Early Retirement Schemes Research Articles

Structural Change in Rural Croatia—Is Early Retirement An Option?

Structural change in agriculture, although often connected with social hardship of uncompetitive small-scale farms and a loss of tradition, is inevitable. It is the basis for successful rural development. We discuss whether early retirement schemes (ERS) are a good value for public money in terms of the necessary adaptations of the farming sector in the course of economic development, and if they are an option for the EU candidate country Croatia. In Croatia, the small scale farm structure leads to widely uncompetitive farms. A study on farmers’ socioeconomic situation as well as actual and expected reactions to policy support is based on results of a household survey. The sample includes farm households from two Croatian regions: The peri-urban Zagreb county and the typically rural region of Bjelovar-Bilogora. Despite unfavourable economic conditions and insufficient farm incomes, rural people are often reluctant to give up farming. We present results on the age structure, income and production structure of farms and farmers’ likely reactions on ERS. We discuss incentives which push farmers to leave the farming sector and ask in which direction farm families plan their future. We conclude with a synthesis of the theoretical advantages and disadvantages of early retirement schemes and link them with possible outcomes in the Croatian case.

Musculoskeletal disorders in assembly jobs in the automotive industry with special reference to age management aspects

Production planners in the automotive industry are already being confronted with the problem of steadily increasing age of workers performing assembly jobs which frequently involve highly repetitive, short-cycle operations, and this problem seems likely to become more acute in the future. Two diametrically opposed solutions are being used: (1) Older workers are phased out under early retirement schemes (before musculoskeletal problems arise), and preference is given to younger workers, in many cases on a temporary, subcontracted basis. (2) Ergonomic and medical danger points in assembly processes are identified and eliminated by modification of the work model, irrespective of whether older or younger workers are involved. The results of a case study at 256 work stations on an assembly line for middle class cars manufactured by a globally active corporation are reported. The following interactions were noted: The age of the assembly workers influences the choice of workplace. Older workers are to be found mainly in jobs with a ‘very favourable’ expert rating, younger workers in jobs with ‘(very) unfavourable’ ratings. Accordingly, age and job strain are in this case not independent variables. Older workers still complain of lumbar spine symptoms despite low demands imposed by their present jobs. This seems to indicate long-term cumulative effects. A major aspect however is that the spine symptoms are often induced multifactorial and rely not or not alone on work conditions. Head–neck–shoulder symptoms occur more frequently in older workers working under unfavourable conditions. Symptoms affecting the head–neck–shoulder region, the lumbar spine and the upper limbs are co-variable with body height and body mass index. For the collective study, it was appropriate to avoid potential impairment of physical performance more or less completely by allotting jobs causing less strain to older workers. Relevance to industry The current study provides the results of a field study of assembly jobs in the automotive industry concerning the relationships between workload, age and musculoskeletal symptoms as well as diverse subjective measures (job satisfaction, etc.).

Early Retirement in Germany, the Netherlands, and the United Kingdom: A Longitudinal Analysis of Individual Factors and Institutional Regimes

In this article we investigate whether early retirement patterns vary between countries with distinct early retirement systems. By choosing countries that differ not only with respect to the coverage and generosity of publicly provided pensions but also with respect to the extent to which the state interferes in the non-public pillars of pension provision, we analyse to what extent such issues have an effect on individual early retirement behaviour. Selectivity effects are expected to be stronger in countries with highly fragmented public systems or private early retirement schemes. By pursuing a shift to more private pension provisions, governments might unintentionally create more inequality in early retirement opportunities among the population. For the analysis we use longitudinal data, i.e. British Household Panel Study (BHPS) 1991-2004 (the United Kingdom), the German Socia-Economic Panel (GSOEP) 1990-2005 (Germany, and the Socia-Economics Panel (SEP) 1990-2001 (Netherlands) and a discrete-time competing-risks model. The results suggest that pursuing a shift from public to private early retirement schemes can lower the incidence of early retirement. Yet, at the same time, early retirement can get more selective in that only the higher paid are able to afford it.

