Hidden in Plain Sight? Does Stricter Employment Protection Legislation Lead to an Increased Risk of Hidden Unemployment in Later Life?

Abstract

This article examines the influence of national employment protection legislation (EPL) on the likelihood of older workers in Europe being forced into retirement. Data are drawn from 4 waves of the Survey of Health, Ageing and Retirement in Europe (SHARE) covering the period from 2004 to 2013. The sample is restricted to those who were aged between 50 and 80 and exited from paid work during the study period (N = 3,446). EPL was measured using the OECD indicators of employment protection concerning regulations for individual dismissals. Exits from work were defined as forced or unforced based on the respondent’s description of the reason for leaving work. Our cross-national study shows considerable variety in the prevalence of forced career exit across 13 European countries. Furthermore, the results show that career exit through retirement is less likely to have been forced as compared to career exit through non-retirement routes. However, the results also show that with every unit increase in the EPL index, the probability of forced career exit through retirement becomes more likely. Apparently in countries with high levels of employment protection, retirement is a more attractive route to lay off older workers than in countries with low EPL. By forcing older adults to leave their jobs through retirement, these employers are shedding workers who would have preferred to continue their working lives.