levels usually result in higher participation
rates at older ages. Thus to reduce the use of early retirement, the
government should seek to further encourage and support lifelong
learning. It should involve a close co-operation between the social
partners since some co-financing of training is called for, given that
many of the returns to training accrue to individual firms and workers.
The activity of the newly launched inter-occupational fund
(Fondi interprofessionali) should be geared towards lifelong learning
initiatives.
•
Develop systems to recognise, certify and validate experience. To
develop the occupational competencies of older, relatively unskilled
workers, it is vital to establish recognition, certification and validation
systems for the work skills that they have gained, in many cases on the
job.
•
Strengthen and expand training opportunities for mid-career and
older workers. For adult and older workers, this may imply boosting
the number of well-designed modular courses of vocational training
which build on the existing qualifications of these workers. Employers
should also re-organise work tasks so that workers have the time to
participate in training. This may encourage greater take-up and may
generate higher returns to training in the case of longer courses.
Mobilising older job-seekers through effective employment services
In general, older workers do not face a larger risk of becoming
unemployed than younger workers (partly because, if they lose their job, they
may leave the labour market altogether). In Italy, while the unemployment rate
of older workers is much lower than is the case with other age groups and the
incidence of long-term unemployment is similar across age groups, the relative
position of older people has worsened over time on both counts.
Moreover, to the extent that pathways to early retirement are reduced, older
workers who lose their job will be increasingly exposed to open unemployment.
Therefore it is essential to strengthen re-employment services and to develop the
unemployment benefit system of Italy. At present, only workers in the industrial
sector are entitled to adequate unemployment benefits. However, the trattamento di
fine rapporto (TFR) also serves as a cushion for all employees in case of job loss.
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16 – EXECUTIVE SUMMARY AND RECOMMENDATIONS
The way the Italian Public Employment Service (PES) operates is not
efficient in activating unemployed individuals, particularly older ones. There is
some concern that the PES is still functioning as a mere provider of
administrative certifications and that job-search enforcement mechanisms do
not work well even for the relatively few benefit recipients. The Biagi Law has
established the conditions for a transparent and well functioning job-matching
market. In particular, financial incentives have been introduced for
disadvantaged groups, including the older unemployed, through the contratti di
inserimento, while in the past financial incentives were available only for youth.
While many problems still exist, since establishing a transparent job-matching
market and specific missions of the PES is a lengthy process involving the
government, the regions and the social partners, this process should be strongly
encouraged.
Enhancing the efficiency of active employment programmes is another
major issue. Active labour market measures tend to take the form of financial
incentives favouring new hires, traditionally among youth, while there are
relatively few active programmes or other service-oriented schemes to help job
losers. There may be scope to extend “activation” policies to older job-seekers.
Active labour market programmes should also be tailored to the individual
needs of workers who have lost their job and risk becoming long-term
unemployed. In-work benefits should likewise be introduced in order to avoid
unemployment traps.
In order to be effective, measures should avoid age stereotyping. Older
people are a very diverse group and this is particularly true in Italy both in terms
of their labour market situation regionally and by level of educational
attainment. The abrupt and early transition from employment to retirement is
more important in the Northern regions while the underground economy is
particularly widespread in the South. This wide diversity among older people
suggests that policies which are targeted on age alone risk being quite blunt
instruments. Moreover, such policies may unintentionally give the wrong signal
that older workers are generally less productive than younger workers.
In order to address these issues, the following policy avenues should be
explored:
•
Reform the unemployment benefit system and provide adequate
funding. A move towards a “modern” system of unemployment
protection is urgently needed. It is crucial to implement a “mutual
obligations” approach between a reinvigorated PES and the
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EXECUTIVE SUMMARY AND RECOMMENDATIONS
– 17
unemployed. This means that adequate benefits and re-employment
services should be provided to the unemployed. Beneficiaries, in turn,
should be looking actively for a job or risk facing a sanction.
Resources freed up by the gradual phase-out of early retirement and,
possibly, part of the TFR, could serve to fund this move.
•
Review the role of the PES. As part of the reform of the system, job
counselling, career consultation and effective placement services must
be made available to unemployed workers in general, including older
ones. This will require a major reorientation of the PES, including the
recruitment of qualified personnel and a review of current practices.
•
Introduce in-work benefits for unemployed or inactive people who
accept a job. This could be done by allowing unemployed workers
who accept a job to keep their benefits for a certain period.
Alternatively, beneficiaries who accept a low-paid job could receive
an income supplement, while older workers with a low wage who
postpone retirement might be granted deferred benefits in terms of
better pension entitlements.
•
Ensure that the measures are properly targeted and evaluated.
Measures intended to benefit older workers as a whole may be not
targeted closely enough at the groups who need them most and may
risk producing stereotypes and stigma. Regular evaluation of the
programmes can help improve targeting. More generally, it can help
identify the measures that work best and for whom.
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RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
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RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
Les défis à relever : vieillissement rapide et sortie anticipée du marché du travail
L’Italie assiste actuellement à un vieillissement rapide de sa population, lequel
est de surcroît plus prononcé que dans la plupart des autres pays de l’OCDE. Son
taux de fécondité a diminué de façon marquée depuis le début des années 70 et
figure aujourd’hui parmi les plus faibles du monde. En même temps, la longévité a
fortement augmenté. La conjonction de ces deux facteurs explique pourquoi l’Italie
enregistre aujourd’hui le rapport de dépendance des personnes âgées le plus élevé
des pays de l’OCDE après la Suède. Ce rapport (nombre d’individus âgés de 65 ans
et plus en pourcentage de la population âgée de 20 à 64 ans) atteignait près de 30 %
en 2000 et va plus que doubler d’ici à 2050. Il ne devrait être dépassé à cette même
date que par celui du Japon.
Ces tendances démographiques vont probablement entraîner un ralentissement
de la croissance économique à long terme et feront peser des pressions plus fortes
sur des dépenses publiques déjà élevées par rapport aux autres pays de l’OCDE. Le
problème est aggravé par le fait que le système de retraite italien est
particulièrement coûteux et qu’il encourage toujours le retrait anticipé de la vie
active. Par conséquent, les travailleurs âgés italiens sortent généralement plus tôt du
marché du travail que ceux de la majorité des autres pays de l’OCDE. Le taux
d’emploi des travailleurs âgés est en fait particulièrement bas en Italie. En 2002,
56 % seulement des hommes âgés de 50 à 64 ans exerçaient un emploi et le chiffre
correspondant pour les femmes était de 27 %, soit respectivement 13 et 21 points de
pourcentage de moins que la moyenne des pays de l’OCDE. L’Italie fait aussi partie
des pays où l’écart entre le taux d’emploi des hommes âgés et celui des femmes
âgées est le plus grand.
L’incitation des travailleurs âgés à rester plus longtemps en activité pourrait
avoir des effets positifs non négligeables car elle permettrait à l’Italie d’avoir une
croissance économique plus forte, ainsi que d’assurer la viabilité financière de son
système de protection sociale et de donner à celui-ci les moyens de répondre de
manière satisfaisante aux besoins de la collectivité.
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Quelles mesures ont été prises jusqu’à présent ?
Les années 90 ont été marquées par trois grandes réformes du système de
retraite (1992, réforme d’Amato ; 1995, réforme Dini ; 1997, réforme Prodi).
Celui-ci continuera d’être financé par répartition, mais les modalités de calcul
des pensions servies au titre des régimes publics seront plus neutres par rapport
aux décisions de départ à la retraite. En particulier, à l’instar de la Suède, les
réformes instaurent un lien entre les pensions et les cotisations. Les droits à
pension seront presque neutres sur le plan actuariel, et les dispositions relatives
à la retraite seront revues périodiquement de manière à tenir compte de
l’augmentation de l’espérance de vie. L’âge du départ à la retraite pourra être
modulé, mais plus ce départ sera retardé, plus le montant de la pension
s’élèvera, et vice versa. La mise en place de ces réformes dans le système public
s’accompagnera de la création d’un système de retraite complémentaire. La
baisse prévisible des taux de remplacement du salaire sera peut-être compensée
par l’allongement de la vie active et par le développement de ce dernier
dispositif.
Les mesures de réforme du système de retraite adoptées au milieu des
années 90 constituent une étape importante dans les efforts visant à assurer
durablement la viabilité financière de ce système. Mais à court terme, des
problèmes considérables se posent, notamment à cause de la très longue période
de transition prévue (ces mesures n’exerceront pleinement leurs effets
qu’en 2035), du caractère discontinu des droits en raison de la révision qui sera
effectuée tous les dix ans afin de tenir compte de l’augmentation de l’espérance
de vie2, et du fait que les intéressés ne soient pas suffisamment informés des
conséquences de la réforme pour leurs droits à pension. Par conséquent, si
d’autres mesures de réforme ne sont pas prises, le départ anticipé à la retraite
risque de demeurer une pratique bien ancrée pendant quelque temps encore. A
plus long terme, la viabilité du système du point de vue social est menacée car,
faute d’une modification des comportements à l’égard de la retraite, il est très
probable que les futurs retraités percevront des pensions beaucoup plus faibles
que ceux qui se retirent actuellement de la vie active, et qu’ils viendront alors
gonfler les rangs des personnes âgées qui dépendent du filet de protection
sociale destiné à la vieillesse.
2.
La première révision, qui jouera un rôle important car elle indiquera si le nouveau
mécanisme fonctionne bien, doit avoir lieu en 2005.
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Les nouvelles mesures concernant le système de retraite qui sont
actuellement en discussion ont pour but d’accroître l’emploi chez les
travailleurs âgés, et pas seulement de préserver la viabilité financière de ce
système face au vieillissement de la population, comme c’était le cas des
réformes mises en place au cours des années 90. Les pouvoirs publics
souhaitent aussi stimuler le développement, trop lent, des régimes de retraite
complémentaire. Cependant, la façon dont ces mesures seront conçues devrait
être conforme à la logique globale du système de retraite issu de ces réformes.
En particulier, s’il semble raisonnable de relever l’âge minimum du départ à la
retraite de manière à tenir compte de l’augmentation attendue de l’espérance de
vie, il paraît aussi judicieux de garder une certaine souplesse quant à l’âge de la
retraite en suivant le principe de la neutralité des droits à pension sur le plan
actuariel qui a été instauré par les réformes des années 90. Il est également
essentiel d’atténuer la forte discontinuité que créent les règles de calcul des
pensions d’une cohorte à l’autre pour des raisons touchant aussi bien à l’équité
qu’à l’efficience, les réformes de la dernière décennie ayant intégré dans ces
règles des incitations qui diffèrent selon les cohortes.
Au-delà du débat en cours, d’aucuns craignent que la réflexion sur les
réformes ne soit trop polarisée sur la question des pensions. Pour éliminer les
obstacles à l’emploi des travailleurs âgés, il est nécessaire de modifier en
profondeur toutes les composantes du système de protection sociale et du
marché du travail, ce qui va beaucoup plus loin que la réforme du seul système
de retraite. Le faible taux d’emploi des travailleurs âgés que connaît l’Italie est
dû à plusieurs facteurs : un accès relativement précoce aux pensions chez les
hommes et principalement dans la région du centre-nord, ainsi qu’un faible taux
d’emploi enregistré durant le début de la vie active des femmes,
particulièrement dans le Mezzogiorno. Les modifications déjà apportées à
l’orientation de la politique du marché du travail conformément à la Loi Biagi
vont dans le bon sens. En particulier, la mise en place progressive d’un marché
du travail plus flexible, qui s’accompagne d’un assouplissement des
dispositions régissant les négociations salariales et d’un accroissement de
l’importance accordée aux mesures d’insertion et de réinsertion et aux
dispositifs en faveur de la formation tout au long de la vie, devrait permettre
d’améliorer les possibilités d’emploi des travailleurs âgés.
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22 – RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
Domaines dans lesquels un effort de réforme plus grand s’impose
Les autorités italiennes sont parfaitement conscientes du fait que l’écart
avec les pays d’Europe qui ont déjà engagé une stratégie de promotion des
possibilités d’emploi pour les travailleurs âgés risque de se creuser de plus en
plus.
Par conséquent, il est indispensable que l’Italie s’attache à mettre en place
un ensemble complet et bien coordonné de politiques qui comprennent non
seulement des mesures de réforme du système de retraite, mais aussi des
dispositions efficaces concernant le marché du travail et le domaine social. A
cette fin, elle doit agir sur plusieurs fronts, aussi bien du côté de l’offre que de
celui de la demande. Elle doit s’attaquer à tous les obstacles qui s’opposent à
l’embauche et au maintien dans l’emploi des travailleurs âgés. Il est
indispensable d’améliorer l’employabilité de ces derniers. La promotion des
prestations d’assurance chômage et d’aide aux chômeurs devrait être placée à
un rang plus élevé dans l’ordre des priorités des pouvoirs publics, de même que
la mise en place de services de l’emploi efficaces dans tout le pays. Tous les
efforts possibles devraient être faits pour transformer le travail non déclaré en
emploi normal, en particulier dans le sud.
Il est évident que pour pouvoir agir sur l’ensemble de ces fronts, une
coopération et une coordination devront être assurées entre diverses
responsabilités ministérielles et entre les administrations centrale, régionales et
locales. En particulier, il est nécessaire : i) d’encourager les employeurs à revoir
leurs pratiques d’emploi concernant l’âge et de réduire les autres obstacles
existant du côté de la demande ; ii) d’améliorer l’employabilité des travailleurs
âgés ; et iii) d’offrir des services de l’emploi plus efficaces aux demandeurs
d’emploi âgés.
S’attaquer aux obstacles existant du côté de la demande
Les employeurs peuvent hésiter à embaucher des travailleurs âgés ou à les
garder pour plusieurs raisons. Premièrement, ils peuvent tout simplement se
faire une idée négative des aptitudes professionnelles de ces travailleurs, et
exercer par conséquent une discrimination à leur encontre en leur préférant des
personnes plus jeunes. Les faits montrent qu’un problème de discrimination
fondée sur l’âge se pose en Italie, mais il est très difficile d’en apprécier
l’ampleur. D’ici à 2006, tous les pays de l’Union européenne vont devoir se
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RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
– 23
conformer à la Directive du Conseil de l’UE relative à l’interdiction des
discriminations, notamment celles qui sont liées à l’âge. La législation italienne
tient déjà compte, du moins de façon implicite, de la question de l’âge. Il est
toutefois indispensable de soumettre à un examen critique les pratiques de
gestion des ressources humaines constatées en ce qui concerne l’âge pour
assurer la pleine application de cette Directive. Le partage de l’information sur
les bonnes pratiques en vigueur dans les entreprises en Italie ainsi qu’un
échange de vues sur les différentes stratégies adoptées dans les pays de l’OCDE
peuvent aider à déterminer les politiques les plus efficaces à mettre en œuvre
dans ce domaine.
Deuxièmement, les salaires, habituellement fixés dans le cadre de
négociations entre les partenaires sociaux, sont généralement fonction de l’âge
ou de l’ancienneté. Ils ont donc tendance à augmenter avec l’âge,
indépendamment de l’évolution de la productivité. Pour les employeurs, la
rémunération à l’ancienneté peut être un moyen d’« attacher » les salariés à
l’entreprise et de les dissuader de la quitter. Quant à ces derniers, la progression
du salaire avec l’ancienneté est destinée à rétribuer l’expérience. Cependant,
lorsque les coûts sont jugés trop élevés par rapport à la productivité, ce sont les
travailleurs âgés que l’on incite en premier à partir. Dans certains pays, comme
l’Allemagne et la Suisse, la rémunération à l’ancienneté a perdu de son
importance avec le temps et une attention plus grande est désormais portée aux
compétences et à la productivité de chaque travailleur.
Enfin, s’il est souhaitable de relever l’âge effectif moyen de la retraite, il
importe de s’intéresser à la qualité des emplois que les travailleurs âgés sont
capables d’occuper s’ils restent plus longtemps en activité. Les longs horaires de
travail, qui posent un problème en Italie, peuvent être pour eux particulièrement
pénibles. Les possibilités de passage progressif à la retraite pourraient être
développées. Le cadre de travail et les tâches devraient être adaptés aux besoins de
ces travailleurs. D’une manière plus générale, l’amélioration des conditions de santé
et de sécurité au travail pour tous les salariés aidera les futures générations de
travailleurs âgés à rester plus longtemps dans l’emploi.
Par conséquent, les pratiques des entreprises devraient être revues de la
manière suivante :
• Mettre pleinement en pratique la Directive européenne sur l’interdiction
des discriminations liées à l’âge, en consultation avec les partenaires
sociaux. La Directive européenne concernant les discriminations,
notamment celles qui sont fondées sur l’âge, devrait être pleinement
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24 – RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
appliquée. Les partenaires sociaux devraient être consultés lors de la mise
en œuvre de la législation correspondante, afin d’en assurer l’efficacité et
de réduire au minimum les coûts supplémentaires que les employeurs
auraient éventuellement à supporter.
•
Améliorer les conditions de travail. Celles-ci doivent être adaptées aux
besoins des travailleurs âgés afin d’accroître leurs chances d’être maintenus
dans l’emploi et leur faculté d’adaptation au changement. Les entreprises
devraient faciliter la rotation des postes pour mieux tenir compte des
besoins de ces travailleurs. Par exemple, ces derniers pourraient être
dispensés du travail de nuit.
•
Recenser les bonnes pratiques des entreprises en Italie qui permettent de
développer les possibilités d’emploi des travailleurs âgés. Les partenaires
sociaux devraient diffuser des exemples de bonnes pratiques que les
entreprises ont adoptées à l’égard de leurs salariés âgés, afin de porter
témoignage de la contribution positive que ceux-ci apportent aux résultats
de l’entreprise.
Au-delà de ces stratégies, il existe des cas où les pratiques concernant les
salaires et la réglementation relative à l’emploi peuvent aussi influer sur la demande
de travailleurs âgés. Premièrement, le fait que l’échelle des salaires soit fondée sur
l’ancienneté peut décourager les entreprises de garder les travailleurs âgés.
Deuxièmement, on constate une segmentation du marché du travail italien. La
protection de l’emploi reste forte pour les travailleurs « intégrés », mais on a vu
aussi apparaître un large éventail de contrats correspondant à des formes d’emploi
flexibles, et l’emploi informel demeure un problème, surtout dans le Sud. Les
jeunes travailleurs ont beaucoup de difficulté à trouver une situation professionnelle
satisfaisante, alors que pour les plus âgés, la seule forme de mobilité possible est le
départ anticipé à la retraite, souvent avec les encouragements de l’entreprise.
La démarche suivante devrait être envisagée dans le cadre des pratiques de
négociation collective :
•
Revoir les pratiques salariales basées sur l’âge ou l’ancienneté. Les
partenaires sociaux devraient tenir compte des effets négatifs qu’exerce sur
l’emploi des travailleurs âgés la progression de la rémunération avec l’âge
ou l’ancienneté. Lorsque les salaires sont fixés selon une approche
décentralisée, une moindre importance devrait être accordée à ces critères
au profit des compétences et de la productivité de chaque travailleur. La
mise en place d’un système de négociation salariale plus flexible et
décentralisé devrait faciliter ce changement.
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•
Revoir la législation relative à la protection de l’emploi. Les dispositions
en vigueur concernant la protection de l’emploi sont trop rigoureuses
s’agissant des travailleurs sous contrat permanent, mais n’assurent pas en
revanche une protection suffisante aux travailleurs exerçant des formes
d’emploi atypiques. Par conséquent, les salariés âgés sous contrat
permanent hésitent généralement à changer d’emploi, ce qui nuit à leur
employabilité. Les nouvelles formes d’emploi n’ont pas assez d’attrait aux
yeux des travailleurs plus âgés et expérimentés. Par conséquent, il est
nécessaire de faire bénéficier celles-ci d’une meilleure protection tout en
assouplissant certaines des règles qui régissent les contrats permanents.
•
Réduire au minimum le risque individuel de précarité. Il faudrait s’attaquer
en priorité au risque individuel de précarité et d’accentuation de la
segmentation du marché du travail dans le cadre de la réorientation de la
politique d’emploi prévue par la Loi Biagi.
•
Développer les possibilités de départ progressif à la retraite et de travail à
temps partiel. L’accès au travail à temps partiel devrait être élargi et ses
modalités assouplies afin de favoriser l’emploi des travailleurs âgés.
•
Faciliter le passage des préretraités à l’emploi dans le secteur formel. Il
est bien connu que certains préretraités continuent à travailler de façon
informelle au rythme qui leur convient afin de compléter leur revenu. Il est
important de trouver les moyens de réintégrer ce type d’activité sur le
marché du travail formel.
Améliorer l’employabilité des travailleurs âgés
Le fait de posséder des compétences à jour est une condition essentielle de
l’employabilité qui influera sur la capacité des travailleurs âgés de trouver un
emploi et de le garder, ainsi que sur les décisions qu’ils prendront quant à leur
retraite.
En Italie, les travailleurs âgés ont un très faible niveau d’instruction par
rapport à leurs homologues plus jeunes. De plus, ils participent beaucoup moins
souvent que les seconds à des activités de formation liée à l’emploi. Cette situation
s’explique peut-être par le fait que les travailleurs âgés sont généralement peu
disposés à suivre une formation, ou que le contenu ou le programme des stages qui
leur sont expressément destinés peuvent ne pas leur paraître très intéressants, ou
encore qu’ils ne pensent pas en tirer grand profit en regard de leur situation actuelle
caractérisée par un salaire élevé et des conditions avantageuses de retraite.
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Il est manifeste que le vécu des travailleurs lorsqu’ils sont jeunes aura une
incidence sur les décisions qu’ils prendront sur le plan professionnel et leur
devenir en la matière lorsqu’ils seront plus âgés. Par exemple, les travailleurs en
milieu de carrière qui ont de nombreuses possibilités d’améliorer leurs
compétences connaîtront sans doute une meilleure situation sur le marché du
travail lorsqu’ils seront âgés que ceux pour lesquels ces possibilités sont
moindres. Certaines interventions des pouvoirs publics devraient donc être
axées sur les travailleurs de moins de 50 ans, afin de leur assurer de meilleures
perspectives en matière professionnelle lorsqu’ils auront dépassé cet âge.
