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Do organizations have age discrimination?

By on 20. november 2017

-and is there a retirement age problem?

 

The current population of Northern Europe is 104,394,630 (see source A1 below) as of Sunday, November 5, 2017, based on the latest United Nations estimates (forecast 117,582,879 in 2050). The median age in Northern Europe is 40.5 years (43,9 in 2050). The population in Europe is currently: 742,274,450

Life expectancy has continued to rise systematically in all of the EU Member States in recent decades.

Population ageing is one of the greatest social and economic challenges facing the EU. Projections foresee a growing number and share of elderly persons (aged 65 and over), with a particularly rapid increase in the number of very old persons (aged 85 and over).

These demographic developments are likely to have a considerable impact on a wide range of policy areas: most directly with respect to the different health and care requirements of the elderly, but also with respect to labour markets, social security and pension systems, economic fortunes, as well as government finances.

Eurostat statistics on mortality are based on the annual demographic data collection. They show that the average life expectancy of a girl born in 2012 in the EU-28 was 82.4 years, while the life expectancy of a boy was 76.8 years. While women had higher life expectancy than men in all of the EU Member States, there has been a pattern of convergence in recent years.

 

Population by age group – % of total population 2016:

Denmark:                                                                   EU-28 Countries:

0-14 year:           16,8 %                                             15,5 %

15-24:                 12,9 %                                             11,1 %

25-49:                 32,1 %                                             31,1 %

50-64:                 19,3 %                                             20,1 %

65-79:                 14,6 %                                             13,8 %

Over 80:                4.3 %                                               5,4 %

 

In Denmark (more or less the same in other NE Countries), the age group of 50 to 79-year-olds is totaling 33.9%, and in comparison, with a relative high purchasing power, it is also a significant group of people from a commercial point of view.

 

The European population aged over 80 is set to rise significantly. In 1960 just 1.4% of Europeans were over 80 years old. This figure reached 4.1% in 2010 and is projected to increase to 11.5% by 2060.

 

A dependency ratio aims to measure how many people there are working to support those who are too old, or too young, to work. It is typically calculated by dividing the number of people who are under 16 or over 65, by the number of people who are of ‘working age’, 16-64.

  • Europe’s dependency ratio was 26,1 in 2010. This meant there were roughly 4 working age adultsper dependent.
  • By 2060, Europe’s dependency ratio is projected to reach 50,2. This means there will be just 2 working age adults per dependent! In some Countries (Slovakia, Portugal, Greece and Poland) that ratio will be over 60!

There is no way e.g. Greece and others will be able to “pay” for that without massive change in policy!

 

Europe as a whole must adapt to a new world where it is projected that almost 1 in 3 people will be over 65, and more than 1 in 10 will be over the age of 80.

 

The total workforce in the EU was in 2016: 379.706 mio. people.

Of them are 244.485 mio. economically active persons, where 223.566 mio. are employed persons. Spread over 188.404 mio. that are employees, 32.716 mio. are self-employed and 2.373 mio. are family workers.

20.919 mio. are unemployed! In 2015, practically half of those who were unemployed in the EU (48.5 %) were long-term unemployed. The relatively largest part is people over 45 years old.

However, there has been a 10.2% increase in employment of older workers (55-64) in the EU in the last 10 years. Despite this, the employment rates of older workers still lag significantly behind the rest of the population. Note that 21.6% of older workers in Europe are self-employed, some driven by lack of other options.

One reason is that many organizations will not new hire people older than 45-50! This is obvious discrimination and directly opposes governments’ desire for higher retirement age. However, age discrimination also takes place in governments unspoken employment policy!

Only around 50 % (var. from 35 to 60 %) of the people in the age group 55-64 years old, is in employment. And more and more governments have raised or want to raise retirement age to 69 or 70! It makes no sense other than the political and the government bureaucratic system knows that the national economy cannot support that age development with pension payment and healthcare cost.

Currently the age at which individuals are entitled to receive the state pension (2010) in the EU ranges from 60 (Malta) to 67 (Norway).

 

In 2012, 17 million Europeans over 65 were defined as at risk of poverty and 14 million were materially deprived!

 

Before the 19th century there was no trend for life expectancy in the UK: life expectancy fluctuated between 30 and 40 years. Life expectancy in Europe by 1870 was 36,2 years! (global average was 29,7 years), in 1913 was the average age 46,8 years and by 2014 that was 80,67 years.