The Territorial Impact of the Farmers' Early Retirement Scheme

AbstractThis article considers the causal relationships between the European farmers' early retirement policy instrument and structural and social outcomes. The member states of Greece, Ireland and France have been among the main beneficiaries of this policy scheme, which encourages farmers aged between 55 and 66 to retire and transfer their land to a younger farmer, with multiple effects. The analysis in this article suggests that the accrued pension income is mostly higher than applicants' previous earnings from farming, while the policy instrument is only moderately successful in enlarging farms or encouraging new entrants, with the majority of transfers occurring between members of the same family. The farmers' early retirement scheme appears to be connected more to the regional traditions of inheritance than to farm structures per se. The impact on an unbalanced European age–farmer structure is evaluated as differing little from what would have happened anyway, with only short‐term effects reported in relation to the time scale. In summary, the scheme is subject to manipulation in terms of region‐specific circumstances and thus fulfils social objectives rather than the purpose of structural cohesion.

Influence of health, lifestyle, working conditions, and sociodemography on early retirement among nurses: The Danish Nurse Cohort Study

The aim of the study was to analyze the relationship between health, lifestyle, work-related and sociodemographic factors, and older nurses' exit from the labor market to Post-Employment Wage (PEW). PEW is an early retirement scheme to make it possible for workers to retire at the age of 60. The study was based on 5,538 nurses in the age of 51-59 who in 1993 completed a questionnaire on health, lifestyle, working environment, and sociodemographic factors. The survey information was combined with longitudinal data from the Danish Integrated Database for Labor Market Research compiled by Statistics Denmark. The follow-up period was from 1993 to 2002. Nurses who had poor self-rated health were more likely to join PEW compared with nurses who considered their health as good (HR 1.28, 95% CI 1.16-1.41). Low job influence, high workload, and physical job demands only marginally increased the probability of retiring. Nurses who have relatively low gross incomes had an increased probability of entering PEW compared with nurses with relatively high gross incomes (HR 1.60, CI 1.43-1.79). Having a spouse increased the probability of joining PEW, especially having a spouse who had retired or was unemployed. The retirement age among nurses is influenced by a number of sociodemographic, work-related, and health-related factors. Poor health, low income, living outside the Copenhagen area, being married, having a spouse who is outside the labor force, and working in the daytime are all predictors of early retirement among nurses. Poor working environment only marginally increased the probability of retiring early.

The Impact of Early Retirement on Perceptions of Life at Work and at Home: Qualitative Analyses of British Civil Servants Participating in the Whitehall II Retirement Study

This study examined pathways to retirement and the role of circumstances at work and at home (including the introduction of financially-enhanced early retirement schemes) on retirement-related decision-making. In-depth qualitative interviews were conducted within 2 years of retirement with 59 British civil servants participating in the Whitehall II Study. Focusing on the experiences of 33 interviewees who spontaneously discussed "early retirement" we identified three pathways to retirement (non-applicants, successful applicants, and unsuccessful applicants for early retirement) each influenced by a range of complementary positive and negative factors at work and at home. The early retirement schemes influenced the balance between these factors in three ways: by encouraging participants to reflect on (and reconsider) existing retirement plans; by offering financial incentives to retire early; and because they were part of the ongoing process of restructuring and downsizing within the Civil Service which was accompanied by a perceived deterioration in conditions at work.

Early Retirement Behaviour in the Netherlands: Evidence from a Policy Reform

In the early 1990s, the Dutch social partners agreed upon transforming the generous and actuarially unfair PAYG early retirement schemes into less generous and actuarially fair capital funded schemes. The starting dates of the transitional arrangements varied by industry sector. In this study, we exploit the variation in starting dates to estimate the causal impact of the policy reform on early retirement behaviour. We use a large administrative dataset, the Dutch Income Panel 1989-2000, to estimate hazard rate models for early retirement. We conclude that the policy reform induced workers to postpone early retirement. In particular, both the price effect (reducing implicit taxes) and the wealth effect (reducing early retirement wealth) are shown to have a positive impact on the early retirement age. Yet, we show that model specifications including the most commonly used financial incentive measures are open to further improvements, given that these are outperformed by a simple specification with dummy variables.