D’une manière générale, il y aurait, semble-t-il, intérêt à développer et
diversifier les possibilités de formation. Il est très important de faire en sorte
que les salariés trouvent effectivement le temps de suivre des stages de
formation. La nouvelle mesure qui les autorise à prendre un congé pour ce motif
est intéressante. Les systèmes permettant d’assurer la reconnaissance et la
validation des compétences acquises en cours d’emploi ont aussi un rôle
essentiel à jouer pour encourager les travailleurs à participer à des activités de
formation.
Les initiatives suivantes sont recommandées :
•
•
Favoriser l’élévation du niveau d’instruction et la participation à la
formation tout au long de la vie. En règle générale, plus les travailleurs ont
un niveau d’instruction élevé, plus leur taux d’activité est important
lorsqu’ils sont âgés. Par conséquent, afin de réduire le recours à la retraite
anticipée, les pouvoirs publics devraient s’efforcer d’encourager et de
soutenir davantage la formation tout au long de la vie. A cet égard, il
faudrait qu’une coopération étroite s’instaure entre les partenaires sociaux,
la formation devant être financée dans une certaine mesure de façon
conjointe étant donné qu’une grande part des avantages qui en découlent va
à l’entreprise et au travailleur qui l’a suivie. L’action du fonds
interprofessionnel (Fondi interprofessionali) récemment mis en place
devrait être axée sur des initiatives en faveur de la formation tout au long
de la vie.
Créer des systèmes qui permettent d’assurer la reconnaissance et la
validation des acquis de l’expérience. Afin de développer les aptitudes
professionnelles des travailleurs âgés relativement peu qualifiés, il est
indispensable de mettre en place des systèmes qui permettent de
reconnaître et de valider les compétences professionnelles qu’ils ont
acquises, dans bien des cas, sur leur lieu de travail.
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•
– 27
Renforcer et accroître les possibilités de formation des travailleurs en
milieu de carrière et des travailleurs âgés. Cette démarche peut consister à
augmenter fortement le nombre de stages modulaires de formation
professionnelle de qualité conçus pour étoffer les compétences que
possèdent déjà ces travailleurs. Les employeurs devraient aussi réorganiser
les tâches de façon à donner à leurs salariés du temps pour suivre ces
stages. Ces mesures peuvent contribuer à faire progresser la participation à
ces activités et permettre aux intéressés de tirer de plus grands avantages de
leur formation s’ils peuvent suivre des stages de longue durée.
Mobiliser les demandeurs d’emploi âgés grâce à des services de l’emploi
efficaces
En règle générale, les travailleurs âgés ne sont pas plus exposés au risque
de devenir chômeurs que les travailleurs plus jeunes (en partie parce que s’ils
perdent leur emploi, ils peuvent totalement mettre fin à leur activité
professionnelle). S’agissant de l’Italie, le taux de chômage des travailleurs âgés
est beaucoup plus faible que pour les autres groupes d’âge et la fréquence du
chômage de longue durée est comparable d’un groupe d’âge à l’autre, mais la
situation relative des travailleurs âgés s’est aggravée avec le temps sur ces deux
plans.
En outre, dans la mesure où les possibilités de départ anticipé à la retraite
deviendront moins nombreuses, les travailleurs âgés qui perdront leur emploi
seront de plus en plus exposés au chômage déclaré. Par conséquent, il est
essentiel que l’Italie renforce ses services de réinsertion et développe son
système d’indemnisation du chômage. A l’heure actuelle, seuls les travailleurs
de l’industrie peuvent percevoir des prestations de chômage convenables.
Cependant, le trattamento di fine rapporto (TFR – indemnité de fin de carrière)
permet aussi à tous les salariés qui perdent leur emploi d’amortir les effets de ce
changement.
Le Service public de l’emploi (SPE) italien ne fonctionne pas de façon
assez efficace pour orienter activement les efforts des chômeurs, en particulier
les plus âgés, vers leur réinsertion. Certains craignent qu’il n’ait toujours pour
rôle que de délivrer des certificats administratifs et constatent avec inquiétude
que les mécanismes destinés à assurer le respect de l’obligation de recherche
d’un emploi ne marchent pas bien, même pour le nombre relativement faible de
bénéficiaires de prestations. La Loi Biagi a créé les conditions nécessaires à la
création d’un marché du placement transparent et efficace. En particulier, des
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
28 – RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
mesures d’incitation financière ont été prises à l’intention des catégories
défavorisées, notamment les chômeurs âgés, avec les contratti di inserimento
(contrats d’insertion), alors qu’auparavant ce type de disposition n’était destiné
qu’aux jeunes. Un grand nombre de problèmes continuent certes de se poser,
étant donné que la mise sur pied d’un marché du placement transparent et de
missions spécifiques pour le SPE constitue un processus de longue haleine
auquel sont associés le gouvernement, les régions et les partenaires sociaux,
mais cette démarche devrait néanmoins être vivement encouragée.
Accroître l’efficience des dispositifs actifs en faveur de l’emploi constitue un
autre problème majeur. Les mesures actives du marché du travail revêtent
généralement la forme d’incitations financières destinées à favoriser les nouvelles
embauches, le plus souvent parmi les jeunes, alors qu’il existe relativement peu de
programmes actifs ou autres dispositifs axés sur les services pour les personnes qui
ont perdu leur emploi. Or, il y aurait peut-être intérêt à étendre les politiques
d’« activation » aux demandeurs d’emploi âgés. Les mesures actives du marché du
travail devraient aussi être adaptées aux besoins particuliers des travailleurs qui ont
perdu leur emploi et risquent de connaître le chômage de longue durée. De même,
des prestations liées à l’exercice d’une activité devraient être créées, afin d’éviter
que ces travailleurs ne tombent dans le piège du chômage.
Pour que les mesures prises dans ce domaine soient efficaces, il faudrait les
élaborer en évitant les stéréotypes fondés sur l’âge. Les travailleurs âgés constituent
un groupe très divers, ce qui est particulièrement vrai en Italie où leur situation du
point de vue du marché du travail diffère aussi bien d’une région à l’autre que selon
leur niveau d’instruction. Le phénomène du passage brusque et précoce de la vie
active à la retraite est plus important dans les régions du nord, alors que l’économie
informelle est particulièrement développée dans le sud. Par conséquent, il y a lieu
de penser que des politiques centrées uniquement sur l’âge risquent d’avoir des
effets assez superficiels. De plus, elles peuvent laisser involontairement entendre, à
tort, que les travailleurs âgés sont de façon générale moins productifs que ceux
qui sont plus jeunes.
Afin de s’attaquer à ces problèmes, il conviendrait d’étudier les possibilités
d’action suivantes :
•
Réformer le système d’indemnisation du chômage et lui assurer un
financement suffisant. Il est urgent d’agir pour mettre en place un système
« moderne » de protection contre le chômage. Il est indispensable d’adopter
une approche consistant à instaurer des « obligations mutuelles » entre
un SPE revitalisé et les chômeurs. Autrement dit, il faudrait offrir aux
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS
•
– 29
seconds des prestations suffisantes et des services de réinsertion
satisfaisants. Les bénéficiaires de ces prestations et services auraient quant
à eux à rechercher activement un emploi sous peine de sanction. Les
ressources dégagées par la suppression progressive des dispositifs de
préretraite et, éventuellement, d’une partie du TFR, pourraient servir à
financer cette action.
Revoir le rôle du SPE. Dans le cadre de la réforme du système, des services
efficaces de conseil et d’orientation professionnels et de placement doivent
être mis à la disposition des travailleurs privés d’emploi en général, et des
chômeurs âgés en particulier. Il faudra à cette fin réorienter en profondeur
le SPE, notamment en recrutant du personnel qualifié et en réexaminant les
pratiques en vigueur.
•
Mettre en place, à l’intention des chômeurs ou des personnes inactives, des
prestations dont le bénéfice est subordonné à l’exercice d’une activité.
Cette mesure pourrait consister à autoriser les chômeurs qui acceptent un
emploi à continuer d’être indemnisés pendant un certain temps. Un
complément de revenu pourrait également être accordé aux bénéficiaires de
prestations qui consentent à occuper un emploi faiblement rémunéré, tandis
que les travailleurs âgés qui ont un salaire peu élevé et retardent leur départ
à la retraite pourraient recevoir des prestations différées sous la forme
d’une majoration de leurs droits à pension.
•
Veiller à ce que les mesures adoptées soient correctement ciblées et
évaluées. Les mesures destinées à l’ensemble des travailleurs âgés risquent
de ne pas viser assez précisément les catégories qui en ont le plus besoin,
ainsi que de renforcer les idées reçues et de produire des effets de
stigmatisation. Une évaluation régulière de ces mesures peut permettre de
mieux les cibler. D’une manière plus générale, elle peut aider à déterminer
celles qui sont le plus efficaces et pour quels types de travailleurs.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
INTRODUCTION
– 31
INTRODUCTION
Italy already has one of the oldest populations of OECD countries. The
working age population (aged 20-64) has begun to contract and will have to
bear an increasing burden of supporting the dependent and elderly population.
By 2050, more than one in three Italians will be over the age of 65. This could
result in a slow-down in economic activity, pressure on the sustainability of
social protection systems and labour shortages in certain occupations. The scale
and timing of these developments will depend crucially on future trends in the
mobilisation of potential labour supply. Increasing female participation rates
and maintaining older workers in the labour market will be of particular
importance.
Although reforms in the pension system enacted in the mid-1990s were
important steps toward ensuring the sustainability of the system in the long run,
the level of public spending on pensions is still one of the highest in OECD.
Among other effects, this reduces available resources for other social
programmes. The pension system has also resulted in early retirement and low
employment rates among older workers.
There is some evidence that older workers in Italy are experiencing a
number of difficulties in the labour market. Improving their skills and
employability should become an essential policy objective. Therefore, it is
important that appropriate measures be taken now to encourage older workers to
remain in the labour market and to improve their working conditions. The main
purpose of this report is to reflect on the different avenues for reform that will
need to be pursued in order to meet this objective.
Chapter 1 highlights the demographic challenges facing Italy and
underlines the importance of increasing labour force participation rates.
Chapter 2 examines in more detail the current labour market situation of older
workers and identifies some of the key problems that they are facing. The next
three chapters explain how the current situation can be improved to address the
challenges ahead. Chapter 3 discusses the extent to which reforms of social
benefits may raise work incentives, thus encouraging older workers to
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
32 – INTRODUCTION
participate in the labour market. But removing supply-side barriers to
employment is not enough. Action on the demand side is also needed. Thus,
Chapter 4 examines those factors which negatively affect the attitudes of
employers towards older workers. Chapter 5 looks at barriers that workers
themselves face to gaining access to better jobs. Finally, Chapter 6 emphasises
the importance of policy coherence in implementing reforms.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 1. THE CHALLENGE AHEAD
– 33
Chapter 1
THE CHALLENGE AHEAD
In Italy, the ageing process is well underway. The old-age dependency
ratio is already one of the highest in the OECD countries in 2000 and will
continue to rise steeply. If participation patterns remain unchanged, the labour
force will start to decline between 2005 and 2010. In light of these demographic
trends, it would appear that increasing the labour force participation of older
people is a crucial policy objective.
1.
The demographic challenge
The Italian population is ageing very rapidly as a result of low fertility rate
and rising life expectancy. The total fertility rate has fallen from almost 2.5 in
1970 (i.e. above the replacement rate of 2.1) to 1.24 in 2000 (Figure 1.1). It is
projected to increase slightly in the early 2000s to reach 1.4 in 2005, in line with
the complete fertility rate, and to remain constant thereafter.3 While Italy has
one of the lowest fertility rates in OECD, life expectancy is among the highest.
In 2000, life expectancy at birth was 76.3 years for men and 82.4 years for
women. Life expectancy is projected to further increase to 81.4 years for men
and to 88.1 years for women in 2030, with most of the projected rise being
concentrated among elderly cohorts. Later on there is no further projected rise.
Finally, immigration policy also will shape the outlook for population growth.
The assumption here is that net migration flows will remain constantly positive,
around 120 000 persons.4
3.
The population projections used in this report are based on the main variant of the
population projections produced by the Italian Statistical Office (ISTAT).
4.
Among OECD countries, Italy has a low but growing share of foreigners in the
total population and labour force. In 1998, the population share of foreigners in
Italy was only 2.1%, while that of Switzerland was 19% (OECD, 2001a,
Chapter 5). This share was only 1.1 % in 1988.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
34 – CHAPTER 1. THE CHALLENGE AHEAD
Figure 1.1.
90
Life expectancy at birth and total fertility rate in Italy, 1970-2050
Actual
Female life
expectancy at birth
85
80
Male life expectancy
at birth
75
2.2
1.9
1.6
70
Total fertility rate
65
Fertility rate
Life expectancy at birth
2.5
Projected
1.3
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
20
25
20
30
20
35
20
40
20
45
20
50
1.0
Source: OECD Health database and ISTAT.
In Italy, life expectancy at age 65 has increased considerably. Currently,
for workers retiring at age 65, they can expect to receive the old-age pension for
around 16½ years in the case of men and for around 20½ years in the case of
women. A broad indicator of the rising economic burden that an older society
may place on the working-age population is given by the old-age dependency
ratio, i.e. the ratio of the population aged 65 and over to the population aged 20
to 64.5 At around 29% in 2000, Italy currently has the highest old-age
dependency ratio among OECD countries next to Sweden (Figure 1.2).
However, Italy’s population is projected to age more rapidly than in most other
OECD countries. Its old-age dependency ratio is projected to reach 43% in 2025
and 67% in 2050.
These changes in the old-age dependency ratio tell only part of the story
about the additional burden that may result from population ageing. The
economic dependency ratio measures the burden of all forms of
non-employment and is defined as the ratio of persons not in the labour force to
those in the labour force. For Italy if participation rates remain constant, the
5.
The old-age dependency ratio is conventionally defined with respect to the
population aged 15 to 64. However, in most OECD countries, teenagers
aged 15 to 19 are more often than not still in school and so it was decided for the
purpose of this report to exclude this group from the definition of the working-age
population.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 1. THE CHALLENGE AHEAD
– 35
economic dependency ratio is projected to rise significantly over the next
50 years. In fact, it would remain one of the highest among OECD countries.
In 2000, there was around one person not in the labour force for every person in
the labour force and this ratio would increase by 30% by 2050.6
Figure 1.2.
Demographic and economic dependency ratios, 2000-2050
Percentages
80
A. Old age dependency ratioa
150
B. Economic dependency ratiob
Hungary
140
Japan
70
Italy
130
Italy
110
Japan
50
Italy
Sweden
France
EU
40
EU
France
OECD
Sweden
Turkey
Italy
Hungary
100
90
Sweden
Italy
France
EU
OECD
France
France
EU
80
Turkey
70
France
EU
60
OECD
Japan
20
50
Turkey
40
10
Turkey
Hungary
EU
OECD
30
Turkey
Italy
120
60
OECD
OECD
Japan
Japan
Sweden
Sweden
Switzerland
Switzerland
Sweden
Switzerland
Iceland
Mexico
Iceland
30
Iceland
0
1975
2000
2025
2050
20
1975
2000
2025
2050
a)
b)
Ratio of the population aged 65 and over to the population aged 20-64.
Ratio of persons not in the labour force to those in the labour force. The labour force
projections assume that participation rates by age and gender remain constant at
their 2000 levels.
Source: National Population Projections; EUROSTAT Population Projections
(1999 Revision); UN, World Population Prospects 1950-2050 (2000 Revision); and
OECD estimates based on labour force surveys.
6.
Of course, these trends will be sensitive to the assumptions made about future
changes in participation rates. Under the “average” scenario as discussed in the
next section, the economic dependency ratio would remain practically constant
over the period. But under the “maximum” scenario, it would be cut by more than
half.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
36 – CHAPTER 1. THE CHALLENGE AHEAD
2.
Potential economic and social impacts
The ageing of the population in Italy will have serious economic and social
repercussions. Some policy interventions in the 1990s have already acted
towards curbing the severe strain on public pension expenditure. Chapter 3 will
present them into detail. One of the most prominent ones will be to inversely
link pension entitlements to life expectancy. Yet future increases in public
pension expenditures would come on top of the current situation in which social
protection expenditure is heavily concentrated on pensions. The associated
hikes in taxes and social security contributions that will be required to finance
them and the reduced pension entitlements which would result for retirement at
a given age could give rise to a number of intergenerational inequities and
tensions. Much of this extra burden of taxation will fall on the working-age
population, and more precisely on those in the labour force.
The demographic changes now underway could also have a negative
impact on labour force growth. However, the future size of the labour force will
depend not only on demographic changes but also on how participation rates
change over time. Participation rates are low in Italy, especially for women and
older workers (Table 1.1). In 2000, the participation rate of older workers in
Italy was among the lowest in OECD.
Table 1.1 Participation rates by age and gender, 2000
As a percentage of population in each age group
Men
Women
50-64
65-69
25-49
Italy
92.0
57.3
10.6
60.9
25.1
2.8
76.5
40.8
6.4
Sweden
90.6
79.8
17.8
85.5
73.8
11.4
88.1
76.8
14.5
United States
92.4
75.6
30.1
77.3
61.0
19.4
84.7
68.0
24.4
Japan
97.2
89.1
51.1
66.1
56.8
25.4
81.8
72.6
37.5
Germany
94.1
64.1
7.4
77.8
45.1
2.8
86.1
54.6
5.0
EU
93.5
66.6
12.4
75.2
43.2
5.7
83.7
53.8
6.9
86.5
50.0
3.1
28.6
22.1
1.3
60.8
40.4
2.2
OECD Minimum
a
OECD Average
OECD Maximum
b
50-64
Total
25-49
65-69
25-49
50-64
65-69
93.6
70.2
21.2
73.3
46.6
10.4
81.2
60.3
19.3
97.2
95.2
65.5
87.5
83.2
38.0
91.9
89.2
51.2
a)
The data refer to Hungary for men aged 25-49 and 50-64 and to Turkey for women
aged 25-49 and 50-64. For the 65-69 age group, the data refer to Belgium for men
and the Slovak Republic for women.
b) The data refer to Japan for men aged 25-49 and to Iceland for women aged 25-49, 50-64
and 65-69 and men aged 50-64. For men aged 65-69, the data refer to Mexico.
Source: European Labour Force Survey and national labour force surveys.
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CHAPTER 1. THE CHALLENGE AHEAD
– 37
Participation rates are not easy to predict with much accuracy. Therefore, a
number of scenarios have been developed which make different assumptions
about how participation rates could change over the next half century
(Figure 1.3):
•
In the “constant” or baseline scenario, participation rates by age and
gender are assumed to remain constant at their 2000 levels.
Accordingly, Italy’s labour force is projected to start contracting
within the next decade and will decline to around 16.8 million
in 2050, down from 23.6 million in 2000.
•
In the “average” scenario, participation rates for the older population
are assumed to converge over the period 2000-2030 to the OECD
average levels of 2000 and remain constant thereafter. In this scenario,
the labour force starts contracting after 2015. Consequently, the labour
force is projected to be 18.9 million in 2050.
•
Finally, in the “maximum” scenario, participation rates by age and
gender are assumed to converge over the period 2000-2030 to the
corresponding maximum rate observed across OECD countries
in 2000 and remain constant thereafter. In the case of Italy, this results
in a particularly steep increase in participation rates for all age groups.
Under this scenario, the labour force peaks at a level of around
32.5 million in 2030 before declining to around 27 million in 2050.
These scenarios show a wide range in the size of the labour force over the
next half-century but they point to a risk that the labour force will already begin
to fall in absolute terms over the next decade if labour force participation rates
remain constant. Under the “constant” scenario, labour force growth is projected
to decline over 2000-2010 by 0.23% per annum (Table 1.2 and Figure 1.4).
Alternatively, under the “average” scenario, an increase in participation rates for
the older population would result in the labour force increasing at a low but
positive rate of 0.10% per annum over the next decade.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
38 – CHAPTER 1. THE CHALLENGE AHEAD
Figure 1.3.
a
Labour force growth in Italy, 1970-2050
Millions, projections after 2000
Historical
Maximum
Constant
Average
35
33
31
29
27
25
23
21
19
17
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
20
25
20
30
20
35
20
40
20
45
20
50
15
a)
The “constant” scenario assumes that participation rates by five-year age groups
and gender remain constant at their 2000 levels. The “average” scenario also
assumes constant participation rates up to and including the age group 45-49 but for
the older age groups they are projected to increase such that by 2030 they reach the
OECD average recorded in 2000. The “maximum” scenario assumes that
participation rates by age and gender converge by 2030 to the corresponding
maximum rate observed across OECD member countries in 2000 and remain
constant thereafter.
Source: OECD estimates based on labour force surveys and ISTAT demographic
projections for Italy (main variant).
One of the economic consequences of such a steep contraction in the
Italian labour force is likely to be slower economic growth. Under the constant
scenario, real GDP growth could decline by about 0.7 percentage points
per annum over the next 50 years, relative to the growth rates experienced over
the period 1950-2000.7 The decline under the “average” and “maximum”
7.
In accounting for output growth, the contribution from labour growth is often
given a weight of around 0.65. The slowdown in labour growth of 1.07 percentage
points – the difference in the average annual growth rate over the period
1950-2000 (0.4%) and the projected growth rate over the period
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 1. THE CHALLENGE AHEAD
– 39
scenarios would be around 0.5 and 0.1 percentage points, respectively. The
impact of slower or negative labour force growth on economic growth could
conceivably be offset by either a decline in the unemployment rate, a rise in
total factor productivity growth or faster growth in capital inputs. Nevertheless,
a shrinking labour force could lead to severe labour shortages in certain
occupations, especially in those areas such as nursing and long-term care where
labour demand will expand as a consequence of rapid growth in the elderly
population.
Table 1.2.
Labour force growth under various scenariosª
in Italy, 2000-2050
Average annual growth
Constant
Average
Maximum
2000-2010
-0.23
0.10
1.41
2010-2020
-0.67
-0.21
1.02
2000-2020
-0.42
-0.03
1.25
2020-2050
-0.84
-0.71
-0.32
2000-2050
-0.67
-0.44
0.30
a)
The “constant” scenario assumes that participation rates by five-year age groups
and gender remain constant at their 2000 levels. The “average” scenario also
assumes constant participation rates up to and including the age group 45-49 but for
the older age groups they are projected to decline such that by 2030 they reach the
OECD average recorded in 2000. The “maximum” scenario assumes that
participation rates by age and gender converge by 2030 to the corresponding
maximum rate observed across OECD member countries in 2000 and remain
constant thereafter.
