We need to establish different working alternatives for older people if the economy's labour needs are to be satisfied, writes Dr Brenda Gannon
Pension entitlement is the main concern for many older workers aged 50-64, who may prefer to move from full-time work to part-time hours, but yet retain the status of a contributing employee.
With the forthcoming Green Paper on Pension Policy the question of how individuals can afford to retire, either partially or fully, will be to the forefront of policymakers' minds.
Older people aged 65 and over in Ireland account currently for approximately 11 per cent of the total population and this proportion is expected to increase to between 15 and 19 per cent over the next 20 years.
As Irish demographics change in years to come and the ratio of older to younger people increases, pension issues will be of utmost importance to Government policy.
Because of the reduction of potential young employees, Ireland will need to find alternative labour resources. A relatively untapped source in Ireland is older workers, particularly in terms of part-time work. The reason Ireland lags behind other countries in this regard is debateable, but the answer is key to the future of the labour force and the inclusion of older workers.
According to the Eurostat Labour Force Survey 2002, only 20.2 per cent of all workers aged 50-64 work part-time hours in Ireland, compared to 28.3 per cent in the UK and 42.8 per cent in the Netherlands. (see table).
Before flagging the areas of policy concern for older people in Ireland, one should recognise recent improvements for part-time workers in general.
The Protection of Employees (Part-time workers) Act 2001, states that a part-time employee cannot be treated in a less favourable manner than a comparable full-time employee in relation to conditions of employment. The overall aim of this legislation is to improve the quality of part-time work.
However, if one was to hypothesise one negative aspect of this, it could mean that employers will be less likely to take on part-time workers due to fears that they will be confronted with more legal responsibilities. On the positive front though, it now means that workers in part-time jobs have the same rights as full-time workers in terms of pay, contracts and holidays (pro-rata). So this is a step in the right direction.
The Act does not enforce pension entitlement so part-time working is a critical topic for the forthcoming Green Paper. If we are to establish why part-time work is less prevalent in Ireland compared to our European counterparts, and try to entice people into partial rather then full retirement, we need first of all to highlight the benefits of part-time work to potential employees. Once the workforce is convinced of the merits of part-time work rather than retirement, we then must look at the structures and determine how best to make part-time work a viable option for older workers.
Taking each aspect in turn now, we know from the Eurostat Labour Force Survey 2002, that of those people aged 50-64 who work part-time 16.8 per cent view this employment option as involuntary. This compares to 11.6 per cent in the UK and an EU-15 average of 7.5 per cent.
Does this suggest that there may be some labour market discrimination against older workers? One such mechanism for this is in the way employers may perceive lower productivity from older workers.
In this regard, implementation of employment equality legislation is critical. Conversely, this statistic suggests many people see their part-time working status as voluntary and not imposed by labour market rigidities.
Benefits of part-time work include more leisure time and promotion of a work-life balance - one of the buzz words in our society today. Given changing preferences of younger people and more focus on work-life balance, combined with the huge increase in labour force participation of women, the part-time work option may be even more appealing in future.
But, how viable is the part-time work option? Current institutional structures in Ireland do not support it. For example, if we consider the disability allowance, (provided by the State to all those of working age who have a disability that is expected to last at least one year) individuals may only partake in rehabilitative work. For those who wish to work fewer hours due to health or disability reasons, the social welfare system impedes their choice.
Similarly, those on the State (transition) pension between the ages of 65 and 66 are not allowed to work. These are clearly barriers to work for older workers wishing to work part-time hours.Although research on this topic in Ireland is only emerging, we can look abroad for information. In the US research indicates that for those opting for part-time work, poor health contributes more than economic factors.
Other research shows that individuals on public pension schemes would prefer part-time work compared to those with private pension provision. It appears, therefore, that institutional structures in the US are not conducive to part-time work. So, for Ireland therefore, what institutional structure will work?
In terms of policy, the main question is how part-time work could become more viable. This is the debate that we should have now. Moreover, there is the final question: Will the Green Paper on pension policy address the issues for part-time workers?
Dr Brenda Gannon is an Economist at the Irish Centre for Social Gerontology, NUI Galway, and is currently researching health and labour market policies for older workers in Ireland. www.icsg.ie