Early Retirement Behaviour in the Netherlands: Evidence from a Policy Reform

In the early 1990s, the Dutch social partners agreed upon transforming the generous and actuarially unfair PAYG early retirement schemes into less generous and actuarially fair capital funded schemes. The starting dates of the transitional arrangements varied by industry sector. In this study, we exploit the variation in starting dates to estimate the causal impact of the policy reform on early retirement behaviour. We use a large administrative dataset, the Dutch Income Panel 1989-2000, to estimate hazard rate models for early retirement. We conclude that the policy reform induced workers to postpone early retirement. In particular, both the price effect (reducing implicit taxes) and the wealth effect (reducing early retirement wealth) are shown to have a positive impact on the early retirement age. Yet, we show that model specifications including the most commonly used financial incentive measures are open to further improvements, given that these are outperformed by a simple specification with dummy variables.

Promoting Employment among Ageing Workers: Lessons from Successful Policy Changes in Finland

Among EU15 countries Finland has witnessed the largest increase in the employment of ageing workers since the late 1990s. In these years there was a rapid change from the policy of promoting early retirement to the policy of promoting staying at work. Furthermore, this rapid shift to a restrictive early exit policy took place in a situation that was especially demanding due to exceptionally high unemployment among elderly employees. This paper considers why and how the Finnish policy has been successful earlier than other EU countries in encouraging ageing workers to stay on at work. We argue that the positive change in employment is an outcome of the interplay between favourable economic trends and wide-scale work promotion measures. These work promotion measures include the restrictive changes in early retirement schemes. A severe recession in the early 1990s is an important background factor both for the increased need for reforms in the early retirement schemes and also for making the reforms politically more acceptable.

The Employment of Older People: Can We Learn from Japan?

The level of employment among older people, including those above retirement age is very high in Japan. This has been attributed to the lifetime employment system, and provisions for external transfers and demotions that allow wages to be reduced as people pass middle age. The paper points to how the structure of Japanese industry is also important and how many older Japanese are working in relatively unproductive and sheltered jobs. Moreover, it questions whether the lifetime employment system can survive, and shows how early retirement schemes, similar to those in the west, are being introduced as a response to continued recession. On top of this, external pressures for deregulation are threatening the ability of protected sectors to absorb older people. Japanese employers have a tendency, as do western employers, to discard older people. All employers will, in the face of population ageing, have to learn how to use older people better.

Reversing the Trend from “Early” to “Late” Exit: Push, Pull and Jump Revisited in a Danish Context

Denmark is a low exit country in EU-25. As such, the Danish experience contradicts most wisdom in mainstream research on the causes of early exit/retirement. The Danish labour market is one of the most brutal vis-a-vis older workers in Europe, while the Danish early retirement schemes are among the most generous in Europe. For these reasons one should expect Denmark to be a high exit country. The contrary is true. With this background, it is argued that cultural and social–psychological factors play a far stronger role in shaping retirement patterns than we tend normally to assume. Accordingly, in recent years Denmark has employed cultural steering based on the voluntary participation of firms and other social partners in attempts to raise further the employment rate of older workers. Cultural steering has been supplemented by the introduction of “positive” incentives, that is, individuals and municipalities are rewarded economically if retirement is postponed.