Source: OECD estimates based on labour force surveys and ISTAT demographic
projections for Italy (main variant).
Using the same assumptions about participation rates remaining constant at
their 2000 levels, these changes in labour force growth can be compared across
OECD countries (Figure 1.4)8. Over the next two decades, labour force growth will
2000-2050 (-0.67%) – means that annual average potential growth would
mechanically decline by around 0.7% (0.65x1.07).
8.
The limitations of using as baseline the constancy of the 2000 participation rates
by five-year age groups need to be underlined. In the case of Italy, there are
two important cohort effects with a positive impact on future labour supply:
better- educated younger female generations are likely to have higher participation
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
40 – CHAPTER 1. THE CHALLENGE AHEAD
be much slower in Italy than on average in the EU or in the OECD area as a whole.
Over the period 2020-2050, this gap may even widen further since the rate of
decline in Italian labour force could be particularly steep. Promoting higher rates of
labour force participation rates for older people will therefore play a key role in
responding to the economic challenges raised by population ageing.
Figure 1.4.
a
Labour force growth in OECD countries, 1950-2050
Average annual percentage growth
1950-2000
-1.2
-1.0
-0.8
2000-2020
-0.6
-0.4
-0.2
0.0
0.2
2020-2050
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
0.4
Italy
-0.4
-0.8
0.6
Sweden
0.1
0.0
1.2
Japan
-0.5
-1.0
1.6
United States
0.6
0.5
0.5
-0.2
Germany
-0.7
0.6
-0.1
EU
-0.5
1.1
0.4
OECD
0.0
a)
The projections of labour force growth over the period 2000-2050 assume that
participation rates by five-year age groups and gender remain constant at their
2000 levels.
Source: OECD estimates.
Population ageing will also result in a greying workforce in Italy
(Figure 1.5). Currently, older workers (i.e. aged 50 and over) account for around
18% of the labour force. Assuming participation rates by gender and five-year
age groups do not change, 26% of the labour force will be aged 50 and over
in 2030 and 23% in 2040 and 2050.
rates than previous cohorts of women, and, in general, workers now in their
thirties and forties with a higher level of education are likely to retire later than
workers now in their fifties and sixties because they will have accumulated less
seniority rights.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 1. THE CHALLENGE AHEAD
Figure 1.5.
– 41
Ageing labour force over the next 50 yearsª in Italy
Percentage of the total labour force
15-24
25-49
50-64
65+
100
1.4
18.2
1.5
19.8
1.8
2.3
2.5
2.8
24.9
25.6
22.6
22.6
63.3
61.4
64.6
64.6
80
60
69.0
69.1
40
20
11.4
9.7
10.0
10.7
10.0
10.3
2000
2010
2020
2030
2040
2050
0
a)
The projection of labour force growth assumes that participation rates by five-year
age groups and gender remain constant at their 2000 levels.
Source: Italian Labour Force Survey and OECD estimates.
3.
Key issue: promoting higher rates of participation among older
people and better employment opportunities
Promoting higher rates of labour force participation among older people
should be a key issue in responding to the economic challenges raised by
population ageing in Italy. A number of changes in employment practices and in
institutional arrangements in the labour market to cope with the inevitable
ageing of Italy’s workforce will also be required. The next chapter will review
in more detail the current labour market situation of older workers and identify
areas where outcomes can be improved.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
– 43
Chapter 2
CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
There is a new concern in Italy about the employment prospects of older
workers. In the past, the main policy goal was to curb youth unemployment.
However, over time, it has been acknowledged that policies that encourage
withdrawal from the labour force of some groups (older workers) in order to
make room for others (youth) are counter-productive. The result is that, today,
Italy has a very low employment rate, in general, and for women, in particular.
Further, there are important regional differences in labour market outcomes and
the presence of a large underground economy.
1.
Activity and inactivity among older people
It is helpful to have a broad picture of the main status characterising older
people in Italy and in OECD countries on average (Table 2.1). The decline in
employment of both men and women from the 50-54 age group accelerates
when reaching the age groups 55-59 and 60-64. These drops are almost
translated one-to-one into a rise of retirement flows. This contrasts strongly with
the OECD average, where the transition from employment to inactivity is not so
pronounced.
A.
Substantial inactivity because of early retirement
Inactivity is much more widespread in Italy than on average in OECD
countries. This is particularly true for people aged more than 60. Between the
ages 60 and 64, only one out of five persons is still working. However,
inactivity is also quite diffuse among prime-age persons, especially women,
since less than two-thirds are either working or looking for a job.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
0.1
0.0
1.3
0.4
6.3
100.0
0.3
0.0
2.8
0.3
3.9
100.0
0.5
0.0
2.9
14.6
5.1
100.0
76.9
71.4
5.5
23.1
1.4
0.0
1.1
25.7
9.5
100.0
86.1
5.8
8.1
92.7
87.8
4.9
7.3
62.3
54.9
7.4
37.7
91.9
Women
0.4
0.0
2.9
7.4
4.5
100.0
84.8
79.6
5.2
15.2
1.2
13.1
7.9
100.0
77.1
70.5
6.6
22.9
0.8
0.0
Total
0.7
18.6
9.0
0.4
3.2
100.0
68.1
64.9
3.2
31.9
0.5
36.2
4.0
0.8
1.6
100.0
54.7
2.2
43.1
56.9
Men
1.0
22.1
9.0
17.9
2.7
100.0
47.3
45.1
2.2
52.7
3.4
22.0
4.0
42.6
2.1
100.0
24.6
1.3
74.1
25.9
Women
50-64
0.9
20.3
9.0
9.2
3.0
100.0
57.7
55.0
2.7
42.3
2.0
29.1
4.0
21.7
1.9
100.0
39.7
1.8
58.6
41.4
Total
0.6
3.5
6.3
0.3
2.1
100.0
87.3
84.1
3.2
12.7
0.3
11.1
2.7
0.7
2.0
100.0
80.5
2.7
16.8
83.2
Men
1.1
3.6
7.2
15.9
3.7
100.0
68.5
65.5
3.0
31.5
3.4
7.4
2.9
40.6
2.7
100.0
40.8
2.2
57.0
43.0
Women
50-54
0.8
3.6
6.8
8.1
2.9
100.0
77.8
74.7
3.1
22.2
1.9
9.3
2.8
20.7
2.4
100.0
60.7
2.5
36.9
63.1
Total
1.0
13.8
9.5
0.3
2.6
100.0
72.7
69.7
3.0
27.3
0.5
39.8
4.6
0.9
1.9
100.0
49.9
2.4
47.7
52.3
Men
As a percentage of population in each age group
1.3
18.1
8.7
18.8
4.4
100.0
48.7
47.1
1.6
51.3
3.8
19.2
4.6
46.2
1.8
100.0
23.1
1.3
75.6
24.4
Women
55-59
0.8
44.2
10.0
0.3
1.9
100.0
42.8
41.7
1.0
57.2
0.8
62.0
4.8
0.7
1.5
100.0
28.8
1.4
69.8
30.2
Men
60-64
0.6
40.1
8.7
17.9
4.1
100.0
28.5
28.0
0.5
71.5
3.1
40.7
4.7
41.4
2.0
100.0
7.9
0.2
91.9
8.1
Women
0.7
42.2
9.3
9.4
3.1
100.0
35.4
34.6
0.8
64.6
2.0
51.4
4.8
21.1
1.8
100.0
18.4
0.8
80.9
19.2
Total
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
1.2
16.2
9.1
9.7
3.5
100.0
60.4
58.1
2.2
39.6
2.2
29.5
4.6
23.6
1.8
100.0
36.5
1.9
61.7
38.4
Total
Labour market status by age and gender in Italy and OECD, 2001
a) The OECD average excludes Australia, Canada, Japan, Korea, Mexico, New Zealand and Turkey.
Source: European Labour Force Survey and national labour force surveys.
Discouraged
Retired
Illness or disability
Family responsabilities
Other
Total
OECDa
Active
Employed
Unemployed
Inactive
Active
Employed
Unemployed
Inactive
Discouraged
Retired
Illness or disability
Family responsabilities
Other
Total
Italy
Men
25-49
Table 2.1.
CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
– 45
Retirement is the main reason for inactivity among Italian males aged 50
to 64, as it is the case in the OECD average, but the proportion is much higher
in Italy, accounting for two-thirds of all inactive men aged 50-54. Illness and
disability among older workers are less prevalent in Italy than on average in
OECD countries. Family responsibilities are the major factor behind inactivity
of Italian women, even among those aged 50 to 64, a result that seems to
support the still highly prevalent traditional separation of family tasks between
men and women. These low participation rates also stem from different causes
across regions. It is mainly due to relatively early exit and retirement for males
in the Northern regions and to low employment rates in general for females and
for all persons in the Mezzogiorno (Southern Italy).
B.
Large labour reserve among older people
Although a high proportion of individuals aged 50-64 are inactive, it is
important to stress that many of them can be mobilised. Total “mobilisable”
labour supply is measured on the basis of estimates of “excess” inactivity and
“excess” unemployment, relative to international benchmarks.9 Contributions to
the total mobilisable labour supply are broken down by four different groups:
youths (15-24); prime-age (25-49) men; prime-age women; and older (50-64)
workers.
It emerges that Italy has a rate of mobilisable labour supply amounting
to 21% of its working-age population (Figure 2.1). In other words, effective
labour supply could be over one-fifth higher in Italy, should labour market
behaviour move in line with best OECD practise. This is the second highest rate
in the OECD area after Turkey (OECD, 2003b). The average OECD rate of
mobilisable labour supply is 12%. In Italy, nearly all (90%) of these mobilisable
resources can be found in inactivity. Older workers account for 40% of this
excess inactivity compared to 29% for the OECD average. This suggests that
there is scope in Italy for large improvements in participation rates, particularly
among people aged 50-64.
9.
Excess inactivity is defined as the difference in inactivity rates between each
country and the country with the third lowest inactivity rate in the OECD area.
Excess unemployment is defined as any positive excess of unemployment above
5%. The countries used as benchmarks are the third best performing countries in
the OECD area and are the following: for men aged 15-24, Denmark and
Luxembourg; for men aged 25-49, Iceland and Mexico; for men aged 50-64,
Switzerland; for women aged 15-24, Norway; for women aged 25-49, the
Slovak Republic; and for women aged 50-64, Norway.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
46 – CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Figure 2.1.
Estimates of mobilisable labour supply in Italy and the OECD
a, b
as a whole, 2001
Percentages of the population aged 15-64
Italy
OECD
25
20
15
10
5
Older persons
Prime-age
women
Prime-age
men
Youths
Excess
unemployment
Excess
inactivity
Total mobilisable
labour resources
0
a)
Mobilisable labour supply is the sum of excess inactivity and excess unemployment,
both relative to international benchmarks. Youth (ages 15-24) enrolled in school
were not included in the calculation of excess inactivity or excess unemployment,
even if they were classified as inactive or unemployed by the national labour force
survey.
b) The OECD average is the population-weighted average for 28 countries.
Source: OECD (2003b), Employment Outlook.
2.
Employment situation of older workers
A.
Employment rates of older people remain low
The proportion of individuals of age 50-64 who are employed (the
employment rate) is very low by OECD comparison (Figure 2.2). In 2002, the
employment rate among older women was the lowest in OECD after Turkey,
and it was the 7th lowest in the case of older men. Italy is also one of the
countries where the gap between the employment rate of men and women is the
largest. By contrast, in the Nordic countries the gender gap is very small.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Figure 2.2.
– 47
Employment rates of older workers by gender
in OECD countries, 2002
As a percentage of population in each age group
Men aged 50-64
Women aged 50-64
ISL
MEX
CHE
JPN
NZL
NOR
KOR
SWE
USA
DNK
IRL
PRT
GBR
OECD
CAN
CZE
NLD
AUS
ESP
GRC
EU
FRA
FIN
DEU
LUX
ITA
SVK
AUT
TUR
BEL
HUN
POL
0
20
40
60
80
100
ISL
SWE
NOR
DNK
CHE
NZL
USA
FIN
GBR
JPN
CAN
KOR
PRT
AUS
FRA
OECD
CZE
DEU
EU
NLD
IRL
AUT
HUN
POL
SVK
MEX
GRC
LUX
BEL
ESP
ITA
TUR
0
20
40
60
80
100
Source: European Labour Force Survey and national labour force surveys.
The employment situation of older workers has improved somewhat
(Figure 2.3). For women aged 50-64, there has been a steady but slow increase
from an employment rate of 20% in 1983 up to 27% in 2002. This increase is
attributed only to women in their fifties. By contrast for older (50-64) men, the
employment rate first decreased sharply from 1983 to 1997 – from 68% to 53%
– and slowly improved thereafter, reaching 56% in 2002. The recent gains have
been most significant in the 50-54 age group and negligible in the older age
groups.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
48 – CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Figure 2.3.
Employment rates by age and gender in Italy, 1983-2002
As a percentage of population in each age group
Men
100
90
50-54
80
70
60
50-64
50
55-59
40
60-64
30
20
10
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
0
Women
100
90
80
70
60
50
40
50-54
30
50-64
20
55-59
10
60-64
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
0
Source: Italian Labour Force Survey.
The factors behind these recent trends include the fact that a larger
proportion of the cohorts now in their fifties entered the labour market in their
late twenties, partly because they stayed longer in the school system. They have
therefore accumulated less years of work seniority and are gradually confronted
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
– 49
with more stringent retirement rules. As Marano and Sestito (2004) point out,
this should result in a positive legacy for the years to come in terms of higher
participation rates.
B.
Large regional differences
The Italian situation is also characterised by strong regional differences
(Figure 2.4). Men typically enter employment only very gradually in Southern
Italy and before the age of 55 their employment rates remain lower than those in
Northern Italy, where they have fewer problems finding a regular job early in
their career but tend to retire earlier. The evidence is that the abrupt and early
employment-retirement process is more important in the North where there is a
massive drop in employment rates even before age 55. The fall in employment
is much more gradual in the South. A similar pattern can be observed for
women with the obvious difference that the peak in employment rates is much
lower than for men.
These figures do not necessarily take fully into account the fact that many
workers are employed in the hidden economy. Therefore, the decline in
employment rates after age 50 may be over-estimated somewhat, especially in
the South.10
Figure 2.4.
Employment rates by gender and region in Italy, 2002
As a percentage of population in each age group
100
90
Men North
80
70
60
Women North
Men South
50
40
Women South
30
20
10
0
15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+
Source: Italian Labour Force Survey.
10.
According to ISTAT, the hidden economy may account for 15% of total
employment and up to 18% for self-employed workers. The hidden economy is
also much more prevalent in the South (22%) than in the North (11%).
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
50 – CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Figure 2.5.
Unemployment rates by age and gender in OECD countries, 2002
As a percentage of the labour force
Men aged 50-64
Men aged 25-49
TUR
DEU
FIN
FRA
CAN
ESP
EU
ITA
BEL
OECD
HUN
GRC
USA
AUS
CZE
JPN
SWE
GBR
IRL
NZL
PRT
DNK
KOR
NOR
AUT
CHE
NLD
ISL
LUX
MEX
0
5
10
POL
SVK
POL
SVK
15
DEU
FIN
CAN
TUR
JPN
FRA
ESP
EU
OECD
SWE
CZE
AUT
USA
AUS
GBR
HUN
DNK
GRC
PRT
ITA
NZL
BEL
IRL
ISL
KOR
NOR
NLD
CHE
MEX
LUX
20
25
0
5
10
SVK
ESP
GRC
FIN
FRA
EU
CZE
GRC
CAN
BEL
OECD
AUT
ITA
PRT
USA
JPN
DNK
NZL
SWE
NLD
HUN
GBR
AUS
IRL
CHE
NOR
ISL
TUR
LUX
KOR
MEX
ITA
FRA
CZE
EU
TUR
DEU
BEL
FIN
OECD
CAN
PRT
JPN
HUN
USA
AUS
DNK
NZL
SWE
GBR
AUT
LUX
CHE
IRL
NLD
NOR
ISL
KOR
MEX
10
15
25
SVK
POL
ESP
DEU
POL
5
20
Women aged 50-64
Women aged 25-49
0
15
20
25
0
5
10
15
20
25
Source: European Labour Force Survey and national labour force surveys.
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CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
3.
– 51
Unemployment: a Southern, female and youth problem
Total unemployment is still relatively high by international standards. Yet
it is not the case for older workers (Figure 2.5). Traditionally, youth
unemployment has been the most serious source of concern for the Italian
labour market authorities. Indeed, the low employment rate of Italian older
workers is mainly attributable to direct transitions from employment to
pensions. However, as the retirement age will be progressively increased, if
higher participation is not matched by a similar increase in demand for older
workers, higher unemployment among these workers cannot be excluded in the
future. Therefore, it is important that this at-risk group should become the target
of preventive active labour market measures to help them to stay in their job or
to find rapidly another job.
Figure 2.6.
Unemployment rates by age and gender in Italy, 1993-2002
As a percentage of the labour force
16
14
Women 25-49
12
10
8
Men 25-49
6
Women 50-64
4
Men 50-64
2
0
1993
1994
1995
1996
1997
1998
1999
Source: Italian Labour Force Survey.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
2000
2001
2002
52 – CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Figure 2.6 indicates that unemployment increased for all workers
between 1983 and 1998 before declining. The incidence of unemployment is
very heterogeneous not only between young and older workers but also across
regions and gender. As shown in Table 2.2, unemployment can be three to four
times higher in the South as compared to the Centre and the North.11
Unemployment is very high for young workers in the South, where more than
two young men and three young women out of five who are in the labour force
are looking for work.
Table 2.2.
Unemployment rates by age, gender and region in Italy, 2002
As a percentage of the labour force
Men
Women
15-24
25-49
50-64
15-24
25-49
50-64
Italy
24.6
6.0
3.5
31.4
11.3
4.5
North and Centre
11.8
2.8
1.8
16.5
6.3
3.3
South
42.6
12.5
6.4
59.5
25.2
7.4
Source: Italian Labour Force Survey.
The incidence of long-term unemployment is quite high in Italy by
comparison to other OECD countries (Table 2.3). What is striking in the Italian
case is the absence of significant difference in the incidence of long-term
unemployment between young and older workers. Typically, in most OECD
countries, older workers have more difficulty in finding a new job and are
therefore disproportionately affected by long-term unemployment. However,
one has to bear in mind that the Italian picture predominantly reflects the high
incidence of long-term unemployment in the South, where it is particularly
concentrated among youth. In the other regions, the picture is one in which
elderly people suffer most from long-term unemployment.
11.
Brandolini et al. (2003) recently show that the unemployment rate might be even
higher in the South by including among the unemployed people out-of-the-labour
force with significant search intensity. Relaxing the ILO requirement of four-week
search intensity would increase only marginally the unemployment rate in the
North and the Centre.
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CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Table 2.3.
– 53
Incidence of long-term unemployment in some
OECD countries, 2002
As a percentage of unemployment
Total
25-49
Men
50-64
25-49
Women
50-64
25-49
50-64
Italy
60.1
60.6
59.0
62.8
61.0
57.2
Belgium
53.3
73.0
50.4
60.8
61.0
86.4
Germany
45.1
62.5
43.4
60.7
47.2
64.9
France
28.7
38.3
27.3
38.2
29.9
38.5
United Kingdom
26.6
35.7
31.8
40.8
19.2
26.2
EU
41.1
51.9
39.7
51.8
42.5
52.1
OECD
35.7
38.9
33.0
38.9
38.9
Source: European Labour Force Survey and national labour force surveys.
Figure 2.7.
38.9
Unemployment rates by age and educational attainment
in Italy, 2001
As a percentage of the labour force
Less than secondary
Secondary
Upper secondary
Tertiary
30
25
20
15
10
5
0
20-24
25-29
30-34
35-44
Source: Italian Labour Force Survey.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
45-54
55-64
54 – CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
Education also plays a significant role. Workers with low skills are more at
risk of falling into unemployment (Figure 2.7) and long-term unemployment.12
While the low employment rate of older workers may have been dominated by
supply-side factors in the recent years, the relatively low level of skills of Italian
older workers may prove a greater source of concern in the future, as attempts
are made to rise the effective age of retirement.
4.
The transition to retirement: a complex picture
According to recent studies of retirement decisions of Italian workers, the
route from employment to retirement is far from linear (Contini and Fornero,
2003). In fact, the authors note that successive transitions oscillating between
employment and unemployment to self-employment, inactivity and eventually
retirement are not exceptional. Quite a few older workers experience spells of
unemployment followed by attempts to find a job as self-employed or else
become inactive (voluntarily or not).
Another finding is that labour market behaviour has responded to reform
measures, although not always in the direction that was predicted when these
reforms were passed. The mid-1990s, characterised by pension reform, were
marked by large and sudden increases in early retirement. Contini and Fornero
(2003) show for instance that workers aged less than 55 accounted for around a
fifth of all male retirement flows until 1991. The proportion jumped to 35.6%
in 1992, dropped to 15.9% in 1993 and then increased again to 28.6% in 1998.
For women, the variability in the proportion of retirement taken by workers
younger than 55 was even greater.
Miniaci (1998) finds that more educated and self-employed workers retire
relatively late and that employees in the public sector do not retire significantly
earlier than their private-sector counterparts.
Brugiavini and Peracchi (2003) also analyse the determinants of retirement
for a sample of workers aged 50-69 years over the period 1977-1997. Their
study confirms that workers tend to retire as soon they are entitled to.
Furthermore, blue-collar workers seem more prone to early retirement than
12.
The inverse relationship between educational attainment and unemployment rate
is somewhat less clear-cut for younger workers, since those with tertiary education
face a quite high unemployment. This may reflect the difficulty in finding a first
job with little or no working experience or queuing while waiting for a good job
opportunity.
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CHAPTER 2. CURRENT LABOUR MARKET SITUATION OF OLDER WORKERS
– 55
white-collar ones. These authors also find that financial variables have the
expected impact on the probability to retire, namely that future earnings
decrease the probability of retirement, while the opposite is true for pensionable
earnings and a measure of “social security wealth”.
