We are not yet sufficiently utilising the potential of elderly

The Netherlands is not yet effectively utilising the potential of older people

In countries that rank highly on the Golden Age Index, the labour force participation rate of older people is even higher. In Iceland (80.2%), New Zealand (77.9%), and Japan (77.8%), the labour force participation rate of older workers is around eighty percent. The percentage of workers aged 65 and older who are still employed in those countries is also approximately twice as high as in the Netherlands. When people work longer, it reduces the pressure on the affordability of the pension system. And in the exceptionally tight labour market, we can make use of all hands and minds.

Policy aimed at keeping older people in the workforce 

In recent years, the Netherlands has taken measures to keep older people in the workforce, with the increase in the pension and ‘AOW’ (state pension) age being the most important one. Additionally, the government has made it attractive for employers to hire older workers by limiting the risks associated with it. For employers who enter into a new contract with employees who are older than the ‘AOW’ age, the obligation to continue paying wages during illness is limited to six weeks, and the reintegration obligations are less burdensome. Furthermore, the right to a severance payment expires after reaching the ‘AOW’ age. In this way, the government has already cleared a few major obstacles from the path.

Older workers no longer seen as expensive, inflexible, and often sick

There is another positive development: the perception of older workers as expensive, inflexible, and at risk of illness seems to be changing. The Netherlands Institute for Social Research, which regularly surveys employers' perceptions of the labour market, sees a shift in sentiment towards older workers. Almost three-quarters of the employers surveyed consider it desirable for employees to continue working after the age of sixty. Twenty years ago, that figure was only around forty percent. 

Employers are also mostly positive about the performance and productivity of their older workers. More than four out of five employers take specific measures to ensure that older workers perform well in their jobs, such as providing the option to take extra leave days. These measures are often included in collective labour agreements (CAOs).

HR policy for Gen Z and Boomers

The positive sentiment of employers is just as necessary as any potential new government policy to keep older people in the workforce. Employers and employees need to become familiar with the fact that the retirement age is increasing and that this requires adjustments on both sides. Currently, it is often the case that employers shape their HR policies through a 'one size fits all' approach, targeting a kind of middle group between the ages of thirty and fifty. However, our own research, Hopes & Fears, shows that generations in the workplace approach their work differently and have different expectations and desires. A broader HR policy - one that allows for flexibility in working hours, locations, and tasks - may contribute to attracting and retaining Generation Z and Boomers, thus creating an inclusive work environment.

Kicking against sacred cows

It also requires cultural changes. Increasing the retirement age has encountered (and still encounters) resistance, not only from people in physically demanding professions. It also involves an infringement on the acquired right to early retirement, which is never easy. And there are more of these acquired rights or ingrained patterns.

In the Netherlands, for example, we assume that you will continue to progress to the highest salary scale and remain in it until retirement. We would, for example, like to have a discussion about demotion, going back to a lower salary scale. It seems that no employer dares to touch that, while it might be a very good way to relieve older workers of work pressure and stress, while at the same time maintaining job satisfaction for the employee and professional knowledge for the organisation. A cultural change is also needed to make demotion discussable. 

Combination of financial incentives, changing expectations, and cultural aspects

It is happening slowly, with the labour force participation of older people, but progress is being made. That is the value of the Netherlands' rise in the Golden Age Index: it shows the movement in the right direction. The increased participation of older people is not a panacea for alleviating the labour market shortage, but every little bit helps. Think about the promise of the latest technology. For example, think about increasing the number of working hours for part-time employees or increasing opportunities for people with barriers to employment. The increase of the employment rate for these groups will also depend on a combination of financial incentives, changing expectations, and cultural aspects.