MEN’S LATE CAREERS AND CAREER EXITS IN ESTONIA

1. Introduction The ageing of the populations in European countries is giving rise substantial economic and social problems. Reduced inflows of younger workers into the labour market and the longer retirement periods with increased life expectancy have altered the age structure on the labour markets and have put pressure on the retirement systems (Auer, Fortuny 2000). Previous policies of reducing labour supply by early retirement are increasingly affected by the need prolong working life. As labour market participation and employment fall with age, demographic ageing increases the need for efforts in raising the employment rate of older workers. The 2001 Stockholm European Council agreed to set an EU target for increasing the average EU employment rate among older women and men (55-64) 50% by 2010 (Employment in Europe 2003). The Barcelona European Council of March 2002 then concluded that efforts should be stepped up increase opportunities for older workers remain in the labour market. Economic and social reforms in Central and Eastern Europe have had a profound impact on the population development trends. The fertility rate has declined and economic crisis resulted in the shortening of life expectancy. The combined effect of these two factors has contributed a rapid ageing of the population. According the United Nations demographic projection the average share of males aged over 50 equalled 26% in Estonia in 2000 and is expected reach 38% in 2030 while the average share of women aged over 50 will grow from 36% in 2000 47% 30 years later (United Nations 2001). The growing old-age dependency ratio shows that the working-age population is expected support an increasing number of old people (Fortuny et al. 2003). These trends will call for an increase in economic participation of older persons in order prevent future labour shortage in the countries of Central and Eastern Europe (CEEC), including Estonia. The situation in these countries is more complex compared with other European Union countries because the development in the 1990s can be interpreted in two contexts: as a transition from state socialism market economy, and as a movement from an industrial, Fordist model a post-industrial, post-Fordist model which concerns all developed countries (Terk 1999). These two developments intertwined. The socialist labour market was characterised by full employment, no open unemployment, strong regulations leading high employment security and job stability. Even more, life-long employment with one firm or in one profession was supported by the system. However, very liberal reforms stimulated massive restructuring of the enterprises and intensive reallocation of labour. Liberalisation transformed firms into economic units. As a result, overstaffing was reduced, social provisions were relinquished and unemployment was unavoidable (Wagener 2002). The result was a sharp decline in the economic performance, i.e. in a short time the employment started fall (Cazes, Nesporova 2003). The majority of employed persons have voluntarily or involuntarily changed their jobs. A certain proportion of the redundant workers have not been able find a new job and remained long-tern unemployed. The vast changes in the labour market affected different groups in different ways. One ambiguous group has been the older workers. At the start of the transition, working pensioners were the first group be laid off everywhere, many countries introduced early retirement schemes avoid the long-term unemployment of older worker (Fortuny et al. 2003). There were hopes that jobs vacated by older workers would increase employment opportunities for young labour market entrants. This led a substantial drop in the average age at which individuals retire from the labour market, which was already rather low at the beginning of economic transition. Also in Estonia, the sharpest decline in employment in the early 1990s could be observed among older workers. …

What Happened to Wage and Non-Employment Structures During the 'Dutch Employment Miracle'?

Not available in German The Netherlands have experienced an employment miracle since the 1980s. This note investigates what happened to the wage, unemployment, and non-employment structures between 1988 and 1998, when both unemployment and non-employment rates decreased markedly. Surprisingly, I find no significant changes in the wage structures, although there clearly was wage moderation on average. Although there have also been virtually no changes in the unemployment structure, the relative non-employment of older workers (due to incentives to retire) and men increased. Whereas supply effects and early retirement schemes can explain the constancy of the returns to age, the lack of an increase in the returns to education remains a puzzle in the face of well-documented skill-biased technological change in other major industrialised countries. Download Paper: (pdf, 368 kb)

Early-retirement reform: can it and will it work?

Early retirement from the labour force has become standard practice for most employees in the industrialised world. However, as a result of the rising costs of early-retirement schemes, curbing the outflow of older workers from the labour force has become a central government policy objective. Early-retirement reforms under which benefits are financed on a more actuarially neutral basis are currently being implemented in The Netherlands. At present it is not clear how older workers will react to these policy reforms. In this article we examine the extent to which (Dutch) older workers are inclined to change their retirement intentions in response to new early-retirement arrangements. On the basis of a labour market and a population survey we examine retirement intentions under alternative early-retirement policies. The overall conclusion is that the retirement reform may lead to a substantial delay of the retirement date, but that in practice factors other than financial incentives are powerfully at work. This is also reflected in the long-run early-retirement trend. This trend presents demographers and economists with a puzzle, because while a break can be identified in the time series, it set in before the early-retirement reforms were put into practice.

Christian democracy, social democracy and the paradoxes of earnings‐related social security

This article compares the retirement policies of Belgium and Sweden in order to reveal the different incentive structures built into the pensions systems prevailing in countries that are taken to represent different approaches to welfare capitalism. It addresses the question of why in a Christian Democratic welfare state that is said to grant pensions rights on the basis of merit and past work performance one can find extremely low labour‐force participation rates among elderly workers, while in a Social Democratic welfare state that is supposed to grant pension rights relatively independent of past labour‐market performance, one can find quite high participation rates amongst that section of the labour force. This apparent paradox is explained in terms of the different purposes of the early‐retirement schemes in the two countries: in Belgium they were primarily part of a strategy to combat (youth) unemployment, in Sweden they had more to do with reforms that sought to accomplish a ‘humanisation of work’ by softening the abrupt transition from work into retirement.

