Encouraging more people to work later in life would help the Netherlands meet its growing challenges of a rapidly ageing population and rising social spending, according to a new OECD report. Working Better with Age in the Netherlands says that reforms over the past decade, such as raising the pension age, have already had an impact: the share of 55-64 year olds in work has increased significantly to just over 60% in 2013, above the OECD average of 55%. But the Netherlands remains well behind the best OECD achievers, ranking only 16th for the employment rate of 55-64 year olds among the 34 OECD countries. “The main challenges in the Netherlands to encouraging longer working lives are high long-term unemployment and low hiring of older workers along with high disability rates,” said Stefano Scarpetta, OECD Director of Employment, Labour and Social Affairs, presenting the report in The Hague. “For example, more than half of over 55s out of work have been jobless for more than a year, above the OECD average of 47%. Further reforms are needed.”
The Netherlands ranks even further behind other OECD countries when measured on a full-time equivalent basis, given that the incidence of part-time work is much higher in the Netherlands than in most other OECD countries.
Few over-65s work: even though their employment rate has nearly doubled over the past decade, it was still only 13% in 2012, the last year data is available, well below the OECD average of 19%.
Among its recommendations, the OECD says the Netherlands should:
- Promote longer contribution periods in second-pillar pension schemes and increase flexibility in withdrawal and combinations of pension and work to encourage longer careers.
- Reduce the maximum duration of unemployment insurance benefits combined with better activation of all unemployment benefit recipients, including for the unemployed over 60 who are receiving Income Compensation for Older Unemployed (IOW).
- Keep replacement rates (the ratio of benefits to former earnings) of sickness and disability benefit well below 100%, and give access to wage-compensation already in the sickness benefit period for re-entry to new jobs with a lower wage.
- Encourage social partners to adjust wage setting procedures by focussing more on performance and less on tenure and seniority.
- Ensure that new practices among innovative firms in the Sustainable Employability programme are promoted and progressively become national standards. Its goals include prevention of unemployment and illness, as well as, improved productivity levels in the entire working population, regardless of age.
- Link training measures for older unemployed directly to a specific job.
- Tighten co-operation between the Public Employment Service and the municipalities to increase re-entry to work for the older unemployed.
- Mobilise more fully labour resources by supporting initiatives to facilitate working on a full-time basis for part-time workers.