Mastrogiacomo (2002) focuses on the joint decision to retire that takes
place within couples. As a consequence of the greater participation of women in
the labour market for younger generations, the share of households where only
the husband works has gone down from 46% to 34% over the period 1984-1998
across a panel of households where the husband is aged 50 to 65. Over the same
period, and while the proportion of couples where both are employed has
remained almost stable (from 20% to 22%), couples where both are out of the
labour force have increased their share from 30% to 35%. A similar pattern can
be observed for women. In any case, there is some co-ordinated behaviour
toward retirement between spouses, so that any reform or measure aiming at
increasing participation should certainly take into account this aspect of the
retirement decision.
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CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES –
57
Chapter 3
PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES:
THE ROLE OF THE WELFARE SYSTEM
Social protection is a major determinant of the labour market participation of
older workers. Individual decisions to work depend highly on benefit levels and
eligibility criteria within the pension system and other social security schemes.
Finding a balance between guaranteeing an adequate income for the elderly, while
not undermining work incentives, is a challenge facing all OECD countries. This
chapter stresses the main challenges faced by the Italian welfare system and
discusses the likely impact of institutional arrangements on the retirement decision
of older workers.
1.
Main challenges faced by the Italian welfare system
In Italy, the pension system has long been very favourable to early retirement,
a key factor behind the very low employment rates observed for workers aged 50
and over. By contrast, there is little use of unemployment or invalidity benefits as
pathways out of the labour market. The public authorities have been confronted for
many years by two main challenges: i) to increase the effective retirement age; and
ii) to ensure the financial sustainability of the pension system.
A.
Increasing the effective retirement age
Over the past few decades the effective age of retirement13 has fallen
significantly. Between the early 1960s and the mid-1990s, the effective
retirement age of Italian men has fallen nearly five years to reach the age of 59
13.
The effective age of retirement refers to the average age at which people aged 40
and over withdrew from the labour force over any given five-year period. It is
estimated using information on participation rates and effectively assumes that no
exits from the labour markets occur because of death and that the population
structure by age remains constant over time. There are a number of alternative
ways of calculating effective retirement ages. However, while a different method
may change the actual values for each country it does not change greatly the
rankings of countries.
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58 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
(Figure 3.1). For Italian women, the effective retirement age has fallen from
almost 62 years in the mid-1980s to 57 years in the mid-1990s. The fall
recorded until the mid-1990s is the result of policies undertaken in previous
decades when early retirement was used to support companies in crisis and to
favour the employment of younger workers.
Figure 3.1.
Average effective age of retirement by gender in Italy,
a
1960-2002
65
64
Men
63
62
61
Women
60
59
58
57
56
702
499
19
9
297
19
9
095
19
9
893
19
9
691
19
8
489
19
8
287
19
8
085
19
8
883
19
8
681
19
7
479
19
7
277
19
7
075
19
7
873
19
7
671
19
6
469
19
6
267
19
6
19
6
19
6
065
55
a)
Estimated average age at which individuals older than 40 left the labour force during
any given five-year period. The estimates are derived using pseudo cohorts by
five-year age groups for persons initially aged 40 and over. They are calculated by
weighting the average age of each cohort over a given five-year period by its share
of the total decline in participation rates for all cohorts between the beginning and
end of the period.
Source: OECD estimates.
Since the mid-1990s, the general trend towards early retirement seems to
have reversed.14 A more disaggregated analysis shows that the change of
behaviour can mainly be ascribed to the reduced number of very early
retirements, concerning workers aged less than 55 (Ministry of Labour and
Social Policies, 2002a). Moreover, the increase in the effective age of retirement
also varies across occupations. For example, self-employed workers have
14.
As explained later, some early retirement flows have clearly been strongly driven
by announcement effects during the reforms of the 1990s. Workers retired as soon
as they could in order to avoid being locked into a new (less generous) pension
entitlement regime.
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CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES –
59
experienced a large increase in their effective age of retirement by around
3 to 4 years. What is clear is that the gap between men and women has been
dramatically reduced. However, the current effective age of retirement in Italy
is low in comparison to other OECD countries, especially for men (Figure 3.2).
Figure 3.2.
Effective and official age of retirement by gender
a
in OECD countries, 1997-2002
Men
Effective
Official
75
70
65
60
55
50
France
Belgium
Hungary
Belgium
Slovak Republic
Hungary
Austria
Slovak Republic
Czech Republic
Luxembourg
Austria
Poland
Poland
Finland
Netherlands
Germany
Finland
France
Italy
Netherlands
Luxembourg
Spain
Italy
Germany
Czech Republic
Australia
Turkey
Greece
Greece
Canada
United Kingdom
Australia
Norway
Sweden
New Zealand
Ireland
United States
Portugal
Denmark
Korea
Switzerland
Japan
Iceland
Mexico
45
Women
75
70
65
60
55
50
United Kingdom
New Zealand
Spain
Canada
Turkey
Sweden
Denmark
Norway
United States
Portugal
Switzerland
Japan
Ireland
Korea
Mexico
Iceland
45
a)
Estimated average age at which individuals older than 40 left the labour force during
the period 1997-2002. The estimates are derived using pseudo cohorts by five-year
age groups for persons initially aged 40 and over. They are calculated by weighting
the average age of each cohort over the period by its share of the total decline in
participation rates for all cohorts between the beginning and end of the period.
Source: OECD estimates.
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60 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
B.
Ensuring the sustainability of public expenditure on pension
Partly because of the substantial reduction in the effective age of
retirement recorded until the mid-1990s, expenditure on public pensions as a
percentage of GDP is one of the highest in the OECD (Figure 3.3). Currently,
expenditures on public pensions in Italy account for about 14% of GDP.
Figure 3.3.
Public expenditure on old-age pensions in some OECD
a, b
countries, 2000-2050
Levels as a percentage of GDP, changes in percentage points
Levels in 2000
Change between 2000 and 2050
Italy
France
Germany
Poland
Austria
Spain
Sweden
Belgium
Finland
Portugal
Japan
Czech Republic
Denmark
Hungary
Netherlands
Canada
Norway
New Zealand
United States
United Kingdom
Australia
Korea
0
2
4
6
8
10
12
14
16
-4
-2
0
2
4
6
8
10
12
a)
It includes all old-age pension spending, all early retirement pension spending which
is an integral part of the public pension system, and survivors and minimum
pensions.
b) For France, the estimates refer to the period 2000-2040.
Source: OECD (2001c), Economic Outlook.
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61
Long-term projections of public expenditure on old-age pensions based on
assumptions of unchanged policy15 are shown in Figure 3.3 for the
period 2000-2050. Projections for Italy are for a stabilisation of expenditure
relative to GDP, partly reflecting the 1990s reforms (see Box 3.1). Public
pension expenditure is estimated to peak at about 16% of GDP around 2030,
and should fall thereafter to about 14% of GDP in 2050, when the new pension
system becomes fully implemented.
The impact of the reforms of the 1990s can be better appreciated by
looking at the four key factors driving the change in public pension spending
between 2000 and 2050. The greater demographic dependency ratios would
imply an increase of public pension expenditure by 10.1 percentage points
of GDP between 2000 and 2050 (Table 3.1). Taking into account the reforms
already enacted in the 1990s, such an increase would be almost fully compensated
by employment gains (reducing expenditure by 3.2 percentage points), lower
average benefit entitlements (-5.5 percentage points) and stricter eligibility
requirements (-1.5 percentage points). This forecast highlights the crucial role of
employment growth, and in particular that of older workers. As already
mentioned in Chapter 2, this would imply a relatively radical departure from
current labour market features, characterised by relatively low employment
rates, particularly among women, older people and in the South. Further, the
postponement in the age of retirement would gradually improve the balance
between contributions paid and pension entitlements adjusted on the
lengthening of life expectancy. In the absence of any postponement in the age of
retirement, (future) pension adequacy would become a very relevant issue for
the cohorts of retirees starting from around 2015 (and particularly so from
around 2025).
2.
The reforms of the 1990s and the current situation
In the early 1990s, the Italian authorities began to take action to prevent
that large future cohorts of retirees would jeopardise the already fragile
financial situation of the pension system. The Italian pension system has been
substantially reformed as a result of agreements between public authorities and
social partners. Previously, the system was highly fragmented and based on
earnings related (or defined-benefit, DB) rules.
15.
Interventions that have already been legislated are taken into account.
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62 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
Table 3.1.
Decomposition of changes in old-age pension expenditures
spending in OECD countries, 2000-2050
Changes in percentage points of GDP
Total change
2000-2050
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
a
France
Germany
Hungary
b
Italy
b
1.6
2.2
3.3
5.8
6.8
2.7
4.8
3.8
5.0
1.2
-0.3
Old-age
dependency ratio
2.5
7.6
4.7
5.1
8.2
2.7
5.2
7.6
6.4
2.9
10.1
Contributions of:
Employment
Benefit
ratio
ratio
-0.1
-1.9
-0.7
0.0
-0.8
-0.3
-0.1
-0.5
-0.7
-1.0
-3.2
-0.5
-1.1
-1.6
-0.6
-0.1
-1.5
-0.2
-3.4
-2.7
-0.3
-5.5
Eligibility
ratio
-0.2
-2.4
1.0
1.3
-0.1
1.7
0.0
0.4
2.1
-0.4
-1.5
Japan
Korea
Netherlands
New Zealand
Norway
Poland
Spain
b
Sweden
b
United Kingdom
United States
0.6
5.1
-1.2
-3.9
0.9
8.0
4.8
5.7
8.0
-2.5
8.0
1.6
-0.7
1.8
4.8
3.8
4.7
3.0
7.3
8.6
3.9
1.7
2.4
-1.0
-0.5
-0.1
0.1
-1.3
-2.6
-0.5
0.1
-0.1
0.2
0.2
1.0
3.9
-5.9
0.0
-2.1
-2.5
-0.2
5.0
1.4
0.0
1.2
-2.1
2.0
0.4
0.1
-0.3
Averagec
3.4
5.2
-0.8
-1.3
0.5
a)
b)
For France, the data refer to the period 2000-2040.
For these countries, the number of pension recipients and average pensions were
estimated by the OECD Secretariat, except for Italy where the data refer to the
number of pensions and not the number of pensioners.
c) Average of above countries.
Source: OECD (2001c), Economic Outlook.
Pension benefits were computed on the basis of the average wage received
by the worker in the last years of his/her working career and were indexed to the
growth of average wages. Contribution years were generously estimated taking
into account a number of non-employment spells and access to retirement as
from the age of 50 through seniority pensions was easy.
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Box 3.1.
1.
63
Reforms of the Italian pension system in the 1990s
Amato Reform (1992)
The goal of this reform was to secure immediate financial sustainability by cutting
pension outlays. The key element with an immediate impact on the cost of the system was
the indexing of benefits to consumer prices, instead of contractual wages. Other important
changes were:
2.
•
A gradual lengthening of the reference period used to calculate benefits: to include
an individual’s entire work history rather than the last few years of employment.
•
•
An increase in the minimum requirements for seniority pensions.
•
A progressive increase in the statutory age of retirement from 60 for men and
55 for women to 65 and 60 years respectively.
•
Workers with 15 years of contributions as of 1992 were not covered under the
new rules, apart from the new rule on indexing.
A gradual abolition of the generous special provisions applying to public sector
workers.
Dini Reform (1995)
This reform aimed at improving longer-term fiscal sustainability and labour market
incentives. The most profound change was to switch from a defined-benefit (DB) system
to a “notional” defined-contribution (NDC) system. A similar reform has been
implemented in Sweden (OECD, 2003f). A key feature was the link between the pension
contributions made over an individual’s life-time and the sum of the benefits an individual
is expected to receive in retirement. Each individual has an “account” in which
contributions – equal to 33% of earnings for employees and 20% for the self-employed –
accumulate. Contributions for each year are re-valued using a five-year moving average
of nominal GDP growth.
On retirement, which can be taken as early as 57, the sum of the contributions (re-valued
by nominal GDP growth) at the time of retirement is multiplied by a “transformation coefficient”
to convert it to a pension (annuity). The size of the “transformation coefficient” and the
corresponding pension benefit depend on the age at which retirement is taken. In other words,
those retiring earlier receive smaller pensions because they will be receiving it for a longer time
period. The “transformation coefficients” were laid out in the Pension Act. While they take into
account the expected lifetimes of the new pensioner on retirement and a discount factor (equal
to an estimate of real GDP growth set at 1.5%), there is no further rise in the transformation
coefficients for those continuing to work beyond 65. The coefficient has to be adjusted by the
Ministry of Welfare every ten years (the first occasion being 2005) on the basis of updated
demographic data and of the comparison between the actual dynamics of GDP growth and the
growth rate of wage incomes (from which effective contributions come from).
The new computation of pension benefits is applied to all labour market entrants from
January 1996 and on a pro rata basis for workers with less than 18 years of contributions.
Workers with more than 18 years of contributions remain covered by the old system, which in
their case is to some extent the pre-Amato regime (see above).
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64 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
Box 3.1.
3.
Reforms of the Italian pension system in the 1990s (cont.)
Prodi Reform (1997)
Since the Dini reforms were insufficient to achieve a prompt stabilization of pension
spending as a percentage of GDP, a number of amendments were introduced under the
Prodi government in November 1997. These included:
•
•
•
An acceleration of the harmonization of the public and private pension regimes.
A gradual increase in the contribution rates for the self-employed to 19% given
that they are credited with 20% on their “account”.
A further gradual tightening of the conditions governing access to seniority
pensions. Blue collar workers and “equivalent” workers who started their careers
between 14 and 18 years of age, and those on Cassa integrazione guadagni,
were granted till 2006 better pension access rules.
In addition, the rules for various special schemes were harmonised with those for
private employees in terms of contribution rates, yield coefficients, and eligibility criteria
for seniority pensions.
4. After 1997
Certain features of the system have been reinforced since 1997:
•
•
•
A.
Several increases in the minimum values of social security and social assistance
pensions have been implemented.
Incentives to postpone retirement for those workers who have reached the
minimum threshold for a seniority pension have been introduced. This scheme
remains little utilised and further reforms are planned (see Box 3.3, p. 80).
Restrictions to the possibility to cumulate labour income with pension income have
been gradually eased.
The 1990s reforms
Three main reforms have been carried out during the 1990s (Box 3.1):
in 1992 (the Amato Reform), in 1995 (the Dini Reform) and in 1997 (the
Prodi Reform). Some parametric changes in the system were implemented
nearly immediately through the Amato and the Prodi reforms. By contrast, the
Dini Reform – which moves the pension system towards a notional
defined-contribution (NDC) rule – implies a long transition period before it is
fully implemented.
The NDC rule is fully relevant only to new labour market participants as
from the 1st of January 1996. Workers with at least 18 years of contributions
in 1996 have their pension calculated according to the old system (DB rule)
while those having contributed less than 18 years have a mixed regime. The
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impact of the Dini Reform on the overall stock of retired workers will only be
important after 2030 (Table 3.2). In 2050, it is estimated that 46% of retirees
will still receive a pension calculated entirely or partially with the rules of the
old system.
Table 3.2.
Projected distribution of Italian pensioners
under old and new schemes, 2002-2050
Percentages
Formula used (at retirement age) to calculate pension
2002
2005
2010
2020
2030
2040
2050
Old (defined-benefit,
New (notional definedMixed regime
DB) rule
contribution, NDC) rule
98.4
1.6
0.0
96.6
3.4
0.0
92.0
7.7
0.3
71.1
27.2
1.7
40.0
51.9
8.1
17.9
54.4
27.7
4.9
41.4
53.7
Source: Ministry of Labour and Social Policies (2002a).
According to the Dini Reform, the retirement age ranges from 57 to 65, but
workers need to have a contribution period of at least five years and may not
retire earlier than 65 unless the level of the pension benefit exceeds 1.2 times
the old-age allowance (see Section B). In any case, at age 65, all Italians will be
at least entitled to such a benefit, if they are not able to earn any other income
(pensions included). Workers can thus choose to retire at an earlier age or
postpone retirement up to 65 years and thus increase their pension entitlements.
Pension benefits estimated through the NDC rule are strongly related to the
age of retirement: the lower the age, the lower the pension and vice versa.
Indeed, the new computation formula takes into account the amount of pension
contributions paid throughout the whole working life, capitalised at the
five-years average of the annual nominal GDP growth rate. Pensions are also
adjusted to life expectancy (averaged across gender) of the pensioner at
retirement age, according to actuarial equivalence.
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The transformation coefficient will be updated every 10 years by the
Ministry of Labour and Social Policies (in agreement with the Ministry of
Economy and after hearings that have to take place with the Committee for
Public Spending on Social Security (Nucleo di valutazione della spesa
previdenziale), the social partners and the relevant Parliamentary Commissions
to account for changes in demographic parameters and the evolution of
long-term GDP growth relative to pension contributions.
B.
Main pension provisions in 2003
The current Italian pension system is composed of a compulsory
pay-as-you-go (PAYG) public system for all workers16 and a complementary
private pension system. The latter is still in its infancy (see Section 3 below).
The Italian pension system includes also a number of means-tested
measures to protect old people against poverty and to decrease inequalities, in
particular the minimum pension supplement (trattamento minimo, TM), the
old-age allowance (assegni sociali, AS) and the social assistance supplement
(maggiorazione sociale).
Pensioners who have a social security pension of an amount lower than a
given minimum (TM) are entitled to a supplement (integrazione al minimo) in
order to bring the pension up to the TM.17 In 2002, the amount of the minimum
annual pension corresponded to 24% of the average production worker earning.
The old-age allowance (AS) is paid to citizens over the age of 65 who are
16.
For more than two thirds of the workers, the public pension system is administered
by the social security institute for the private sector (INPS). This covers most
private sector employees and the self-employed (artisans, farmers and
shopkeepers). Some categories of professionals have their own institutions, which
are supervised by the Ministry of Labour and Social Policies. About a fourth of
the public pension system is administered by the social security institute for the
public sector (INPDAP) and the remaining part is administered by a number of
small institutions. Compulsory pension expenditure is monitored by the nucleo di
valutazione della spesa previdenziale, which publishes an Annual report. The
medium and long term projections are updated every year by the Department of
General Accounting of the Ministry of Economy.
17.
Supplements are given only if individual income is below two times the TM or not
above four times the TM when cumulated with the spouse’s income.
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67
without income or face particularly difficult circumstances18 and in 2002,
corresponded to 21% of the average production worker earning, which is just
slightly more than the absolute poverty line defined by ISTAT. The social
assistance supplement (maggiorazione sociale) depends on other received
benefits, on the age and the income of the recipient. Under the budgetary laws
for 2002, the current government modified the social assistance supplement.
Now all pensioners (including those receiving the old-age allowance and other
social measures, e.g. linked to disability pension) who are at least 70 years-old
and with an annual income lower than a threshold (currently equal to 31% of the
average production worker earning) will receive the social assistance
supplement up to this amount.
As far as the public pension system is concerned, there are currently two
main pension entitlements, i.e. the old-age pension (pensione di vecchiaia) and
the “seniority” pension (pensione di anzianità). Workers receive an old-age
pension when they reach the age of 65 for men and 60 for women
(previously 60 and 55, respectively) with a minimum contribution period of
20 years. Workers can receive a seniority pension at a younger age based on
joint requirements related to age and years of contributions. Seniority pensions
will progressively disappear with the gradual extension of the NDC system.19
In 2004, private employees were entitled to seniority pensions at the age of 57
with at least 35 years of contributions (Table 3.3). The minimum years of
contributions, regardless of age, are 38 years for employees and 40 years for the
self-employed. On top of the gradual increase in the minimum thresholds
already legislated for and shown in Table 3.3, the new measures currently under
discussion in the Parliament would further increase the age thresholds related to
seniority pensions from 2008 onwards (see Box 3.3, p. 80).
18.
To be entitled to the old-age allowance, the individual income must not be above
the AS or twice the AS when cumulated with the spouse’s income.
19.
In 1998, according to ISTAT, beneficiaries of a seniority pension represented
14% of all the beneficiaries of a pension (all categories included). Among them
there were also “baby-pensioners” (privileged workers who had retired as young
as 40), a possibility suppressed by the reforms previously depicted.
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68 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
Table 3.3.
2001
a
b
2002
2003
2004
2005
2006
2007
From
2008
The gradual increase in the requirements
for seniority pensions in Italy
Non-manual workers
Private
Public
37
37
56 and 35
55 and 35
Manual workers Self-employed
37
40
54 and 35
58 and 35
a
37
37
37
40
b
57 and 35
55 and 35
55 and 35
58 and 35
a
37
37
37
40
b
57 and 35
56 and 35
55 and 35
58 and 35
a
38
38
38
40
b
57 and 35
57 and 35
56 and 35
58 and 35
a
38
38
38
40
b
57 and 35
57 and 35
56 and 35
58 and 35
a
39
39
39
40
b
57 and 35
57 and 35
57 and 35
58 and 35
a
39
39
39
40
b
57 and 35
57 and 35
57 and 35
58 and 35
a
40
40
40
40
b
57 and 35
57 and 35
57 and 35
58 and 35
a) Requirements in terms of minimum contribution period only – regardless of age.
b) Requirements in terms of joint minimum age and minimum contribution period.
Source: Marano and Sestito (2004).
C.
Potential impacts during the transition period
Because the Dini Reform is only fully applicable to the flow of new
retirees as from 1996, its impact will show up over the medium to longer run.
There are also effects in the short term related to the Amato and Prodi
parametric changes affecting the whole stock of retirees. As already mentioned
in Box 3.1 along with the indexing of pensions to consumer prices, eligibility
requirements are being tightened and an increase in the minimum age of
retirement is gradually being phased in. Further changes are in the pipeline
through the measures currently under discussion in the Parliament (see Box 3.3,
p. 80). As they refer to an enabling bill, still approved only by one branch of the
Parliament, the implementation acts having to be defined subsequently by the
Government, the following description mostly refers to the rules and changes
that have already been enacted.
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Three sets of statutory age of retirement
Three different sets of statutory ages of retirement need to be considered
during the transition period (Marano and Sestito, 2004). Two sets refer to the
workers still covered fully or partially by the old system (DB rule), and one set
for workers under the new system (NDC rule):
•
For the old-age pension in the old system, the legal age is from 2001
60 years for women and 65 years for men, along with a minimum
contribution period of 20 years. The same ages apply to compulsory
retirement in the public sector, although in practice public employees
have been granted since 1992 the option to work until age 67. In the
private sector, although retirement is not compulsory in the strict
sense, the age limit for the old-age pension appears to be binding in
practice (i.e. very few continue working after 65), while women have
been recognised the right to continue working until the age limits
applying to men i.e. 65.