Managing older employees after downsizing

The implementation of a downsizing programme based on an early retirement scheme has been investigated together with its effect on 144 individuals, aged 55yr or over who remained in the company afterwards (“Stayers”). Special attention has been paid to the effects of a rejected application. Two-wave panel data, 18 months apart, were used to explore adjustment, in terms of health effects, and exit. Levels of distress and somatic complaints proved largely unchanged even though workloads increased and commitment with the organization declined during the 18 months period. A rejected retirement application appeared to have had an indirect effect on distress, expressed in terms of organizational commitment. Both age and perceptions of role overload were related to exit within 18 months of the downsizing.

Analysis of the evolution of farmers’ early retirement policy in Spain. The case of Castille and León

The aim of this paper is to present an empirical analysis of early retirement CAP (R. 2079/92) policy in Spain. The guidelines issued by the commission in 1985 (COM(85)750 last) emphasise the need to help young farmers to get started and describe the handicaps to be overcome by young individuals seeking to start up as farmers on account of reduced mobility in ownership of arable land. The early retirement policy is a structural and rural development policy (installation of young farmers, modernisation of agrarian structures). We explore the implementation of this process on a national and regional level in Spain and Castille and León, and review its inconsistencies and the interests of the parties involved. The early retirement scheme presents poor results because of its extra-cultural nature, unconnected with the traditions of inheritance and the farmers’ interests.

Worker Separations in a Nonstationary Corporate Environment

This paper investigates differences in worker turnover characteristics between periods of workforce expansion and contraction in a firm. We derive a Cox proportional hazard model from a simple model of job separation based on the expected surpluses from the firm and its workers. We account for non-stationarity in the baseline hazard reversing the role of calendar time and employment duration (Imbens (1994)), and estimate the model using personnel data from a large Dutch aircraft manufacturer over a period from January 1987 until March 14th, 1996, one day before its bankruptcy. Performance evaluations, blue versus white collar employment, and career paths within the firm are found to play an important role explaining differences in turnover behavior. A generally important result is that smooth functional forms of the age effect on worker mobility can produce misleading results, blurring a better understanding of the design of early retirement schemes for corporate reorganizations.

Retirement, financial incentives and health

This paper aims to assess empirically the relative size of incentive effects and health for the retirement decision. We specify and estimate a dynamic model for retirement behaviour that explicitly takes account of health and eligibility conditions and replacement rates of alternative exit routes from the labour force. A range of health instruments are constructed from estimates of a model for health dynamics and these are used to assess the effect of reporting errors and of endogeneity of health on the estimates of the retirement model. Our results provide evidence that health and retirement are endogenously related. Health matters but the size of the health effect depends crucially on the health measure used. We find that subjective health measures overstate the effect of health on retirement and that endogeneity of health suppresses the health effect. Incentive effects are relatively insensitive to alternative specifications for health. The incentive effects are strong for early retirement (ER) schemes. There is evidence that income streams in alternative exit routes are compared in the retirement decision and that alternative exit routes act as substitutes.

Managing Retirement—Rethinking Links between Individual and Organization

Retirement represents an important life event in Western countries marking the transition from one life stage to another and the movement from being within to being outside the labour force. For employees, retirement might represent the border between organizational life and life outside the workplace. This border, though commonly thought of as fixed and distinct, is becoming more and more blurred. Organizations and organizational psychology have thus far largely ignored retirement as a relevant topic. However, the changing nature of retirement, as a consequence of demographic changes and developments in the labour market, means that we need to rethink our assumptions about retirement and to attempt to specify some of the missing links between individual and organizational perspectives on retirement. We will argue that retirement is not only an important event in the life of working individuals but has become an important issue for management. This article will discuss some individual retirement processes and possible impacts of retirement on the organization focusing, in particular, on the use of early retirement schemes as a management tool replacing traditional redundancies. It is suggested that these early retirement schemes neglect some basic aspects of individual and organizational retirement processes and are likely therefore in some cases to be less than effective. By describing a different model for managing retirement we aim to suggest how a better balance between individual and organizational needs can be achieved.