Speech by Minister Tom Kitt, Minister for Labour Affairs at the Employment and Retirement Conference in the Conrad Hotel on Wednesday 26 September 2001

"Irelands Demographic Set for Radical Shift" - Labour Affairs Minister

"Older People Must Be Encouraged Into The Workforce" - Tom Kitt

"Older People's Participation Should be Voluntary and Based on Lifestyle Choice"

"Reduction of Tax and Training are Key Incentives"

I have often said that issues related to ‘Employment' and ‘Work' are the measure of whether a Government's economic and social policies are working effectively and working in harmony. Here again today, on the topic of older people participating in the labour force, we can see how that point of view holds true.

On the economic front, Ireland's success over the past decade has heralded an era of unprecedented employment growth. In the last five years the numbers in employment increased by 400,000 - an increase of 30%. This has brought undoubted benefits to the country, including better opportunities for our working age population and increased standards of living for the population as a whole.

With success, however, new and different challenges arise, quandaries indeed that policy makers in the 1980's would have welcomed, when people like ourselves gathered here today had to agonize over rising unemployment, crippling interest rates, poor growth and a seemingly unrelenting exodus of our young people to an array of foreign countries.

Those problems, thankfully, are less manifest today - but in their place issues such as maintaining competitiveness, mobilising labour supply and ensuring social inclusion arise. These issues call for new and innovative responses from policymakers and the Government welcomes research such as is presented here today, which brings relevant issues to the fore and helps develop thinking in the area of retention and recruitment of older workers.

In the shorter term the economic focus is on maintaining progress. The Government is well aware that the existence of a tight labour market can curtail economic growth through its impact on competitiveness, particularly in terms of wage levels. Policies have focussed on increasing participation in the labour force; reducing unemployment and increasing immigration of workers into Ireland. Given the limited scope to tap further into these sources, and the continued need to tackle labour and skills shortages in the economy, the Government has also to give consideration to increasing participation of people in the older age categories.

However, longer term economic and social perspectives - such as emerging demographic trends, issues of equality of opportunity and greater life expectancy - require that we can cannot be short-sighted in our approach.

Ireland's demography, like that of most of Western Europe, will undergo a radical shift in the next 10 to 20 years, with an ever-increasing proportion of the population in the 55-plus age category. It is estimated that by the year 2011 the numbers in the 45-64 year old category will grow by 197,000 representing an increase of 24% on the current level. At the same time the numbers of younger people available to enter the workforce will be reducing. The number in the 15-24 year olds category will reduce by 50,000. In simple terms our population and our workforce is getting older.

As such, and purely from the economic viewpoint, the issue of retaining people in the labour force becomes significant. This is even more notable in that it is contrary to the situation that prevailed in the past of encouraging early retirement so as to create employment opportunities for younger people.

However, in the myriad of statistics, projections and economic analysis the key social issues of equality and choice should not be overlooked. Empowering individuals with the choice of whether to remain in, or take up employment should certainly be an overriding consideration. Any incentive to work should take an encouraging rather than coercive approach. Older people's participation should be voluntary, based on lifestyle choices rather than economic imperative.

Today's Conference reflects the importance of addressing both the social and economic issues arising. Two separate areas of research will be unveiled which focus on the area of older workers both in quantitative and qualitative terms. The first study was commissioned jointly by the Expert Group on Future Skills Needs and the National Competitiveness Council. It focuses on Labour Force Participation Rates of over 55's in Ireland. Based on the findings of a survey, possible barriers to entry for the age group are identified and potential solutions are put forward, which may facilitate the increased participation in the labour market of this age group. The second study, undertaken by the ESRI for the National Council on Ageing and Older People, looks at Older People's Preferences for Work and Retirement, gathered from a consumer survey in February last.

The research being presented today coincides with analysis undertaken by my Department to identify the key issues in this area. The Department has coordinated its efforts with agencies and groups represented here today.

The analysis by my own Department has identified two important areas where positive action to enhance the position of older workers from both an economic and equality perspective could be undertaken. The first focus broaches in broad terms the areas of Pensions, Taxes and Benefits. The complicated nature of the relationship in these areas will undoubtedly affect the participation of those in or approaching pension entitlement, whether State or Private pension.

The Government's policy of reducing the personal tax burden is an incentive for older people to continue working; especially those who may wish to work part-time to supplement their income. However, further detailed examination of the inter-linkage with Pensions and Benefits by my Department in conjunction with the Departments of Finance and Social Community and Family Affairs is necessary to ensure that full pension entitlements and benefits are retained and that in addition there is no financial disincentive to remaining in or returning to work beyond a certain age.

One approach that needs particular examination - as has been introduced in other countries - is the benefit of introducing an early or part-time pension payment without incurring additional tax, linked to semi-retirement or part-time work. I hope that we will be able to bring forward more specific proposals in the New Year.

The second focus of my Department revolves around initiatives that promote opportunities, match people with vacancies and address the issue of training and retraining. FÁS already caters for those in the older age groups and last year over Seven-and-a-Half Thousand people over 55 years of age participated on FAS programmes, of which Eleven Hundred were on job training.

Depending on their situation of departure, some retired people on pensions may be over-skilled for the types of jobs available to them while the remainder may have insufficient personal and work skills - IT for example - to access available employment opportunities. This is an area where the brokerage capacity of FÁS could be tailored to facilitate the needs of older workers. The possibility of extending the ‘Preventive Strategy' - where FÁS interview unemployed people before they reach nine months on the Live Register - to over 55 year olds, would ensure that older unemployed persons are given a fair opportunity to take up a suitable vacancy or training.

If actions taken by Government to promote employment opportunities for older persons are to be a success, it is important that they be carried out in conjunction with employers and their representatives.

Indeed, I would go further. It is my opinion that it is employers who should in the first instance actively pursue the agenda with regard to the recruitment and retention of older workers. Companies should be aware that, given the demographic trends and projections, they will be increasingly dependent on older workers in the future. The tacit knowledge that experienced and skilled workers maintain within a company means they represent an asset that should not be discarded. There is no room for an attitude that sees older people as less productive or more expensive.

I might add that a key issue is for employers to provide attractive conditions, principally flexible working arrangements, if older men and women are to help address the labour shortages in this economy. This means employers being flexible towards work time options, recognition of family circumstances and adaptation of the workplace to meet the needs of the older person. Hence those who take a pre-emptive approach in adjusting their cultures, career structures and personnel practices to facilitate older workers will be better placed to compete for and retain staff.

In conclusion there are four key issues informing this debate regarding participation by older people in the workplace.

The overriding principle is that of choice. People of a certain age and circumstances should be able to choose if they want to work - be it part time full time or voluntarily - or whether they want to take advantage of the benefits which they have earned over their working life to date.

Secondly, in the key area of retaining people and skills in the workplace for as long as possible, the onus is on employers to provide the conditions to allow that to happen. There would not be any benefits from Government action to encourage a longer working life if at the same time employers were not seeking to retain long-serving employees.

The Government needs to look at the relationship between Tax, Pension and Benefits to see if it can provide a greater incentive to extend working life, rather than encourage early retirement as would have been the objective in the past.

We also need, in conjunction with employers, to ensure that training and other actions to support workers and those seeking work are appropriate to all age groups.

I wish you well in the remainder of the Conference. I would like to thank Forfas and the National Council for Ageing and Older People both for organising this Conference and for undertaking this important research. I have no doubt that this work will contribute greatly to the Government's deliberations in this area.