•
For the seniority pension and for workers still in the old system,
gradually until 2008, the contribution requirement for all workers will
reach 40 years (regardless of age) or 35 years and 57 and 58 years of
age for employees or self-employed, respectively (Table 3.3).
•
For the old-age pension in the new system,20 the legal age of
retirement ranges from 57 to 65 with a contribution period of at least
five years. While the latter requirement is likely to be unimportant, a
more binding constraint should derive from the requirement that the
pension benefit exceeds 1.2 times the old-age allowance an individual
would be entitled at 65 years of age.
The official increase in the minimum retirement age for seniority and old-age
pensions and the lower accumulation of seniority rights of the future and more
educated cohorts should progressively lead to a rise in the effective age of
retirement. However, the incentives to postpone retirement during the long
transition periods are weak, so that the actual age of retirement may not rise in
parallel to life expectancy. Even after the long transition period, it would remain
possible to retire at a relatively early age, albeit with rather low pension benefits. In
order to strengthen the incentives to postponement, the current Government has
proposed a new policy package to further reform the pension system (see Box 3.3,
p. 80).
20.
Seniority pensions do not exist in the new system.
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70 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
Trend in replacement rates
During the transition period, employees will experience a relatively important
decrease in the replacement rate for a given age and seniority at retirement
(Table 3.4). Further reductions in the replacement rate will occur largely as a result
of adjustments for longer life expectancy (see Box 3.1 and below). However, as
Table 3.4 makes clear, the fall in the replacement rate (at least for employees) could
be partially avoided by postponing by five years the age of retirement. Indeed, due
to the “mixed” regime of the calculation, postponing retirement by five years could
significantly contribute to maintaining the level of entitlements, due to the
combination of the five additional years of contributions as well as actuarial
adjustments.
a
Table 3.4. Gross replacement rates of the pension system in Italy ,
2003-2050
Year of retirement
2003
2010
2020
2030
2040
Retirement at 60 with 35 years of contributions and average earnings
b
st
1 pillar
70.0
67.9
58.1
51.7
49.4
Private sector employees
d
c
0.0
4.4
8.6
13.1
15.0
2 pillar
Total
70.0
72.3
66.7
64.8
64.4
st
Self-employed workers
1 pillar
69.4
66.7
43.0
32.0
29.9
d
c
0.0
4.4
8.6
13.1
15.0
2 pillar
Total
69.4
71.1
51.6
45.1
44.9
Retirement at 65 with 40 years of contributions and average earnings
b
st
Private sector employees
1 pillar
79.9
77.6
74.3
69.5
65.6
d
c
0.0
5.0
9.8
14.9
19.5
2 pillar
Total
79.9
82.6
84.1
84.4
85.1
st
79.2
76
56.3
46.2
39.8
Self-employed workers
1 pillar
d
c
0.0
5.0
9.8
14.9
19.5
2 pillar
Total
79.2
81.0
66.1
61.1
59.3
2050
49.0
15.0
64.0
29.7
15.0
44.7
64.6
19.5
84.1
39.2
19.5
58.7
a)
Macroeconomic assumptions: real wages and productivity are assumed to grow by
1.8%; the real GDP growth rate is 1.4%; the inflation rate is 2%.
b) Results for public sector employees are similar.
c) The 2nd pillar refers to complementary pension funds. The assumption is that the
worker entered the pension fund in 2000.
Source: Direct submission from national authorities.
Self-employed workers will experience a much larger cut in the
replacement rate than is the case for employees. This is mainly due to the lower
contributions paid by self-employed in the new pension system – around 17%
compared to 32.7% paid by dependent workers. The replacement rates will also
be lower in case of career interruptions (when no contributions are paid) and
this will disproportionately affect female workers.
The new regime involves considerable flexibility in the choices individuals
can make regarding retirement decisions, which may occur at any time between
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71
the ages of 57 and 65. This flexible mechanism in itself provides an incentive to
postpone retirement, since delaying retirement from the age of 60 (having paid
contributions for 35 years) to the age of 65 (having paid contributions for
40 years) will lead to a significant increase in the replacement rate.
Revision process due to changes in the demographic coefficient
To guarantee the financial sustainability of the new pension system based
on the NDC rule vis-à-vis demography, it is crucial to revise pension
entitlements according to life expectancy at retirement. The revision at ten-year
intervals of the demographic coefficient will take place for the first time
in 2005. But in that year the change will obviously have almost no effect as less
than 1% of pension benefits are concerned (Table 3.2).
The law dictates the variables to be considered in order to update the
transformation coefficients and establishes a social dialogue procedure.
D’Amato and Galasso (2002) have observed that introducing discretion in such
a process might well put the financial sustainability of the reform in danger as
there might be political pressures from the elderly who represent a growing
share of the voters. The infrequency of such revisions, due at ten years intervals,
may also create inequities and incentives to anticipate retirement. Marano and
Sestito (2004) stress the fact that such a discontinuity may imply jumps in
entitlements leading individuals to retire immediately before coefficients are
modified in order to avoid drastic and unpredictable changes in entitlements.
An issue debated is whether to have a more frequent revision of
coefficients. Although the revision of the demographic coefficient will have
almost no effect in 2005, in the future, increasing life expectancy will have a
negative impact on the replacement rate and progressively more pensioners will
be concerned by the adjustment of this coefficient. In view of the possible
resistance it may cause, one could question whether the adjustment would be
more acceptable if done every year, so becoming more gradual. In Sweden for
instance, the adjustment is automatic (OECD, 2003c).
Work and pension
The possibility for a pensioner to cumulate pension benefits with other
sources of income is an important factor affecting retirement decisions. In Italy,
the prevailing rules will also have some consequences on workers in the
underground economy, which seems to attract pensioners who wish to continue
working but do not want to lose their right to a pension. In the past, several
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72 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
regulations limited the possibility to cumulate pension and work income.
Currently, the possibility to cumulate both incomes is limited in some cases and
forbidden in others, mainly depending on the category of pension (disability,
seniority or old-age), the kind of income (employed or self-employed activity),
the years of contribution (less or more than 40), the age of retirement and the
regime (earnings-related, mixed or contributions-based). Thus after the changes
enacted in 2000 and in 2002, seniority pension retirees may cumulate work and
pension income if they retire after 58 years of age and with a contribution
period of at least 37 years. Such a possibility provides an incentive to postpone
retirement beyond the current minimum requirements and up to these thresholds
above which work and pension income may be cumulated. However, it nullifies
whatever incentive there may be to further postpone retirement beyond these
thresholds.
Undeclared jobs and pension
The Employment Taskforce (2003) stressed that transforming undeclared
work into regular work was a particular challenge for Italy. It is widely
presumed that a large share of undeclared jobs are held by older workers who
are working illegally so as to cumulate wages with pension benefits. It is also
possible that many of these older workers have the same type of job they held
before being entitled to pension benefits.
To counter this problem, the government is implementing fiscal
advantages for individuals who remain in the formal labour market and receive
a pension. The government eased the rules to draw pension and work income,
both in 2000 and 2002. As a general rule, people receiving a seniority pension
are free to cumulate a pension and a work income when they reach 37 years of
seniority and 58 year of age. Drawing pension and work income is allowed
always for people retired with 40 years of seniority and for old-age pensioners.
Furthermore, the self-employed that are not allowed to cumulate a pension with
work income, can nevertheless do so paying a penalty of a maximum of 30% of
their work income. Finally, in 2003, a measure has been introduced that gave all
pensioners the right to cumulate a pension and work income without conditions
upon the payment of a small fee. These new rules should encourage older
workers receiving a pension to declare any work income they may be receiving.
In any case, the new pension reform aims at further easing these rules.
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3.
The complementary pension system
A.
The new complementary pension funds
73
During the 1990s, the government has tried to develop complementary
“pillars” supplementing the public “pay-as-you-go” pillar. The development of
a complementary pension system appeared necessary to compensate for the
expected fall in public pension entitlements (see Table 3.4).
Before the 1992 reform, only a few sectors characterised by above average
wages (e.g. the banking sector, insurance and investment companies) had some
forms of complementary pensions.21 Starting in 1993, the reforms have
provided a framework for the creation of both collective and individual
complementary pensions in all sectors and for each category of workers,
i.e. private and public employees and the self-employed. The main principles
applying to the new pension funds are:
21.
•
All funds are defined contribution (DC) funds and contributions are
capitalised on an individual basis.
•
Participation in a pension fund is voluntary and individual, although it
may occur in the context of collective agreements.
•
The management of funds is generally given to a specialised third
party (e.g. banks, insurance companies, financial intermediaries), but
the pension fund itself maintains the legal ownership of the assets
under management.
•
Pension fund contributions receive a fiscal advantage of the ETT kind
(i.e. Exemption of contributions, Taxation of accumulation and
Taxation of benefits), built in such a way to avoid double taxation and
thus replicating in many aspects an EET system.
These covered about 600 000 individuals in so called “fondi preesistenti”.
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74 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
In 1993, two types of funds were introduced: the so-called “closed or
contractual funds” (fondi chiusi or fondi negoziali or fondi contrattuali) and
“open funds” (fondi aperti). The main characteristics of those funds are the
following:
•
Closed pension funds. They concern primarily, but not exclusively,
employees and are created on the basis of collective agreements
among the social partners, so that the fund may cover a sector or a
company, at the regional or national level. In the case of
self-employed workers, a closed fund is created under the initiative of
their corresponding associations. The legal status of a closed fund is
an association or a foundation, often non-profit and in general with an
autonomous legal status.
•
Open pension funds. They concern any category of workers,
dependent or self-employed. They may be established by financial
intermediaries specialised in asset management like banks and
insurance and investment companies. Participation in these funds may
be at the individual or collective level.22
In 2000, contribution plans funded by individuals’ savings based on life
insurance (piani individuali pensionistici – PIP) were included in the system of
complementary pensions. In 2001, the PIP have been granted the same fiscal
advantages as closed and open funds, provided that they have the same
conditions for benefit entitlement.
When people decide to draw either their seniority or old-age pension, they
can also draw the supplementary private benefits under the following
conditions:
•
22.
For workers drawing their seniority pensions, it is the age required in
the obligatory public regime, with a minimum of five years of
contributions to the pension fund.
However, open funds are not very interesting for the majority of wage and salary
earners because fiscal advantages are granted to them only if: i) there is not a
sector closed fund to which the worker may adhere to; and/or ii) the TFR is
conferred to the open fund by a collective contractual agreement (see Box 3.2).
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75
•
For workers drawing their old-age pension, the access is at termination
of working activity with a minimum of 15 years of adherence to the
pension fund and an age difference not greater than ten years from the
age required by the public old-age pension.
•
For those individuals who are not subject to a legal age of retirement,
the age of entitlement to benefits is 57.
In some specific circumstances, it is however possible to receive part of the
capital (so-called riscatti, for individual funds). For instance, this is possible in
case of extraordinary health expenditures, to finance a first house for the
recipient or the recipients’ children and so on. In this case, it is necessary to
have contributed to the fund for at least eight years.
Since the 1990 reforms implied such a substantial change in the Italian
pension system, an accompanying legislative framework has also been set up in
order to enhance trust in the new “private” pillars. Several elements were
introduced, in particular the creation of a specific authority in charge of
supervising the transparent and correct administration and management of the
complementary pension funds (the COVIP – Commissione di vigilanza sui fondi
pensione, under the Ministry of Labour and Social Policies). Investments in
pension funds should follow the principle of a “prudent person”, and
administrative and transaction costs should be minimised. In general, the
regulatory rules applied to the management of complementary pension funds in
Italy are in line with those described in the EU Directive relative to
complementary pension funds.
B.
Subscription to the complementary pension funds
As already mentioned, the Italian complementary pension regime is
relatively young. As a result, the pension funds presently cover only a small
segment of the labour force, but they should contribute significantly to
supporting the income levels of pensioners in the future. In particular,
complementary pension funds have been relatively slow in taking off (the first
fund became operational in 1997) and have received little support from younger
workers. Presently, about two million workers (about 10% of workers) have
subscribed to the various types of complementary schemes available, including
the individual pension plans (Table 3.5). There are still many problems with
respect to civil servants, for whom no pension funds have been established so
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76 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
far despite the fact that the legislation extended to the public sector the same
provisions as for the private sector (Vernière, 2003a).
Table 3.5.
Importance of the complementary pension system in Italy, 2001
Dependent workers
private
public
Self-employed
Total
Total workers
Coverage
(thousands)
(% of employment)
1722
10.9
1722
0
13.8
0
265
1987
3.7
8.7
Source: Ministry of Labour and Social Policies (2002a).
In order to encourage the development of the complementary pension
system, the 1993 reform tried to transfer the annual flow of the deferred wage
(TFR) to the complementary pension funds (Box 3.2). Any decision about the
precise terms of the transfer was left to the social partners. This transfer was
meant to generate substantial funding for the development of the private
pension system, since the TFR stock has been estimated at 130 billion euros,
while the current annual flow of contributions is close to 15 billion euros or
1.3% of GDP (Bosi and Guerra, 2002).
The transfer of the TFR to the complementary pension funds met with
strong opposition and the new funded voluntary complementary pension
schemes has not taken off until now, even after more favourable tax incentives.
Although the 1995 reform proposed particular tax treatments to encourage the
development of the complementary pension regime, a radical reform of the
fiscal treatment of complementary pension funds took place in 2000. As a
result, a single tax regime currently applies to all forms of pension funds and
fiscal allowances are harmonised across different funds, without favouring the
TFR or any other pension fund. These benefits are of course subject to several
conditions, in particular i) a minimum of 15 years of contributions is needed;
ii) a maximum of one half of accumulated savings can be withdrawn as capital
at retirement and; iii) pensions benefits can be drawn as from retirement age
only.
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CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES –
Box 3.2.
77
Transferring the trattamento di fine rapporto (TFR) to complementary
pension funds
The TFR may be interpreted as a sort of deferred wage. It was introduced in the
1920s, based on an agreement between the social partners, within the field of private
sector industrial relations. According to the laws governing this scheme, firms
accumulate in their book reserves corresponding to about one month salary per year for
each worker (6.91% of payroll on average). At the retirement date or in the case of quit
or layoff, the employee is granted back the accrued contributions, capitalised at a rate
of 1.5%, plus 75% of the inflation rate. The TFR can be anticipated in case of unusual
expenses, e.g. to buy a house. All workers within the private sector benefit from the TFR.
For public sector employees, the issues and the (on-going) discussions around the
TFR are particularly complex. Until 1993, the TFR was non-existent in the public sector.
Instead, various forms of deferred wages were in place. In order to apply the same
framework as in the private sector and to boost the complementary pension regime in
the public sector, it is proposed to transfer the various forms of deferred wages regimes
in the public sector to the TFR regime.
For workers, the replacement of the TFR with a complementary pension fund is
advantageous, as long as the latter assures higher returns than those guaranteed with
the TFR. However, the TFR possesses fewer constraints than pension funds and may
operate as a useful cushion during periods of unemployment, in particular because
unemployment benefits are insufficient in Italy. From the employers’ point of view, the
abandonment of the TFR regime implies the loss of a low-cost source of funds.
4.
Other social protection instruments
A.
Unemployment
Unlike in some other OECD countries, there is little risk of unemployment
benefits (UB) being used as a pathway to early exit from the labour market in
Italy. Expenditure on unemployment benefits remains modest in Italy. In 2001,
it represented 0.5% of GDP compared with 1.4% in France and 2.1% in
Germany (OECD, 2003b).
The basic scheme provides benefits amounting to 40% of the previous
wage for a period of six months only. This period is extended to nine months for
individuals older than 50. Benefits are available only to workers who are
definitively out-of-work and who do not maintain any link with their previous
work. Workers individually or collectively laid-off must have at least 52 weeks
of contributions.
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78 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
More generous and longer-term benefits (12 months extending up to
three years for people over 50) apply only to collective dismissals in firms (with
more than 15 employees) in the industrial sector (so called “mobility
indemnities”). Moreover, this scheme very often intervenes after people have
already received benefits from the Cassa integrazione guadagni or CIG, which
covers workers expect to be re-hired in the same firm in the future. In some
cases, the mobility schemes may be allowed to accompany the dismissed
worker up to retirement (so extending beyond the three years maximum with a
special contribution paid by the firm). Both the mobility and the CIG benefits
are equal to 80% of the former wage, up to a ceiling which is however
approximately equal to 60% of the earnings of the average production worker;
mobility benefits are also gradually reduced after the first 12 months.
A bill to reform the unemployment benefit system is currently pending in
Parliament. This reform aims at increasing the maximum duration of
unemployment benefits, but with a degressive replacement rate (60% for the
first six months; 40% for the following quarter; 30% for the last quarter).
B.
Disability
Unlike in some other OECD countries, disability is no longer a route to
early withdrawal from the labour market in Italy. Access to disability benefits
has been severely tightened in Italy during the past 20 years. At 12.7%, benefit
recipiency among the working age population in 1980 was higher than in any
other OECD country. After the drastic reform of the contributory benefit
programme in 1984, benefit recipiency has fallen rapidly.23 The reform
tightened the requirements to benefit eligibility. In particular, it is no longer
possible to take into account the economic environment. Disability pension
entitlements depend exclusively on the physical and psychological conditions of
the applicant. Two kinds of disability pensions were introduced, depending on
whether the reduction of ability to work is 60% (assegno di invalidità) or 100%
(pensione di inabilità). The former is subject to a check every three year and
allows the pensioner to work. The latter is incompatible with labour income,
while the pension calculation rules are more generous.
23.
More details and international comparisons are available in the OECD
comprehensive study on invalidity (OECD, 2003a).
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79
These restrictive measures have put a halt to the previous widespread use
of disability benefits in the depressed South. There has also been an increase in
means-tested benefits from about 10% of recipients in 1975 to about 70%
currently (OECD, 2003a). By 1999, the recipiency rate stood at 55 per 1 000,
about the OECD average.
Italy stands out clearly as one of the few countries where invalidity
expenditures have come under control. The proportion of GDP devoted to
invalidity benefits has gone down from 1.7% in 1990 to 1% in 1999, while for
the OECD, the ratio has increased from 1.2% to 1.3% over the same period.
Taking into account all disability-related programmes, Italy spent
1.8% of its GDP in 1999, while the OECD average was 2.4% and the
EU average was 2.7%.
5.
Key issue: working longer
A.
The current debate
The government has presented new proposals for reform of the pension
system which are currently under discussion in the Parliament (Box 3.3). The
stated objectives are to provide further incentives to workers to remain in the
labour force at older ages and to accelerate the development of the
complementary pillar.
The government faced strong opposition from trade unions to the proposals
when they were initially announced. Since December 2003, a dialogue was
initiated between the government and the social partners to explore the
possibility of an agreement on an overall package.
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80 – CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES
Box 3.3.
Current pension reform proposals (May 2004)
An enabling-act had been approved by one branch of the Parliament and two redrafts
strengthening it further have been presented by the government to the Parliament in
October 2003 and February 2004. Further amendments have been presented and approved
by the Senate in May 2004. Subsequently, the provisions will have to be transcribed, if
approved by both branches of the Parliament, into actual legislative decrees by the
Government The main current pension reform proposals include:
•
A further easing of the rules governing the accumulation of labour income and
pension income.
•
Providing incentives, in the period up to 2008, to continue working for workers who
are entitled to a seniority pension through: a) the certification of pension access
rights regardless of future reforms, so as to avoid anticipated retirement flows
induced by fears of future reforms; and b) the option for private employees who
continue to work to fully cash in, on a tax favoured basis, the pension contributions
they and their employers would have had to pay, while future pension entitlements
are frozen (in real terms) at the value the worker is entitled at the moment of
choice (the same option is also envisaged at a later stage for public employees).
More broadly, the use of part-time work as an alternative to the seniority pension
should be eased.
•
Increasing, from 1st January 2008, the age and contribution requirements for the
seniority pension: together with the already scheduled rise to 40 years of the
requirement based on the length of the contribution period only, the second
access rule, based on 35 years of contribution and the reaching of a certain age,
will see an increase of three years with respect to what is currently forecast for that
year (Table 3.3), so that employees will need to reach 60 and self-employed,
61 years. Two further increases of one year each of the age requirement are
scheduled for 2010 and 2014.
•
Reducing, from 1st January 2008, from four to two the possible dates to actually
start benefiting from a seniority pension during the year, which will imply that
actual retirement will take place in average 9 and 15 months after reaching the
requirements for employees and self-employed respectively, compared with the
current average of 4.5 and 7.5 months.
•
Increasing, from 1st January 2008, to 65 years (60 for women) the minimum
retirement age in the new system, with an exception holding only for those
reaching 40 years of contribution or 35 years of contribution and an age of
62 years (employees) and 63 years (self-employed) since 2014 (such age limits
are two years lower during 2008 and 2009 and one year lower during 2010-2013).
•
Transferring on a principle of silent consent the employees’ TFR to private
pension funds.
•
Harmonising the regulation of collective and individual pension funds, increasing
competition and levelling the playfield.
Source: Marano and Sestito (2004) and submissions from the national authorities.
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CHAPTER 3. PROTECTING PEOPLE WHILE ENHANCING WORK INCENTIVES –
B.
81
Encouraging older workers to continue working longer
Reforms to the pension system will take a long time to bear their fruit in
terms of social and financial sustainability. Meanwhile, it will be necessary to
retain in employment older workers who will otherwise continue to retire
relatively early and in large cohorts (Inglese, 2003). It is particularly important
to develop without delay the social protection safety net in case of
unemployment.
The progressive set-up of a multi-pillar pension system is clearly a positive
step to ensure the adequacy of pension income but some measures to incite
mainly younger workers to adhere to complementary pension funds may be
necessary in view of the low attractiveness of these funds currently.
In general, initiatives aimed at better informing workers on the future of
their pensions are lacking. Only a minority in a representative sample of the
population aged 16-80 understand how a pay-as-you-go system operates (Boeri
et al., 2002). In Sweden where the NDC reform was introduced in 1998,
information to individuals has been a crucial component in the implementation
of the pension reform (Sunden, 2003). The corner stone of this information
policy is the “orange envelope” sent out annually to every Swedish citizen. It
contains an annual statement of their present and future pension entitlements.24
Increasing the knowledge among people of how their pensions are determined
and what affect them seem to have changed in Sweden peoples’ views on early
retirement substantially.