 

EU gross replacement pension rates is 50 percent of av. income
STATE PENSION ADEQUACY 2012
EU-28 10 percent of people over 65 is overburdened
EU OVERBURDENED PEOPLE

 

There is obviously a very large gap between what the state expects, what people want and what the labor market offers.

 

There may be several reasons why organizations do not want to new hire people over 45-50 years. Some of the openly stated are; resistance to change, less flexible, more critical, harder to manage, outdated education and high expectation for compensation. You can argue all of them are subjective based on old assumptions.

There will be situations where some people will confirm the above assumptions, conversely, you will also be able to find them in the 25-35 age group, if one disregards outdated education. However, the average executive MBA student is around 40 and some have passed 50 when they graduate. In today’s world, most people expect learning to be a lifelong project.

What about those new hire stopping blocks not pronounced, like the manager who are afraid to hire people who are smarter or better and have more experience than themselves and will not hire only because he or she feels inferior or threatened, instead of seeing opportunities? Some HR departments base their bias on obsolete beliefs and can’t deliver any kind of scientific data to support prejudices of age. Age is a form of illusion that is in constant motion, illustrated by today’s 70-year-old has about the same state of health as 50-year-old person in the 1970s!

Looking at the youngest and coming workforce, many expect that they will be extremely difficult to lead, they will not stand any pressure and they are very demanding and hard to manage. They may expect everything to happen right here and now.

Others expect total disruption in the next 5 to 10 years in the way we work, and most employees will change status and operate as independent contractors hired by project, depending on industry and work task and only meet in the virtual meeting room. You may need to consider investment in office buildings!

However, this does not change the problem here and now for many people over the age of 45-50, who actually want to work and some until they are over 70! And the governments need their tax payments!

As an employer and recruiting manager you can also choose to look at benefits (pros) like: more stable labor (their children are independent nor have they children sick days nor maternity and fewer sick days), they are no longer so busy with career changes and new job opportunities. With regards to compensation demand that will be regulated by the normal market mechanisms, supply and demand in a competitive world. As a private employer, you are free to choose which compensation you wish to offer (pros and cons).

Median job tenure for all industries are between 2 and 4,5 years. As expected, median job tenure increases as age increases. Public employees are less mobile compared to private sector employees. Overall, job mobility is highest for the age group 25-34 and also high for the age group 35-44. The differences between countries in this respect are relatively modest. For job-to-job mobility, multivariate analyses confirm the significance of age and the somewhat smaller significance of gender. There is some evidence that employing workers with 4-10 years of job tenure has the most beneficial effect on productivity, just as there is evidence that employing workers with very short or very long tenure will affect productivity negatively. On average most employees in the age group below 34 will not meet the 4-10-year request and the age group 35-44 only slightly above average!

 

Age discrimination?

As a commercial company you should probably reflect your customers, here applies diversity including age.

As a leader, you should ask yourself if it makes business sense not to hire people over 50, not forgetting your company Corporate Social Responsibility, if it is to have any real meaning.

 

Source reference statistics and graphs:

EU Age groups in mio.
EU 2016 MALE AND FEMALE POP IN MIO.
Percent split Male Female Europe 2016
EUROPE POPULATION MALE AND FEMALE 2016
2020 to 2050 NE Pop Forecast
NE POPULATION FORECAST

 

NE Population
COUNTRIES IN NORTHERN EUROPE

 

Foreign workers in the EU

Foreign citizens made up 7.4 % of persons in employment in the EU in 2015. The split between intra- and extra-EU migrants was almost even, with 3.6 % having their citizenship from another EU country, and 3.8 % coming from outside the EU. This also means that on an EU level, 92.6 % of those working worked in the county in which they have their citizenship.

 

Sources websites:

http://www.worldometers.info/world-population/northern-europe-population/

http://ec.europa.eu/eurostat/statistics-explained/index.php/People_in_the_EU_%E2%80%93_statistics_on_an_ageing_society

http://ec.europa.eu/eurostat/web/population-demography-migration-projections/population-data/main-tables

www.ilcuk.org.uk/files/Europes_Ageing_Demography.pdf

http://ec.europa.eu/eurostat/statistics-explained/index.php/Labour_market_and_Labour_force_survey_(LFS)_statistics

http://www.un.org/esa/population/publications/worldageing19502050/pdf/018north.pdf

https://ourworldindata.org/life-expectancy/