UK and German Retirement Policies Compared

As we all know raising the participation rates of older workers is both essential and a core component of the Lisbon Agenda, so here’s a timely report from the Anglo-German Foundation for the Study of Industrial Society comparing policies directed towards older workers in the UK and Germany. More salacious material to stimulate all you policy wonkers out there. (Hat Tip to David from North Sea Diaries). Looking at the table on page 3 the UK seems to have been a good deal more successful in acieving these objectives over the last decade. In both coutries male participation rates in the 55-64 age group has actually gone down since 1990, with the increase for the group as a whole being a matter of increasing female participation. On the other hand the UK has managed to reverse the 1990 – 2000 downward male trend and between 2000 and 2004 55-64 male participation went up, something which it noticably didn’t do in Germany.

The report concludes that the primary deficit concerning active labour market policies for older unemployed in Germany is the lack of specific targeting of this group both in active job placement and training. In the UK, the scope of active measures is rather limited both with regard to the kind of measures � New Deal 50 plus/New Deal 25 plus � and the level and duration of funding………In the UK � despite a more socially inclusive stance recently � funding of job creation and a broad application of training measures has not taken place so far, given the low intervention character of labour market policies. In Germany, in the wake of recent labour market reforms, a shift in paradigm towards a more activating approach to job placement has been implemented.

No Answers Only Questions

One person who could rightly claim to know more about global ageing and its possible consequences than anyone else in the business is the German Director of the Manheim Research Institute for the Economics of Ageing Axel B?rsch-Supan. If there’s a conference being organised, he seems to be there. Actually his comments at both these meet-ups are well worth reading in and of themselves (here, and here).

In a sense B?rsch-Supan is almost uniquely qualified to express opinions on the topic since he has both devoted a large part of his professional career to studying the question, and he lives and works in a society which is already reeling under the impact. As he says:

“Today?s Germany has essentially the demographic structure that the United States will reach in a quarter of a century. The dependency ratio (the ratio of persons aged 65 and over to those aged from 20 to 59) is at 28 percent, and it will reach 75 percent in 2075, if we dare project that far. Almost one-fifth of the German population today are aged 65 and over. One quarter are aged 60 and over, which is relevant because the average retirement age in Germany is 59.5 years. Thus, in this sense the United States is not ?entering largely uncharted territory,? …. Rather, they can look to Europe?in particular to Germany and Italy?to see what will happen in the United States.”

I mention B?rsch-Supan because he serves as a good pretext for going over where we are to date with the issue. As he says himself. watching demography change is rather like watching a glacier melt, on a day-to-day basis it’s hard to see that anything is happening, but over time the impact is important.

One of his recent papers has the intriguing title: “Global Ageing: Issues, Answers, More Questions“. It is a good up-to-date review of the ‘state of the art’, and a quick examination of the points he makes probably serves as a good starting point, since I can’t help thinking, in the case of global ageing, it isn’t so much what we know that matters, it’s what we don’t know.

So here we go, a review of what we “know”, what we think we know, and what we don’t know:
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Europe’s ‘Tiger’

Last Friday Eurostat released the 2004 data on comparative per capita PPP’s (purchasing power parities) across the EU. Perhaps the most surprising fact which emerges is that Ireland is now in second place (after Luzembourg) with a PPP 40% above the EU average. For a country that not so long ago was considered one of the ‘poorer’ EU members this is truly stunning.

It is generally well known that Ireland had (and continues to have) one of the highest fertility and population growth rates in the EU, but this has not been regarded as especially important since conventional neo-clasical growth theory (and the new ‘super-duper’endogenous growth theory for that matter) argue that increased population means a bigger economy, but not necessarily an increase in per capita income. However, as I said yesterday, it’s all about population structure. What we are now understanding is that the right age structure can produce very rapid increases in per capita income, and Ireland is, of course, a good case in point.

In the case of the ‘Celtic Tiger’, New Economic Paradigm theorists David Bloom and David Canning, who have made a specific study of the Irish case, reached the following conclusions:
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Roses in Picardy

In part this vote may be decided by differing participation rates across the regions. It is clear that in some Departments the participation rates are very high. I just heard a reporter in Picardy. Apparently the anti-Maastricht (remember even the Maastricht vote was only a ‘petit oui’) sentiment was high in Picardy. Today they have a high participation. It is such factors, local and regional ones like this, which may in the end decide the vote. Strange to think that the future of Europe may be in the hands of a number of voters ‘on the margin’ over in Piccardy, and similar.

Update One: An estimate for Radio France by CSA suggest a participation as high as 82.5%. One thing is sure, the big news about this referendum, apart from the result that is, will be the participation. No-one can say this isn’t representative. Meantime the metro stations around the Chanmps Elysee have been closed – the police fear spontaneous demonstrations (of joy presumeably). The left have called for a celebratory ‘fevstival’ in the Place de la Bastille at 22:00.

BTW: it is now 20:00. All stations outside Paris and Lyon are now closed.

Update 2: The CSA has now backed off a bit, and the participation will be something in the 70’s %.

Blogging The French Referendum

Update I: Participation rates at 19:00 have just been released: 66,24 %. This means that it will surely clearly surpass the Maastricht final participation of 69,69 %. The poll estimates are talking about a final participation of 75%. This is big for a topic which many said was ‘abstract’. In Spain, the particpation was in the mid forties. The majority of polling stations close at 20:00 (in 40 minutes) but in Paris and Lyon they close at 22:00.

Well it’s a beautiful hot & sunny spring day here in Barcelona. I’ve got my web-radio tuned to France Inter (France Info) and I’m working quietly away updating some things on my website. I think today is an important day for Europe, and I’m going to be blogging live as the news comes in.
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Changing Perspectives On Immigration.

Views of immigration are changing. Back in the mists of time, when I first came to the conclusion that ongoing demographic changes were going to be important, the voices in favour of a reconsideration of immigration policy were few and far between. Perhaps the first and most notable of these voices was the UN population division. Now things are different, and a series of recent international conferences and reports highlighting the positive advantages of immigration as an economic motor only serve to underline the fact that discussion of this important topic is very much back on the agenda.
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Arrivederci Lisbon?

The Financial Times reports today that the team lead by Wim Kok, set up after the March economics summit, and charged with carrying out a review of the Lisbon process, is likely to find that we are badly behind schedule. This is hardly surprising since the Lisbon agenda was rather stronger on rhetorical nicety (including the now famous objective of turning Europe into the ?most competitive and dynamic knowledge-based economy in the world? by 2010) and rather weaker on concrete policies and objectives.

The intention is now to change this balance:
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ECB: German Plea Falls On Deaf Ears

When this is all over, and we come to look back at the when and the where, maybe we will remember today’s decision as just one more of those missed opportunities. Certainly not much notice seems to have been taken of Gerard Schroeders request for a helping hand on the interest rate front. Is there any significance in the fact that on the day the ECB decided to stand firm, German unemployment turned upward again to 10.3%, while it was also revealed that German factory orders fell unexpectedly by 2% in January: just for good measure I suppose.
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