However, reforming the social protection system will not be sufficient. To
ensure that older workers stay longer in the labour market, measures should also
go beyond the traditional debate in Italy over pension reform (INPDAP, 2002).
More and better policies need to be implemented in order to increase the
employability of older workers and to convince firms to hire and retain them.
These issues are discussed in the following chapters.
24.
These projections are based on their current and historical income register along
with variables such as the age of retirement and the life expectancy at that time,
the average growth in the economy, the return on their funds, the expectations of
the increase in incomes, the indexation of their pensions, etc. To retain simplicity
and comprehensibility, the scenarios in the envelop people receive is limited to
assumptions on increases in real average income (0% and 2%), real return on
funds (3.5% and 6%) and age at retirement (61, 65 and 70 years). For these
different scenarios people can have an estimate of how their monthly old-age
pension may be influenced from retiring at 61 instead of 65.
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CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
– 83
Chapter 4
REMOVING DEMAND-SIDE BARRIERS
Neither the pension system nor other aspects of the social security system
currently provide strong incentives for Italian workers to postpone retirement,
and many employers have exploited these institutional arrangements to shed
their older employees. However, if older workers are to be encouraged to
continue working longer, it is crucial that firms are willing to hire or retain
them. This chapter describes first the employment practices of firms with
respect to older workers. It then looks at the reasons why many employers
appear to be reluctant to retain workers beyond a certain age.
1.
Employment practices of firms
Employer attitudes and perceptions play a fundamental role in determining
the employment outcomes of older workers. Older workers continue to be
subject to a range of negative attitudes by employers, some of whom appear to
believe that substituting younger workers for them will be positive for the firm.
A.
Employers’ views of older workers
There is no comprehensive survey in Italy of employers' attitudes towards
older workers. According to Confindustria (the principal employers' association
representing mainly industrial firms), the current strategy of Italian firms is to
favour younger workers (Confindustria, 2002). Indeed, younger workers are
considered as more capable than older workers to adjust to technological change
and demand shifts. Confindustria stresses the need to improve older workers'
human capital and to integrate more fully older people into the labour force.
However, employers feel that higher participation rates of older people can only
be achieved with a less rigid labour market and with lower social contributions.
The latter point reveals the perception that older workers are too costly.
Moreover, lowering social contributions may help reduce the shadow economy
in the short term.
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84 – CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
Other employers seem to have a somewhat different perception, at least in
principle. According to Confcommercio (an employers’ organisation
representing small businesses and services), its affiliates wish to keep their older
workers in order to ensure that older workers transmit firm specific skills to
younger workers. This point is somewhat supported by Confartigianato (an
organisation representing self-employed craft and trades workers) who think
that older workers should be used as tutors to younger generations. The picture
here is one where there is low substitutability between younger and older
workers because of specific human capital accumulated by the latter.
It is however worrying that the diffusion of good practices towards older
workers among firms does not seem to be yet a reality.25 The only example
mentioned in Italy’s National Action Plan 2002 is the reference to a programme
undertaken by the Milan City Hall aiming at enhancing the professionalrelations expertise of pensioners working in libraries (Ministry of Labour and
Social Policies, 2002b).
It is important that examples of good practice be better publicised to
illustrate the positive contribution of older workers to firm performance. For
example, Paulli and Tagliabue (2002) mention the case of new railway
companies re-employing pensioners of the Italian Railways who had been
engine drivers. For the company, these workers are highly skilled with
experience and do not need any immediate training. For the individual
employee, there is the possibility to combine a pension and a salary.
The need to overcome the common misconception that older workers are a
burden for employers is crucial. Mirabile (2000) points out that action so far has
focussed on policies to raise the legal age of retirement while little has been
done to develop work practices in a manner that ensures that older workers can
effectively retire later.
25.
Ciccarone and Marchetti (2003) mention this concern in a recent evaluation of the
prospects for older workers in Italy: “Given the little attention paid until recently
to the employment of older workers, it is indeed difficult to single out relevant
case studies to report upon”. The same authors stress the fact that the evaluation of
policies towards older workers has mainly focused on their effects on public
pension expenditure.
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CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
B.
– 85
Age discrimination
According to Paulli and Tagliabue (2002), there is widespread
discrimination against older workers with regard to job recruitment and training
courses, in particular for low-skilled workers.
Article 3 of the Italian Constitution states a general principle of equality
and non discrimination. As an application to this general principle, Article 15 of
Law 300/1970 (the so-called “workers’ statute”) prohibits any action that
discriminates against workers according to their political or union affiliation
religious belief, race and gender. Age is not explicitly mentioned, but can be
presumed to be in the same vein by extension. Age discrimination does not give
rise to a significant number of legal actions in Italy.
Nevertheless, there may be pressures to strengthen anti-age discrimination
legislation. Indeed, from October 2003, a European Union directive on
discrimination (Directive No. 78/2000) makes age discrimination illegal in all
member countries. Member countries have three years to comply with this new
rule. While for the time being there are no plans to introduce new legislation on
anti-age discrimination, the Biagi Law has already added discrimination based on
age to the list of discriminatory practices that work agencies are forbidden to use in
their job matching activities.26 While not much should be expected by this new
legal framework, it may help to improve the situation of older workers in the future.
For example, firms and public administrations would no longer be allowed to set
age limits in their advertisements or for competitive entrance examinations.
2.
Employment protection
The relationship between employment protection legislation and employment
of older workers is complex. In general, stricter legislation tends to reduce labour
turnover but its impact on employment levels is less certain (OECD, 1999a, 2004e).
The OECD has ranked countries according to the strictness of employment
protection governing individual dismissals based on a combination of several
different factors such as the notice period involved, the amount of severance pay
and the definition of unfair dismissals (see Table 4.1). According to this
classification, Italy holds the 19th position among the 28 OECD countries that have
been ranked.
26.
It is included more specifically in the Article 10 of the Legislative decree 276/2003
implementing the Law 30/2003.
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86 – CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
Table 4.1.
Overall strictness of protection against individual dismissals
a
in OECD countries in 2003
Country ranking
Portugal
Slovak Republic
Czech Republic
Netherlands
Sweden
Germany
Spain
Turkey
France
Japan
Greece
Austria
Korea
Mexico
Norway
Poland
Finland
Hungary
Italy
Belgium
New Zealand
Ireland
Australia
Denmark
Canada
Switzerland
United Kingdom
United States
4.3
3.5
3.3
3.1
2.9
2.7
2.6
2.6
2.5
2.4
2.4
2.4
2.4
2.3
2.3
2.2
2.2
1.9
1.8
1.7
1.7
1.6
1.5
1.5
1.3
1.2
1.1
0.2
a) There is no ranking available for Luxembourg and Iceland.
Source: OECD (2004e), Employment Outlook.
From this perspective, Italy does not seem to have a particularly rigid labour
market. Moreover, the new rules such as the ones introduced by the Biagi Law that
are progressively being implemented should further ease the legislative burden on
hiring and firing decisions of firms. However, Marano and Sestito (2004) stress that
many of the flexible regulatory and contractual arrangements have mostly applied
to young people while the picture has remained broadly the same for older workers.
This might explain why employers still have the impression of excessively rigid
labour market regulation which is not adapted to the Italian productive system
(Confindustria, 2002).
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CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
– 87
The new regulations introduced by the Biagi Law and implemented by the
Legislative Decree 276 in October 2003 (Box 4.1.) aim at removing some
rigidities of the Italian labour market like the regulatory constraints on part-time
work or the possibility to hire workers through private employment agencies. In
order to have incentives that are not just targeted at young people without
distinction,27 the Biagi Law has introduced a new scheme specifically targeted
at disadvantaged groups, among which older workers (integration contract or
contratto di inserimento).28 The Government has only introduced a general
framework for this new integration contract which will need to be defined and
implemented through collective bargaining.
More broadly, the new law should enhance the transparency and efficiency
of the job matching process. While some provisions like having to prove the
necessity of temporary employment arrangements for a “project” of limited
duration may appear less attractive to employers than the current legislation, the
key challenge appears to be the implementation of the new law. More than
40 issues will need to be resolved by means of agreements or regulations that
involve the Minister of Labour and Social Policies, the social partners and the
regions.
Providing incentives to firms that employ disadvantaged individuals
through a regular contract appears to be effective. Cipollone et al. examine a
programme implemented in 2000, which provides a large subsidy to firms
hiring workers with an open-ended contract.29 Their results suggest that the
subsidy has increased labour force participation of eligible inactive people by
about 1.4% in 2001 and 2.1% in 2002 with respect to non-eligible individuals.
The increase is mostly concentrated among persons aged 35-54, with a low or at
most secondary schooling level and who, before entering the labour market,
27.
The labour cost rebates related to training and work contracts for workers aged 29
and under have been abolished.
28.
The different disadvantaged groups are the following: youths (for whom the
labour cost rebates do not apply as youths may be covered by apprenticeship
schemes), long term unemployed, unemployed aged 50 and over, inactives who
wish to resume working activity, women in areas with high gender occupational
gap and handicapped persons.
29.
This programme, called Credito d’imposta, started in October 2000 and originally
granted firms a tax credit of about 400 euros (620 euros in the South) per month
for each worker, of age over 25 years, hired with an open-ended contract from the
month of the hiring until December 2003.
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88 – CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
were either retired or housewives. The programme is found to encourage mainly
adult and older workers to enter the labour force with regular contracts.
Cipollone et al. (2003) suggest that firms employing workers in the
underground economy took advantage of the subsidy to move these labour
contracts to regular ones.
Box 4.1.
The Biagi Law
In February 2003, a new law gives the government the possibility to reform the
functioning of the labour market, with the objective of increasing employment among
youth, women, older workers and job-seekers, particularly in the Mezzogiorno. One of
the purposes of the law is also to reduce job precariousness and secure regular
employment (in particular, outside the hidden economy).
The main aspects covered by the law are the following:
- Article 1 is concerned with harmonising and increasing the efficiency of public
and private work intermediaries. A Legislative Decree (297/2002) has already been
passed prior to the reform to enable private employment agencies to compete and
co-operate with public agencies. The article simplifies the procedure of job placement.
- Article 2 is concerned with the promotion of lifelong learning through
apprenticeships, a new work training contract to facilitate reintegration of job-seekers
and orientation training whereby the trainee is hired on a fixed term contract.
- Article 3 authorises the government to reform current conditions for part-time
work. The reform aims at defining new rules to give sufficient protection to part-time
workers (delay of notice, overtime payment, etc.) while encouraging parties to engage in
such contracts instead of precarious work arrangements in the hidden economy. The
current rules impose unnecessary obstacles on the possibility to work reduced hours.
Reduced social contributions may be granted for part-time contracts with workers from
disadvantaged categories (youth and older job-seekers).
- Article 4 regulates non-standard forms of employment such as on-call work,
“continuous co-ordinated collaborations” (or so-called Co-co-co contracts) and job
sharing. The law provides a new framework for fixed-term work arrangements that
consist of either wage and salary work or “work missions” (more akin to selfemployment). Other occasional forms of work like baby-sitting, private tuition, gardening
and house cleaning, will also be easily regularised through a system of coupons
available from the social security institution.
- Article 5 supports active collaboration of employers’ and workers’ representatives
through the setting up of bilateral institutions with common goals in the area of job
placement, training and labour-contract design.
- Article 8 reinforces the control system of INPS, INAIL (Istituto nazionale per
l’assicurazione contro gli infortuni sul lavoro) and the Ministry of Labour and Social
Policies, by increasing co-ordination among them and supplementing financial controls
and sanctions with a policy of prevention and information.
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CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
3.
– 89
Mobility and tenure
Labour mobility is an important aspect of the process of matching labour
supply and demand. Not surprisingly, labour mobility is lower for older workers
than for younger ones. As an illustration, only 4.2% of workers aged 50-64 have
job tenure of less than one year (the proportion is almost 12% for the age
group 25-49). However, voluntary and involuntary separation rates are high for
older workers (Box 4.2).
Box 4.2.
High separation rates for older Italian workers
Contini (2002) find that separation rates are high for older workers, especially
after 55. Using INPS data, he estimates hiring and separation rates for workers in
various age groups between 1986 and 1996. Hiring and separation rates are high for the
youngest age category (25-34). Hiring rates are similar for prime-age (age 45-54) and
older workers (55-64), but they are much lower than is the case for their younger
counterparts. The main difference can be found in the separation rates, which are much
higher for the oldest category. Separation rates of the latter are about twice as high as
their hiring rates.
Moreover, separation rates for older workers followed an upward trend during the
period under analysis, which does not appear to be related to the business cycle.
Separation rates kept increasing during the whole period for workers aged over 44, while
they were relatively stable for younger workers.
There are important regional discrepancies in hiring rates of older workers. During
1994-1996, hiring rates varied between 9.2% in the North-West region and 18.9% in the
South for individuals aged over 54. These differences can be linked to higher labour
market participation of older men in the South of Italy.
A crucial question is whether these separation rates are linked to early retirement.
Contini (2002) estimates rates of re-entry into dependent work. As expected, workers
younger than 50 years old have a much higher rate of re-entry into the labour market
than older workers. About 32% of workers aged between 45 and 54 years find a new job
within one month and 40% after one year. For workers aged 54 and over, no more
than 13% could be considered as job-to-job switchers. Moreover, their cumulative rate of
re-entry into dependent work remains flat irrespective of the length of time since
separation.
Company size may also be an important factor affecting the demand for older
workers. Large firms (over 1 000 employees) have a remarkably low turnover rate. The
rate of job-to-job changes is approximately 20% for individuals aged over 50 who worked
in small companies (less than 20 employees), while it is only 15% in larger companies. In
the long term, rates of re-entry diverge since almost 50% of older workers who separated
from a small company found dependent employment within 60 months, against only
22% of those who separated from a big company.
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90 – CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
Not surprisingly, older workers tend to have higher job tenure than
younger workers. In Italy, about 70% of workers aged 50-64 in 2001 had been
working with the same employer for 15 years or more, while this proportion
drops to 26% for workers aged 25-49 years. By international standard
comparison, average tenure is high in Italy. In terms of the age-profile of
average job tenure, Italy resembles countries like France in particular, but also
Germany and Sweden, and differs considerably from countries like the United
States or the United Kingdom, where job tenure is on average much shorter
(Figure 4.1). Average job tenure rises steadily with age in Italy, even for the
oldest age groups and despite relatively high rates of separation among older
workers, i.e. job loss (see Box 4.2). This suggests that, in case of downsizing or
companies restructuring, older workers are more likely to drop out of the labour
market altogether than to find new employment (as paid employees in the
formal sector).
Figure 4.1.
Job tenure by age and gender in selected OECD countries, 2000
Sweden
20
18
18
16
16
14
14
60
-6
4
55
-5
9
50
-5
4
20
-2
4
60
-6
4
0
55
-5
9
2
0
50
-5
4
4
2
45
-4
9
6
4
40
-4
4
8
6
35
-3
9
8
30
-3
4
10
45
-4
9
12
10
35
-3
9
12
US
Women
30
-3
4
Years
22
20
25
-2
9
UK
24
22
20
-2
4
Years
Germany
40
-4
4
France
Men
25
-2
9
Italy
24
Source: European Labour Force Survey and Job Tenure Supplement to the US Current
Population Survey.
It is difficult to influence the decisions people make about staying with the
same employer, but it would appear that highly regulated labour markets
generate higher job tenure on average. Thus, while older workers may have
fewer opportunities in these labour markets to change job and develop new
skills, they may reinforce their skills in their current job. The impact on their
employability is therefore mixed.
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CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
4.
– 91
Wage profile by age
In most countries, wages tend to rise with age and/or tenure. This may
reflect the increasing productivity of workers as they gain more experience.
However, the age-profile of earnings may also be the result of an implicit
contract between the employer and the employee such that wages depend on age
or length of service, i.e. seniority, rather than on individual worker’s
performance. This practice can serve to encourage greater work effort and
commitment from workers (Lazear, 1979). In such a system, wages are initially
lower than a worker's productivity, but eventually rise above it.30 As part of this
implicit contract, firms will set a mandatory age of retirement to ensure that
they do not have to continue paying wages above a worker’s productivity
beyond a given age.
Based on survey data from the Bank of Italy,31 average age-earning
profiles of full-time workers in 1991, 1995 and 2000 are shown in Figure 4.2. It
seems that the age-earning profile has become steeper in the 1990s. Thus, the
difference between the younger and the older cohorts is more pronounced
in 1995 and 2000 than in 1991. Finally, one can mention that the age-earning
profile decreases slightly for the oldest age categories and this feature is more
pronounced for women than for men.
The change that occurred for older workers between 1991 and 1995 could
be explained by selection mechanisms reinforced by announcement effects
following the pension reforms. Indeed, workers claimed retirement as soon as
they could in order to avoid losing the option later on. It is likely that those who
left the labour market during this period usually had a relatively low level of
education, and thus of earnings, mainly for two reasons. First, Italy has
experienced a late surge in education level, thus older workers tend to be less
educated than younger ones. Second, those with less education had higher
chances to be eligible to a seniority pension as they started working earlier.
30.
In the following discussion, any reference to a worker’s wages being above or
below productivity should be taken as shorthand for the wage rate being above or
below the value of the worker’s marginal productivity.
31.
The Bank of Italy survey is the Survey of Household Income and Wealth (SHIW).
Unlike the INPS data, the sample size is small and thus the survey is less reliable
with respect to labour income than the INPS data which are based on
administrative files.
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92 – CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
Figure 4.2.
a
Age-earnings profiles by gender in Italy, 1991, 1995 and 2000
Earnings of 25-29 year olds=100
Men
Women
1991
1995
150
150
140
140
130
130
120
120
110
110
100
100
90
2000
90
25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64
25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64
a) Full time workers.
Source: Bank of Italy: Survey of Household Income and Wealth (SHIW).
In terms of international comparisons, Italy is among those countries with
a relatively flat age-earning profile (see Figure 4.3).32 The Italian age-earnings
profile for men comes close to that observed in the United States. The wage
drop for the oldest age categories is limited, which comes as a sharp contrast
with countries like the United Kingdom. Regarding women is age-earning
profiles, wages of the oldest age categories are higher compared to those of
younger workers but in the same proportion as the United States and Sweden.
32.
It should be kept in mind that these wage profiles refer to a point in time and so
they are comparing the wages of different cohorts of workers with different levels
of education. Therefore, the figures may not be representative of the way wages
evolve over individual careers.
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CHAPTER 4. REMOVING DEMAND-SIDE BARRIERS
Figure 4.3.
– 93
Age-earnings profiles by gender in selected OECD countries,
early 2000s
Earnings of 25–29 year olds=100
Italy
France
Belgium
Sweden
United Kingdom
Men
Women
210
210
190
190
170
170
150
150
130
130
110
110
90
25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64
United States
90
25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64
Source: OECD wage data base of full-time workers; for Italy, Bank of Italy, SHIW, 2000.
However, there are a number of reasons to think that seniority wages are
more important in Italy than what these international comparisons may suggest.
First, in Italy, wages are usually set through collective agreements between the
social partners. As Paulli and Tagliabue (2002) stress, the Italian labour market
is traditionally based on a seniority-wage system and this would help to explain
why most Italian employers do not retain older workers after a certain age.
Second, using longitudinal data from INPS for individuals, Brugiavini and
Peracchi (2003) have estimated the individual age-earnings profile of private
sector employees between 1973 and 1997. The authors have made use of all the
available information (sector affiliation, gender, initial occupational category) to
control for individual heterogeneity. Their results show that annualised monthly
earnings increase monotonically with age for both men and women. The growth
rate of earnings declines with age until 35. Then the growth rate is roughly
constant. Such findings seem to confirm that there is hardly any wage decline
for older workers in Italy.
This is further confirmed by analysis on wage mobility. According to
Contini (2002), who computed transition matrices over the period 1985-1991,
Italy is characterised by low downward wage mobility and relatively high
upward wage-mobility for older workers.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 95
Chapter 5
STRENGTHENING EMPLOYABILITY
One crucial way to help older workers finding or keeping a job is to
enhance their employability. Achieving this is the responsibility of public
authorities, unions and employers' associations, but also workers themselves.
The purpose of this chapter is to highlight the relevant factors enhancing the
employability of Italian older workers.
Various aspects of the employment conditions that older workers face in
Italy will be first discussed. Older people’s attitudes to work will then be
examined. Finally, the range of education, training and labour market
programmes offered to Italian workers will be described.
1.
Employment conditions
The future employment prospects of older persons will be influenced by
the type of jobs that are available. Strenuous work conditions are usually felt
more acutely by older workers. More generally, older workers who want to
extend their careers may be especially interested in more flexible forms of
employment, such as part-time.
A.
Job characteristics by industry and occupation
Older workers are overrepresented in “agriculture, hunting, forestry and
fishing” (yet only 4% of all workers are employed in these industries), in
“transport, storage and communication” (men only), “public administration,
education, health and social work” (35% of all older men and 62% of all older
women are employed in this sector) (Table 5.1). They are underrepresented in
the “wholesale and retail”, “hotel and restaurant” and “financial, real estate and
business services” industries as well as in the “service workers and sales
workers”. By occupation, they are overrepresented both in high-skilled
occupations (“legislators, senior officials and managers”, and “professionals”)
and in low-skilled ones (“elementary occupations”).
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96 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Table 5.1.
