Future age-conscious manpower planning in the Netherlands: from early retirement to a new perspective on the elderly?

Introduction

The population of the industrialized countries is ageing. Public policy interest in this issue of population ageing, however, is a much more recent phenomenon, particularly since the ageing process is expected to affect the labour market. The ageing of the labour market could have a considerable effect on labour costs, labour supply, productivity, and mobility, etc. This article focuses on the effects of population ageing on the Dutch labour market, and particularly on individual organizations.

Expectations are that the ageing of the population of The Netherlands, which set in in the late 1960s, will reach its peak shortly after 2030. The ageing process has far-reaching repercussions for society as a whole, affecting sectors such as public health, housing, education and the labour market. As far as the labour market is concerned, the process will primarily affect the government's ability to finance its pension scheme. As the labour force continues to age, it will become increasingly difficult to finance current retirement patterns of elderly employees. Dutch government policy focuses on efforts to increase the labour force participation of the elderly. Concrete policy measures, such as abolishing early retirement schemes or even raising the official retirement age, affect the labour market as a whole, but they also have direct and indirect repercussions for individual companies and other large-scale organizations. As things stand now, employers are often faced with a gradual increase in the average age of their staff. The overriding concern of organizations with an ageing workforce is their ability to bear the costs of early retirement schemes. There are, however, numerous other reasons why it is useful for an organization to gain insight into the changing age structure of its workforce. How does ageing affect total wage costs? Which retraining and updating schemes should be implemented to prevent know-how from becoming outdated? What are the consequences for promotion and career planning, and how will an ageing workforce affect) absenteeism? It is questions such as these that have aroused interest among employers in the age structure of their organization. They are likely to show growing concern for these matters in the near future since age structures are expected to change quite substantially.

This article deals with the effects of ageing and possible future policy measures on the age structures of large-scale organizations in The Netherlands. I will first shed light on the ageing of the labour market as a whole. Particular attention will be paid to trends which have taken place during the past decades, as well as to expected future trends and to the consequences of such developments for large-scale organizations. The repercussions of the ageing process, and the effects of a number of policy measures on an organization's age structure will then be described using data which refer to the workforce of one of the biggest employers in The Netherlands - the Dutch national government. The data have been taken from a study into trends in job levels and working hours on behalf of the Government Buildings Agency. However, the policy scenarios which have been drawn up are based only partially on this study. The author accepts full responsibility for the scenarios formulated.

An ageing labour market

The ageing (and dejuvenation) of the population of The Netherlands (see, for example, Schippers and Siegers, 1991), which began in the late 1960s, resulted in a significant increase in the average age of the population (see Figure 1). In 1995 the average age was more than five years higher than in 1960. This increase has so far not resulted in concomitant shifts in the working-age population (population aged 15 to 64 years). The average age of the working-age population has increased gradually since 1975, and has kept pace with changes in the total population since 1985. Changes in the average age of the labour force are only partially related to the ageing process since a number of developments have been taking place simultaneously [ILLUSTRATION FOR FIGURES 2 AND 3 OMITTED][1]. The effect of the ageing process among the male part of the labour force was (more than) offset by the reduced participation of the elderly in the labour market. The labour force participation of all males aged 15 to 64 dropped from 90 per cent in 1960 to 75 per cent in 1994, whereas males in the 50 to 64-year age group dropped from 91 per cent to 57 per cent during the same period. This is one of the lowest participation rates among the industrialized countries, mainly due to disability benefits and early retirement (see for instance OECD, 1995a and 1995b). Among the female labour force, on the other hand, the ageing process was reinforced by their increased labour force participation. This resulted in an increase by almost five years in the average age of working women since 1960.

Projections carried out by Statistics Netherlands (1995) show that the average age of the Dutch population will increase by another five years by 2030 and that the average age of the working-age population will increase by over two years during the same period. It is not quite clear how the age structure of the Dutch labour force will change since economic developments play a role alongside demographic trends. If we make the cautious assumption that …