Italian older employees by industry and occupation, 2001
Percentages
Employees aged 50-64 in each category
As a share of all employees
in each category
As a share of all
older employees
Total
Men
Women
Total
Men
Women
17.9
19.5
15.7
100.0
100.0
100.0
Agriculture, hunting, forestry and fishing
25.4
25.4
25.2
3.9
4.2
3.4
Mining and quarrying, manufacturing,
electricity, gas and water supply
14.6
16.0
11.5
22.4
26.7
15.0
Construction
16.2
16.9
6.3
6.0
9.2
0.5
Wholesale and retail
9.6
10.7
8.2
5.8
5.7
6.1
Hotels and restaurants
13.1
13.5
12.7
2.4
1.9
3.3
Transport, storage and communication
20.6
23.5
11.4
7.2
9.8
2.5
Financial, real estate and business services
13.2
17.2
9.2
7.3
7.5
7.0
Public administration, education,
health and social work
24.7
28.8
21.6
45.0
35.1
62.3
Legislators, senior officials and managers
37.6
40.5
25.4
3.7
5.1
1.3
Professionals
27.2
29.4
25.9
16.7
10.4
27.7
Technicians and associate professionals
16.1
19.4
11.9
16.4
17.4
14.6
Clerks and related workers
16.3
21.9
11.6
16.7
16.0
17.9
Service workers and sales workers
12.4
13.7
11.2
8.8
7.3
11.5
Agricultural and fishery workers
24.7
24.6
25.0
1.0
1.3
0.5
Craftsmen and related workers
15.1
15.6
12.5
13.8
18.8
5.2
Plant and machine operators
15.7
16.7
12.3
9.6
12.5
4.4
Elementary occupations
24.3
23.5
25.2
13.3
11.3
16.9
All employees
By industry
By occupation
Source: Italian Labour Force Survey.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 97
The share of older workers in Italy employed in manual occupations is below
the OECD average (Figure 5.1). The share of employment in manual occupations
does not differ between prime-age and older men but is much higher generally for
men than for women. Since manual occupations usually are more physically
demanding with a larger hazard of injury, the risk that older men leave the labour
market before the official retirement age due to health reasons is higher than for
older women in Italy, but possibly lower than in some other OECD countries.
Figure 5.1.
a, b
Manual workers by age and gender, 2002
As a percentage of total employment
Men
25-49
70
60
50
40
Women
50-64
30
20
10
0
0
Poland
Poland
Slovak Republic
Slovak Republic
Portugal
Portugal
Greece
Greece
Hungary
Hungary
Spain
Spain
Czech Republic
Czech Republic
Finland
Finland
OECD
OECD
Austria
Austria
United Kingdom
United Kingdom
Italy
44.9
46.0
Italy
Denmark
Denmark
Germany
Germany
Sweden
Sweden
Ireland
Ireland
Switzerland
Switzerland
Luxembourg
Luxembourg
Belgium
Belgium
Norway
Norway
Netherlands
Netherlands
10
20
30
40
50
60
70
29.8
21.8
Manual workers refer to skilled agricultural and fishery workers, craft and related
trades workers, plant and machine operators and assemblers and elementary
occupations.
b) The OECD average is the average of the countries shown.
Source: European Labour Force Survey and national labour force surveys.
a)
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98 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
B.
Flexible work arrangements
More flexibility in working arrangements is often put forward as a tool to
increase employment. Such flexibility, however, may have a price in terms of
increased precariousness for workers. Thus, the appropriate balance must be
found which preserves the quality of worker-firm employment arrangements,
without imposing unnecessary obstacles to the hiring of new labour market
entrants.
Since the second half of the 1990s, Italian labour market policies have
centred on a liberalisation of employment contracts as well as the provision of
fiscal incentives to job creation. This has been followed by strong employment
growth. However a balanced approach is needed as there is a risk of a dual
labour market being created, if job protection for permanent contracts remains
rigid. As OECD (2003c) points out, rules on permanent contracts that are too
rigid risk aggravating job precariousness for new entrants and re-entrants.
Part-time employment
Since 1990, the incidence of part-time employment in Italy has increased
to reach 12% in 2002 but is still somewhat below the OECD average of 15%
(OECD, 2003b). The incidence of part-time among women has significantly
increased to 24% in 2002 while it has been stable in the case of men at
around 4-5%. Part-time employment is not significantly more frequent among
older workers than prime-aged ones (Figure 5.2).33
The law on part-time work explicitly forbids discrimination in the
treatment of part-time workers as compared with full-time workers. However,
the main barrier to working part-time is the still prevalent defined-benefit
pension system for older workers, which grants pension benefits on the basis of
the last years of contribution.34 The length of the contribution period for
computation of the pension has progressively been extended in 1992 to the last
33.
Clearly, the scarcity of part-time jobs is a major obstacle to prime-age female
participation, as the child care system is relatively under-developed in Italy.
34.
In the case of part-time work, while one year of par-time work counts as one
equivalent year of full-time work in order to reach the seniority eligibility
thresholds, it only counts for half a year in the accumulation of the number of
years which (up to a maximum of 40) are multiplied by pensionable earnings in
order to determine the actual pension.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 99
ten years for employees with at least 15 years of contributions. With the
progressive introduction of the contribution-based system, there are less
disincentives to work part-time as the pension benefits are computed over the
whole period of contributions. However, the transition period is very long and,
therefore, over the next few years, the proportion of part-time workers could
remain low for older workers.
Figure 5.2.
a
Part-time work by age and gender in OECD countries , 2002
As a percentage of employment
Women
50-64
70
60
50
40
Men
25-49
30
20
10
0
0
Ireland
Ireland
United Kingdom
United Kingdom
Japan
Japan
Germany
Germany
Belgium
Belgium
Australia
Australia
New Zealand
New Zealand
Norway
Norway
Mexico
Mexico
Luxembourg
Luxembourg
OECD
OECD
Canada
Canada
Italy
France
10
20
30
40
Netherlands
Netherlands
26.7
23.7
Italy
6.1
4.1
France
Austria
Austria
Portugal
Portugal
Sweden
Sweden
Denmark
Denmark
Poland
Poland
Turkey
Turkey
Spain
Spain
United States
United States
Korea
Korea
Greece
Greece
Slovak Republic
Slovak Republic
a) The OECD average is the average of the countries shown.
Source: European Labour Force Survey and national labour force surveys.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
50
60
70
100 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Furthermore, some regulatory constraints have often acted as an obstacle
on firms’ readiness to offer part-time job positions. For instance, until recently a
part-time worker’s hours of work had to be very strictly predefined, a feature
now revisited by the Biagi Law. Moreover, there are currently no particular
incentives to work part-time. While the 1995 pension reform provides for the
opportunity to move from full-time to part-time when a worker approaches
retirement age, this possibility has been little used so far. According to Paulli
and Tagliabue (2002), the main reasons are the following: the high cost of parttime work for employers, the opportunity for highly-skilled older employees to
retire and then work as a consultant for their previous company, and the rigidity
of gradual retirement in view of the fact that it is easier to retire officially and
work illegally.
Temporary work
Temporary work contracts are not particularly widespread in Italy by
international standards (Table 5.2). There is however an emerging trend towards
more flexible arrangements. Law 196/1997 has relaxed many constraints with
respect to fixed-term contracts and temporary work agencies. The Biagi Law
(see Box 4.1, p. 88) has further eased the use of temporary work and staff
leasing with competing employment agencies. And it is a fact that temporary
work has increased in recent years. Temporary agency work is particularly
widespread among men in large firms, mainly in the manufacturing sector in the
North, and among young people (Sestito, 2002).
Table 5.2.
Temporary work contracts in some OECD countries, 2002
As a percentage of employment
Men
Italy
France
Germany
Spain
Sweden
United Kingdom
EU
OECDa
25-49
7.6
10.3
7.3
37.3
10.8
4.0
50-64
5.9
4.3
4.2
15.9
6.5
4.8
10.2
10.8
5.6
7.8
Women
25-49
50-64
12.7
6.2
16.4
7.3
8.2
4.4
47.0
18.4
17.7
7.1
6.3
5.7
13.7
14.9
6.8
12.6
Total
25-49
9.7
13.1
7.7
41.1
14.1
5.1
50-64
6.0
5.7
4.3
16.7
6.8
5.2
11.8
12.5
6.1
9.7
The OECD average excludes Australia, Korea, New Zealand, Poland, and the
United States.
Source: European Labour Force Survey and national labour force surveys.
a)
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 101
The 2001 budget law provided an incentive to postpone retirement through
recourse to a temporary contract. Wage and salary earners in the private sector
who are eligible for a seniority pension and who want to postpone retirement
can sign a labour contract for at least two years providing the same earnings as
the previous contract but bearing no social contributions on the new contract.
The take-up of this incentive has been low: by mid-2002, only around
2000 workers had asked to postpone their retirement (Ministry for Labour and
Social Policies, 2003c). Indeed, proposals under the new pension reform are not
going to require breaking the old contract, but only that workers communicate
to the firm their intention to get the benefit. Moreover, the social contribution
savings will be fully reaped, on a tax-favoured basis, by the worker.
Flexible contracts
Job flexibility has been mainly achieved through the so-called “Co-co-co
contracts” (collaborazioni coordinate e continuative). This particular labour
contract has led to a specific form of employment that lies between dependent
work and self-employment. Unlike self-employment or free-lance activity, both
firms and workers have to contribute to the social security system and
pensions.35 Yet, workers on a “Co-co-co” contract have few rights and little
labour protection. The rationale behind this form of labour contract is to offer
workers the possibility to choose a form of employment with greater
independence and the opportunity to work for several employers
simultaneously.
According to figures from INPS, about 2.1 million workers had been
employed under a “Co-co-co” contract in the period up to December 2002.
However, according to the CNEL (2003), the number of individuals actually
engaged in such forms of employment at any one time is approximately
600 000. The former figure refers to all people registered with INPS who had
been employed under a “Co-co-co”contract at least once in the past
six-seven years. The latter figure is a rough estimate. The 2001 Census suggests
that around 850 000 people actually working under a “Co-co-co” contract in
October 2001.
The success of these “Co-co-co”contracts is most probably due to the
lower labour cost they imply for firms. Indeed, social contributions on
35.
Two-thirds of the contributions are paid by the employer and one-third is paid by
the worker.
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102 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
“Co-co-co” contracts are lower than is the case for standard contracts, especially
as regards contributions to the pension system. According to CISL, most of the
workers under “Co-co-co” contracts end up with no more than one employer
and accomplish tasks that are quite similar to those of regular dependent
workers.
Another flexible form of employment which apparently has been
increasing in importance over recent years is “associate work” (associazione in
participazione). In this particular case, instead of employing workers, firms give
them a status similar to that of a co-owner of the company in which they are
working. The decree accompanying the budget law for 2004 extended to this
type of worker the same pension insurance as that for “Co-co-co”contracts.
Under the new Biagi Law, the “Co-co-co”contract will be replaced by the
new legal status of “project work” (lavoro a progetto). The aim of this
institutional change is to distinguish more properly atypical forms of work from
dependent work. Indeed, for the time being, there are often few differences
between dependent workers and “Co-co-co”workers, except that the latter have
less rights and are in most cases younger. Whether the change implied by the
Biagi Law will change this situation remains to be seen.
There is concern that “Co-co-co” arrangements may have created yet
another barrier to the employment of older workers. Indeed, “Co-co-co”
workers are on average younger than regular workers, partly because the high
flexibility of this form of employment seems to be better suited to the needs of
younger generations. Moreover, pension concerns are more likely to arise
among older workers, who are especially sensitive to the fact that the small
pension contribution of this kind of job could put in jeopardy the level of
pension benefits that they will receive. Therefore, “Co-co-co” contracts may
have made the labour cost of younger workers even more attractive relative to
older workers. Yet, the impact on the relative demand of older workers is not
known precisely. Indeed, one cannot exclude that the fiscal advantages
stemming from “Co-co-co” contracts may have contributed to regularise
undeclared forms of work. However, among older people the “co-co-co”
arrangement seems to be relevant as an official contract among people already
receiving a pension benefit.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
2.
– 103
Older people’s attitudes to work
It is important to stress that older workers are far from being a
homogeneous group: they have entered the labour market at different ages; they
have different levels of skills and educational attainment; they face varying
health conditions; they work in different sectors and they work under different
forms of employment. In 2000, low-skilled (those with less than upper
secondary education) Italian workers aged 55-64 declared that they had started
work at the age of 19.9, almost seven years earlier than their high-skilled
counterparts (those with tertiary education). The gap is only three years on
average in the EU (European Commission, 2003).
A.
Job satisfaction
Regarding job satisfaction, Clark (1998) found that Italian workers
reported in 1989, one of the lowest levels of overall job satisfaction among the
set of countries investigated (Austria, Germany, Hungary, Ireland, the
Netherlands, Norway, United Kingdom and United States).36 More recent data
for Italy shows that job satisfaction among older workers who remain in
employment is higher than is the case for their prime-age counterparts
(Table 5.3). If one looks at specific dimensions of job satisfaction, older
workers report the highest satisfaction with respect to work atmosphere and
consideration from others. However, they are somewhat less satisfied than
younger workers in terms of job seniority, work intensity and job
precariousness.
Table 5.3.
Measures of job satisfaction in Italy, 1995
Ranking from 1 to 10
<30
31-40
41-50
51-65
Work atmosphere
6.6
6.4
6.4
6.7
Job security
3.6
3.6
3.6
3.3
Work intensity
7.7
7.8
7.8
7.6
Interest
7.2
7.6
7.5
7.5
Consideration from others
6.5
6.5
6.5
6.7
Job precariousness
3.7
3.6
3.4
3.0
Overall
6.5
6.6
6.4
6.9
Source: Bank of Italy: Survey of Household Income and Wealth (SHIW).
36.
Total
6.5
3.5
7.7
7.5
6.6
3.4
6.6
On the basis of the 1989 wave of the International Social Survey Programme.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
104 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Results of job satisfaction for older workers in Italy are likely to suffer
from a certain degree of sample selection bias. Those who still work after
age 50 are probably more likely to be happy at work than those who have
already retired or left the labour market for health-related reasons. Indeed, the
latter are often individuals with lower levels of education, a variable which is
positively related to job satisfaction. Moreover, it is difficult to compare results
across age groups as they are likely to be in different types of occupations and
industries. To overcome such difficulties, Sestito (2002) has run various job
satisfaction equations. While this study does not include age, it does control for
potential work experience, which could well be considered as a proxy for age.
The estimation results show that the relation between job satisfaction and
experience is not linear but has rather an U-shape pattern. It also turns out that
for most specific measures of job satisfaction except work atmosphere, the
experience parameters happen to be statistically significant. While it is difficult
to draw any conclusion on the level of job satisfaction of older workers, it
seems that older workers are no less happy at work than younger ones.
B.
Expected age of retirement
The implementation of the pension reforms in the 1990s seems to have
modified expectations with respect to the age of retirement (Table 5.4).
According to Mastrogiacomo (2002), the proportion of respondents who believe
that they will retire earlier rose significantly after the Amato Reform (1992) and
declined after the Dini Reform (1995). And the share of those expecting to retire
later increased substantially at the end of the 1990s. Boeri et al. (2002) found
that an increase in the official retirement age is preferred by a majority of
Italians.37 On the other hand, the most disliked option among Italians is a
reduction in the benefit level of public pensions.
Interestingly, 45% of inactive individuals aged 55-64 in Italy would like to
have a paid job, should the right conditions be in place (Figure 5.3). The figure
is higher than the OECD average. Italy is among those countries with the
highest proportion of inactive individuals who wish to work. This finding is
confirmed by analysing data on retired individuals (OECD, 2003b). For this
group, 41% still wish to work now or in the future. Thus, it seems that a large
proportion of those who go into retirement would like to stay in the labour
market.
37.
As a result of a questionnaire of potential reform options for the current pension
system administered to a sample of Italians aged 16-80.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 5. STRENGTHENING EMPLOYABILITY
Table 5.4.
– 105
a
Changes in retirement expectations in Italy ,1989/91-1995/98
Percentages
1989-1991
1991-1993
20
21
1993-1995
1995-1998
Husband
Expect to retire earlier
25
16
Expect to retire at the same time
51
48
41
36
Expect to retire later
29
30
34
48
Expect to retire earlier
29
16
25
13
Wife
Expect to retire at the same time
48
47
45
46
Expect to retire later
24
37
30
40
a) The expected age of retirement is compared between two waves of respondents.
Source: Bank of Italy: Panel from the Survey of Household Income and Wealth (SHIW),
as presented in Mastrogiacomo (2002).
Figure 5.3.
a, b
Inactive persons of 55-64 who would like to work, 1997
Percentages
Share of inactive persons who would like to work
OECD average
50
40
30
20
10
Ita
ly
P
as ort
u
te
r n gal
Lä
nd
er
Po
la
nd
C
an
ad
a
No
rw
ay
Sp
ai
G
n
er
m Cze
Ja
an
ch
pa
y,
n
we Re
pu
st
b
er
lic
n
Lä
n
Sw
de
r
i
U
ni tzer
te
la
d
K i nd
ng
do
m
Sw
ed
N
et
en
he
rla
n
De ds
nm
ar
k
Fr
an
ce
H
un
ga
ry
G
er
m
an
y,
e
Ne
w
Ze
al
an
d
0
a) The question is: “Would you like to have a paid job, now or in the future?”
b) Population-weighted average for countries shown.
Source: International Social Survey Programme (ISSP), 1997.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
106 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
3.
Educational attainment of older workers
A.
A key to higher employment rates
At present, 58% of older male workers and 55% of older female workers in
Italy have not attained an upper secondary level of education (Figure 5.4). This
proportion is much larger than in most OECD countries. The gap is somewhat
smaller for women than for men.
The generation gap in educational attainment is also important. Those
aged 55-64 in 2000 had completed 6.8 schooling years on average, while the
figure for those aged 25-34 is 10.9 years (Sestito, 2002). Since educational
attainment generally has been rising rapidly among younger generations, the
average level of educational attainment of older workers will improve in the
future (Figure 5.4). By 2025, results of simple extrapolations suggest that
around 31% of older workers in Italy will have less than an upper secondary
education level and around 15% a tertiary education. In Italy, the fall in the
share of older workers with less than upper secondary degree is the largest
among the countries shown in Figure 5.5. Yet, the increase with respect to
tertiary education is smaller. Therefore, Italy will remain at the back of the field
with respect of the proportion of older workers with a tertiary education in the
future.
The low employment rate of older workers is partly explained by their low
level of educational attainment relative to younger cohorts, which is aggravated
by weak training opportunities throughout their careers. As in most other OECD
countries, employment rates in Italy are clearly linked to levels of educational
attainment, and especially so for older people (Figure 5.6). While employment
rates are higher for more highly educated people at all ages, the gap is more
pronounced after age 50. One can also observe substantial differences in the gap
by gender. For instance, the employment rate of highly educated women
aged 50-64 is more than three times larger than the rate of their less educated
counterparts.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
Figure 5.4.
– 107
Educational attainment of workers aged 50-64 by gender
in some OECD countries, 2001
Percentages
Men
Tertiary
Upper secondary
Less than upper secondary
100
90
80
70
60
50
40
30
20
10
PRT
MEX
KOR
MEX
ITA
TUR
TUR
SVK
KOR
CZE
GRC
IRL
POL
ISL
ESP
AUT
FRA
HUN
NZL
GBR
DNK
LUX
NLD
SWE
BEL
AUS
FIN
NOR
CHE
DEU
USA
CAN
0
Women
Tertiary
Upper secondary
Less than upper secondary
100
90
80
70
60
50
40
30
20
10
Source: OECD (2003j), Education at a Glance.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
PRT
CZE
GRC
AUT
CHE
ISL
ITA
SVK
ESP
POL
LUX
DEU
HUN
FRA
NLD
GBR
IRL
NOR
FIN
DNK
BEL
AUS
NZL
SWE
USA
CAN
0
108 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Figure 5.5.
a
The rise expected in education level of older workers, 2000-2025
Percentage shares of labour force aged 50-64 by level of educational attainment
Tertiary
Upper secondary
Less than upper secondary
100
6.0
11.7
90
30.9
8.8
28.4
29.2
80
70
11.1
20.2
43.4
47.2
60.3
50.1
52.0
60
49.3
42.8
50
42.0
49.4
53.6
40
36.9
30
27.6
46.8
20
37.0
36.3
38.8
41.9
United
States
(2000)
United
States
(2025)
28.7
10
12.1
22.1
19.8
15.5
0
Italy
(2000)
Italy
(2025)
Sweden
(2000)
Sweden
(2025)
France
(2000)
France
(2025)
Japan
(2000)
Japan
(2025)
Extrapolations based on data for 2000 and obtained by applying participation rates
by educational attainment, gender and five-year age groups between the ages 50-64
to the corresponding population aged 25-39.
Source: For 2000, OECD (2003j), Education at a Glance; for 2025, OECD estimates.
a)
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 5. STRENGTHENING EMPLOYABILITY
Figure 5.6.
– 109
Employment rates by age, gender and educational attainment
in Italy, 2001
As a percentage of the population in each category
Less than upper secondary
Upper secondary
Tertiary
100
90
80
70
60
50
40
30
20
10
0
Men
Women
25-49
Men
Women
50-64
Men
Women
Total
Source: OECD (2003j), Education at a Glance.
B.
Skills and training of older workers
Initial education attainment is only one aspect of skills levels and
requirements and thus particular attention needs to be paid to on-the-job
training. Systems to recognise, certify and validate competences acquired on the
job are important to motivate older, less educated workers to engage in training.
They are also important tools to help workers change jobs. In any case, less
training results in skill obsolescence (see Box 5.1) and lower employability, and
thus creates a greater risk of unemployment or early withdrawal from the labour
market. To compensate for the lower initial education level among older
workers, one could argue that their participation in continuous training should
be higher than that for prime-aged workers and even more so in Italy where the
difference in initial education levels are larger than in many other countries.
Promoting training activities after the age of 45 could also help workers to be
ready for a second career.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
110 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Older workers usually receive little training. There are a number of
potential barriers to older workers obtaining more training. Employers may be
reluctant to give training to older workers because they do not expect these
workers to remain long enough with the firm to gain a sufficient return on their
training investment. Older workers, in turn, may be reluctant to engage in
training because existing training programme are not well adapted to their needs
or because the opportunity costs of investing in further training are too high
versus the expected financial returns (OECD, 1999a, 2003b). In fact, there is
some evidence that the relatively low incidence of training among older workers
is primarily due to a lack of demand for training by older workers themselves
(OECD, 2003e).
Box 5.1.
Literacy skills fall with age
Literacy skills in general
The results of the International Adult Literacy Survey (IALS) for Italy indicate that
the average level of literacy skills falls with age in all of the three literacy categories
(prose reading, documentary reading and quantitative skills).
More than 80% of Italian older individuals (aged 56-65) fall below the line delimiting
which groups should be considered as a target for public interventions. While the results
are substantially better for prime-age workers, one can still observe for each age
category a large proportion of individuals with inadequate skills. This is especially true for
the 36-45 and the 46-55 age categories, where respectively two-thirds and
three-quarters of the sample do not reach a level allowing them to accomplish valuable
tasks with respect to literacy. This is particularly alarming as it underlines the need to
improve now the skills of a large share of the labour force, since many of them,
especially the oldest, have insufficient skills to face labour market change.
Computer literacy
While the importance of literacy skills in the labour market has been growing,
computer skills are ranked as particular important by employers. In 2000, half of all those
surveyed use a computer but only around 30% report good computer skills (Figure 5.7).
The share of people that use a computer declines by age and the use of a computer
differs greatly between working and non-working persons. The gap between these two
categories increases with age and is quite wide from the age of 30. Among individuals
with a job, the share of persons that use a computer is fairly stable until the age of 50.
From a qualitative point of view, the picture is somewhat different. The share of persons
that report good computer skills declines dramatically from the age of 30 for non-working
persons and from the age of 45 for working ones.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
Figure 5.7.
– 111
Computer skills by age in Italy, 2000
Percentages
A. Incidence of individuals who use a computer
Working
Not working
60
50
40
30
20
10
0
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65+
B. Incidence of individuals with good self-reported computer skills
60
50
40
30
20
10
0
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65+
Source: Bank of Italy: Survey of Household Income and Wealth (SHIW).
In Italy, a little more than one older worker out of five receives job-related
training, which places Italy among the countries where job-related training is
relatively low (Figure 5.8). However, the gap between older workers and primeage workers is relatively small compared to other countries.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
112 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
One of the most discriminating factors regarding job-related training seems
to be the size of the firm. According to the second European Survey of
Continuing Vocational Training (CVTS2), about 52% of employees in large
firms38 received job-related training in Italy in 1999 (OECD, 2003b). This
proportion is slightly higher than the European average. On the other hand,
participation in job-related training is quite low in small firms only 11% of
employees of these firms are engaged in training, well below the European
average of 23%. This is an important policy issue, given the importance of
small firms in Italy.
Italy is among the few countries where about one-half of continuous
training is paid by employers, while in most of the other countries, employers
pay for more than 70% of continuous training courses (OECD, 2003b). Once
again, this might reflect to the relatively small size of Italian firms.
Figure 5.8.
Incidence of job-related training for workers by age
a
in selected OECD countries
As a percentage of employment
50-64
25-49
60
50
40
30
20
10
nd
Po
(F
m
Be
lg
iu
la
l.)
d
la
n
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Refers to training received at some stage during the 12-month period prior to the
survey. The data for each country refer to different years over the period 1994-98.
Source: International Adult Literacy Survey.
a)
38.
Large firms are defined as having more than 1 000 employees and small firms are
defined as having between 10 and 49 employees.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 5. STRENGTHENING EMPLOYABILITY
E.
– 113
Measures to promote continuous training
Continuous training is a key element of social inclusion in a knowledge
based society. Promoting lifelong training among workers will increase the
overall efficiency of society and also will better allow workers to adapt to
change and to find new jobs in the last years of career.
Given their low level of initial education, older workers may have a
negative attitude towards classroom instruction. There is a need for
well-designed, modular, vocational training built on the recognised
qualifications of these workers. From a life-cycle perspective, it may also be
necessary to promote greater training opportunities for workers at earlier stages
in their careers and not just after they reach the age of 50. To date, relatively
few important initiatives have been put in place that are targeted specifically at
older workers (Box 5.2).
Another tool to foster continuous training is the opportunity for employees
to get temporary leave from their job in order to pursue training. In this context,
public funds (about 50 million euros a year) are targeted at disadvantaged
workers. Among the latter category, one can find older workers and individuals
with no more than elementary education.
To promote lifelong learning, the inter-occupational fund (Fond
interprofessionali) could be considered as an important step forward. Public
funds will be directed towards the social partners in order to build up a new
system of continuous training (Ministry for Labour and Social Policies, 2003c).
This fund is financed by an employer contribution of 0.3% of the wage-bill. The
initial level of this fund is of 181 million euros. From 2004, the fund could
provide about 500 million Euro per year for investments in continuous
education. Because it is still too recent, this fund cannot be evaluated yet. Its
promoters should make sure that the fund is well targeted toward workers who
will most need it in the future, namely those with little or obsolete skills. The
individual training tools stressed in the recent agreement between the social
partners in France may be a useful model in terms of promoting a lifelong
learning (Box 5.3).
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
114 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Box 5.2.
Vocational training programmes for older workers
In Italy, the focus of vocational training has long been on younger workers, as they
offer more years to recoup the cost of the investment.
There are very few instruments in the hands of public institutions that are directly
aimed at older workers to redress this unfavourable situation for them. Of course, any
project promoting lifelong learning will eventually improve the situation of older workers
as, in the long term, it will decrease the risk of skill obsolescence. Yet, action in favour of
older workers is needed now if one wants to support their employability. The Italian
government, local authorities and social partners are becoming more aware of the need
to focus on older workers.
From a legal point of view, a major step forward is the improvement brought by
Law 236/93, which from 2003 explicitly stipulates that vocational training should be
aimed at older workers (45-64 years). This Law is one of the most important tools to
finance vocational training in Italy as it introduces a fund aimed at supporting firm and
individual training programmes as well as projects from the social partners at various
levels.
Apart from Law 236/93, there is no policy measure at the national level aimed at
continuous education with a specific age target. However, at the regional and provincial
level, a couple of initiatives were introduced in 2003:
•
First, the Marche Region has introduced an age criterion in favour of workers
aged over 45 concerning individual training programmes (by means of
voucher). This measure has mainly been taken in order to correct the bias in
favour of younger workers, as the latter were getting most of the vouchers.
•
The second initiative comes from the Molise region. With the financial help of
the European Social Fund, this region has introduced a specific measure
towards workers older than 40. The goal is to keep these workers up to date
with new production processes in order to avoid skill obsolescence and
exclusion from the labour market. Thus, this measure provides support to
training programs connected to new technologies.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
CHAPTER 5. STRENGTHENING EMPLOYABILITY
Box 5.3.
– 115
Promoting lifelong learning and vocational training among experienced
workers: the new French agreement
In September 2003, the French social partners signed a national intersectoral
agreement on “employee lifelong access to training”. The accord includes an increase in
the financial contribution paid by employers: For firms with 10 or more employees, from
1.5% of payroll costs to 1.6%; and, for firms with fewer than 10 employees, from 0.25%
to 0.40% initially and to 0.55% as of January 2005.
The agreement also includes a number of innovative measures concerning
experienced workers:
•
Employees with 20 years of work experience and those over the age of 45,
regardless of work experience, will be eligible for a “skills audit” (to be carried
out outside of working hours) after their first 12 months in their current job,
and will be given prioritised access to the recognition of their work-derived
experience (validation des acquis de l’expérience, VAE).
•
Moreover, all employees with two years of service will be able to have a
career guidance interview carried out within their company.
•
A new tool, the “training passport” (passeport formation) has been introduced
which will be drawn up at the behest of the employee, who takes responsibility
for it, and which lists the knowledge, skills and occupational aptitude acquired
either in initial and continuing training or through professional experience.
•
A new scheme, the individual right to training (droit individuel à la formation,
DIF), has been created with the individualisation of training as a core principle.
All employees with more than 12 months of service with their company will be
accorded a 20-hour “credit” year (pro-rata for part-timers), which can be rolled
over for six years. This credit is aimed at enabling the employee to take
training either during or outside working hours. It will be possible for
employees who lose their jobs to use the monetary equivalent of their unused
training hours credit to fund the drawing up of a skills audit, VAE or training
programme, provided that the employee requests this when notice of
termination is given.
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116 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
4.
Employment services for older people
A.
Active labour market programmes
In Italy, a large number of active labour market programmes are targeted at
youth. Moreover, even when programmes are not specifically targeted at
specific people age group, they tended to favour de facto youth employment.
For instance, hiring subsidies tend to cover virtually all new hires of young
people, but only one in seven new hires of older workers (Marano and Sestito,
2004). However, a recent measure introduced by the Biagi Law is targeted at
disadvantaged groups, among which the unemployed who are older than 50. It
takes the form of an “integration contract” providing financial hiring incentives
defined through collective bargaining.
Several Regions are also promoting the employment of older workers in
“social solidarity services”, i.e. services to support the local community and
proximity services. Demand for such services is growing rapidly, partly due to
the process of population ageing. In some Regions, financial incentives for
encouraging the employment of older workers in these services are available.
This may take the form of voluntary work, telework or home work, as well as
other arrangements which help older workers reconcile work and family life.
B.
The Public Employment Service
In general, the effectiveness of labour market programmes will crucially
depend on the existence of a well-functioning employment service. As
underlined by many observers, there is considerable scope for revitalising the
Italian Public Employment Service (PES). At the beginning of the reform
process of the PES, financial constraints were a relevant issue as stressed in
Sestito (2002). Currently, a better definition of the mission of the PES is the
most relevant issue, in order to take full advantage of the co-existence and
transparent cooperation of public and private intermediaries. This is essential as,
until recently, registering at a public employment office was rarely motivated by
the demand of search-related services but mainly to obtain some administrative
advantages related to being classified as long term unemployed. Exploiting the
more transparent job-matching market resulting form the Biagi Law may also
contribute to better “activate” the older unemployed.
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CHAPTER 5. STRENGTHENING EMPLOYABILITY
– 117
In general, the system is moving towards a “mutual obligation” approach,
where individual rights and obligations are well specified. The unemployed
should be offered effective re-employment services, but they should also look
for a job actively, or else face a sanction. The unemployed who contact the PES
must indeed be not only without a job and available for one, but also actively
looking for one. On the other hand, the PES must at least guarantee, (with the
exact modalities to be set at the regional level) the following services:
•
An orientation interview before three months from the start of
unemployment.
•
A proposal to participate in initiatives of working integration, training,
new skill development or other measures aiming at professional
integration. For teenagers, youths and women; the proposal will be
made not later than four months from the beginning of unemployment;
for other individuals who risk long-term unemployment; not later than
six months from the beginning of unemployment.
Provinces have been given greater autonomy in the management of the
PES. The Italian PES is indeed undergoing a process of administrative
decentralisation and modernisation (Box 5.4). It started with a legislative decree
in 23 December 1997 ending the monopoly of public job placement services
and launching the transfer of competence from central authorities to the
provinces. Because of the slow results of this process, the Biagi Law introduced
new reforms to enhance job placement opportunities (see Box 4.1, p. 88).
Their aim is mainly to help the local employment services from each
province to be more effective as a broker between workers and employers to
match their needs. One of the negative aspects in the decentralisation process as
pointed out by Dau (2003) is the lack of new human resource management
towards officers in the new local employment services. Officers from the old
PES had problems to adapt to their new roles because they received no training
and the work was not reorganised. It is especially the case in some southern
provinces, where unemployment is higher. This decentralisation process is
however helpful as it allows local policies to be adapted better to local
conditions and needs.
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118 – CHAPTER 5. STRENGTHENING EMPLOYABILITY
Box 5.4.
The employment service network in Italy
In Italy, there are 527 employment centres (CPI), with provincial responsibility,
scattered across the territory and another 120 local gates in the region of Sicily. There
are wide differences in the quality of the services provided by different CPI. However,
under the Master Plan adapted in 2001, the aim is to achieve better standards in all
centres, further develop personalized services, and achieve better integration between
employment services and other social services.
In many centres, the provinces have set up services devoted to “weak segments” –
or disadvantaged groups – of the labour market (immigrants, disabled). In some cases,
the CPIs have started to operate in direct conjunction with social services. In other
cases, the provinces have created “services for the working integration of the
disadvantaged” within the CPIs, which are regulated by regional laws based on the Leg.
Decree 469/97 and annual and multi-annual Active Labour Market Plans.
Particularly significant interventions have been made in the domain of adult
education through cooperation between CPIs, schooling and higher education
institutions, the regional training system and firms.
The inter-regional Project on guidance, labelled “Informational system of training
opportunities and virtual guidance community” provides support to the creation of
databases on job and training opportunities. This is a response to the European Summit
conclusions of Lisbon and Stockholm on the improvement of databases available on
training and work opportunities inter-related at the European level through the creation of
the European Gate.
Source: Ministry for Labour and Social Policies (2003c).
The very heterogeneous character of the Italian labour market, especially
from a geographical point of view, implies that some measures may be adequate
for some regions and not for others. This is one reason why the government
intends to promote in 2003-2006 a territorial and bilateral management of the
Welfare-to-Work strategy (Ministry of Labour and Social Policies, 2003c). For
instance, to help promote employment prospects for older workers in the
Centre-North, the aim is to promote the training of adults and encourage active
ageing. In the South, measures to facilitate the transition from the hidden
economy to regular work may be more important from the point of view of
improving employment prospects of older workers.
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CHAPTER 6. ENSURING POLICY COHERENCE AND COMPREHENSIVENESS –
119
Chapter 6
ENSURING POLICY COHERENCE AND COMPREHENSIVENESS
Italy is confronted with a very pronounced process of population ageing
but has one of the highest rates of mobilisable labour supply among OECD
countries. There is thus a large scope to increase labour supply and to meet the
demographic and economic challenges ahead with most of the potential
resources coming from people older than 50.
Of course, there are a number of alternative solutions for boosting labour
supply, such as increased recourse to international migration and raising fertility
rates. However, as discussed in the first section of this chapter, these measures
should be considered as playing a complementary role and are not substitutes
for mobilising labour resources among older people. It is also important to
ensure that public support for measures to encourage greater labour market
participation among older people is not undermined by a misguided belief that
more jobs for older people mean fewer jobs for younger people. This myth is
debunked in the second section of this chapter. In the final section, the
importance of policy coherence and comprehensiveness is stressed.
1.
Alternative ways to boost participation and employment
Many of the reforms which are recommended in this report as part of a
strategy to raise the employment rate of older workers will take time and
involve complex trade-offs. This is why some analysts have put forward a
number of alternative ways to cope with a decline in labour force growth as a
result of population ageing.
A.
Is immigration an alternative?
An increase in immigration would provide an immediate increase in the
working-age population and, thus, could help to relieve the pressure of Italy’s
unfavourable demographic trends. Greater immigration is already serving to
help reduce a number of labour shortages in the formal and informal economy.
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120 – CHAPTER 6. ENSURING POLICY COHERENCE AND COMPREHENSIVENESS
Foreign workers are often employed in low-skilled occupations such as
agriculture, personal services and construction. Clearly, though, the extent to
which immigration may be used as an effective mechanism is severely
constrained by political and social pressures.
Even if immigration can play a complementary role to solve the
demographic and economic challenges ahead, “it cannot be expected to have
more than a marginal impact on the projected disequilibria in the age structure”
(OECD, 2001a). This is because, in the longer run, the fertility and mortality
patterns of immigrants and their descendants are likely to match those of the
non-immigrant population – and as very large and sustained increase of
immigration rates would be required to significantly affect the age-pyramid of
Italy’s population over time.
B.
Raising fertility
Another possibility for increasing future labour supply would be to
encourage higher fertility rates. Since the beginning of the 1970s, the total
fertility rate has fallen from 2.4 children per woman to 1.2 in the late 1990s, one
of the lowest rates among OECD countries. Higher fertility rates would
eventually lead to an increase in labour supply but this would only begin to have
an impact on labour supply after 2025 at the earliest.
However, little is known about what are the most effective policies for
raising fertility rates. Clearly, family-friendly employment policies that help to
better reconcile work and family life have an important role to play. But it is a
fact that even well-educated young mothers continue to face difficulties in
entering the labour market and establishing a career. This raises more
fundamental issues of how to promote gender equality in the labour market.
More generally, it is crucial to help parents with young children by providing
wider possibilities for part-time work and creating high quality child-care
facilities.
2.
Are older workers working at the expense of other workers?
It is sometimes argued that early retirement can help reduce youth
unemployment. In most OECD countries youth unemployment rates are quite high
and early retirement schemes have been sometimes seen as a way for younger
workers to move into employment by allowing older workers to move out. This
perception is particularly acute in Italy where youth unemployment is especially
high, as made clear in Chapter 2. Yet, this public perception is unfounded.
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CHAPTER 6. ENSURING POLICY COHERENCE AND COMPREHENSIVENESS –
121
As shown in Figure 6.1, there is little evidence that fewer jobs for older
workers can be “traded off” for more jobs for younger workers. In fact, there
appears to be a positive, rather than negative, relationship between changes in the
employment rates of younger and older workers over the past decade among OECD
countries (OECD, 2003 g and i). Over this period, Italy has generated fewer jobs for
both older and younger workers. On the other hand, countries such as Ireland and
the Netherlands have managed to generate more jobs for both categories of
workers. It is also worth noting that no countries are found in the quadrant where
employment rates have fallen for older workers but risen for youth.
Figure 6.1.
Younger workers are not substitutes for older workers
Changes in percentage points
Change of the employment rate of 50-64
16
NZL
14
NLD
12
10
IRL
BEL
8
FRA
6
LUX
4
FIN
NOR
USA
GBR
2
DNK
SWI
JPN
0
-2
ESP
AUS
CAN
PRT
ITA
GRC
SWE
-4
DEU
KOR
-6
-8
TUR
-10
-12
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
Change of the employment rate of 20-24
a) 1991 for Switzerland and Germany.
Source: OECD estimates based on labour force surveys.
The relatively low substitutability between younger and older workers in Italy
could be partially explained by the relatively small size of the typical Italian firm.
Indeed, job specific human capital is probably more prevalent in small firms than in
large firms as workers are more often involved in many parts of the production
process than in the former. While this may not require any specific skills, it may
impose a set of skills that takes time to acquire. In such context, firms can not easily
swap older workers for younger workers (Lazear, 2003).
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122 – CHAPTER 6. ENSURING POLICY COHERENCE AND COMPREHENSIVENESS
3.
Ensuring policy coherence
Enhancing the employability of older workers and tackling the economic
impacts of ageing requires, among other things, a broad range of coherent
policy actions. These measures will be more effective if implemented within a
stable macroeconomic framework and a well-functioning labour market more
generally. They will also require a careful balance such that while employment
among older people is encouraged, negative stereotypes vis-à-vis older workers
are not perpetuated by policies that are targeted on age alone.
A.
A stable macroeconomic framework and comprehensive reform
A stable macroeconomic framework, notably sound public finances, is an
essential prerequisite for encouraging growth, sustaining overall improvements
in labour market performance and providing an environment where the full
benefits of reform can be achieved. While this should help to improve
employment prospects for Italian workers generally, it will be especially
important for older workers.
In terms of microeconomic reforms, the OECD Jobs Strategy has stressed
that it is important to act on all fronts, encompassing reforms of product and
labour markets (OECD, 1999b). In addition, attention has to be paid to the
interactions and complementarities between policies. For example, it is clear
that the “return” to active labour market policies will be all the higher when
demand-side barriers to employment (e.g. hiring and firing costs) are addressed
and when product markets are dynamic and responsive to new business
opportunities.
B.
Towards a well-functioning labour market
In the future, a more flexible labour market, a reduced age-related
education gap and a reorientation of labour market policies along the lines of
the recent Biagi Law should help to increase the employability of older people.
However, any policy action needs to take into account that the reasons of the
low employment rate among older workers in Italy differ across the country: for
men in the North, the issue is mostly one of relatively early retirement; for
women, and all persons in the Mezzogiorno, the problem is that even at 50 years
of age the employment rate is low. While in the case of women, low
employment rates are mostly due to a cohort effect, and as such should
gradually increase over time, in the Mezzogiorno it is related to the broader
issue of the low employment equilibrium of that region.
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CHAPTER 6. ENSURING POLICY COHERENCE AND COMPREHENSIVENESS –
123
Greater flexibility should be matched by a more efficient public
employment service (PES). The PES has undergone substantial reform
since 1997 and hence it may gradually move towards the better-performing
employment services available in other OECD countries. It also now openly
coexists with buoyant private intermediaries. However, some important
objectives must be achieved in the near future. Unemployment insurance should
be made available to all workers in the formal sector and not only to specific
segments of the labour market, as in manufacturing. The mutual obligation
approach to which the system is moving should rest on effective re-employment
services.
More generally, the reforms envisaged for by the Biagi Law should be
implemented rapidly, most notably in the easing of part-time contracting. As
well as ensuring transparency and continuous information, other active
measures by the PES should be taken so as to maximise the matching of
workers and vacancies across the whole territory.
C.
Tackling negative stereotypes
One of the most difficult dilemmas facing policy-makers is how to
improve the employment prospects for older workers while at the same time
fighting the very age stereotypes which sometimes explain firms’ perceptions
and behaviour. All too often, and despite the available evidence or lack of it,
there is a perception that workers are less productive as they get older. It also
makes it difficult for unemployed older workers to find a new job. It is therefore
important to fight these stereotypes. This raises the question of whether policies
that are too narrowly targeted on age, such as wage subsidies (or social security
reductions) for all older workers, nurture negative age stereotypes, and
underlines the need for a careful evaluation of these types of specific policies.
4.
Conclusion
Increasing the employment rate of older people has become a topical issue
in Italy. But it is not an easy task and will need a comprehensive strategy.
It is especially important to ensure greater coherence of reforms on both
the supply-side and demand-side. Incentives stemming both from the pension
rules and the employability of older workers matter. The pension reforms
enacted in the mid 1990s represent important steps on the supply side for the
long run financial sustainability of the system. Yet, there are some problems
remaining, partly due to the long transition period until the former system is
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124 – CHAPTER 6. ENSURING POLICY COHERENCE AND COMPREHENSIVENESS
finally phased out. Insofar as the old pension rules operate for workers not
touched by the pension reforms of the 1990s, incentives to remain longer in the
labour market are weak. Pension entitlements are relatively generous and the
gains from working one additional year, in terms of higher future pensions, are
rather limited.
In terms of the employability of older workers, several labour markets
institutions such as seniority-based wages and the focus of active labour market
policies on youth, while consistent with long-standing social norms, are no
longer suited to a workforce that is rapidly ageing. More generally, to increase
employment prospects for older workers, a well-functioning labour market must
be established. This implies greater flexibility in the employment relationship
and in the wage-setting mechanism in particular. Occupational as well as
geographical mobility should be enhanced, particularly between the South and
the North.
AGEING AND EMPLOYMENT POLICIES: ITALY – ISBN-92-64-01703-8 © OECD 2004
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