Transcript The labour supply of older workers

The labour supply of older
workers in Hungary
Scharle Ágota
Ministry of Finance, Hungary
Department of Economic Policy
Activity rates drop after age 45
100
men
women
60
40
20
age group, years
60–64
55–59
50–54
45–49
40–44
35–39
30–34
25–29
20–24
0
15–19
activity rate, %
80
0
Sweden
Germany
Latvia
EU15
EU25
Czech R
Poland
1999
Slovak R
70
Nederlds
Hungary
activity rate for 55-64, %
This is very low compared to EU,
even CEE levels
80
2003
60
50
40
30
20
10
An experiment: increase activity rates for
men aged 45-54 and 55-64
85
adding 55-64
adding 45-54
actual: aged 15-64
83
79
77
75
73
71
69
67
2004
2003
2002
2001
2000
1999
65
1998
activity rate, %
81
And it is threatening the balance
of the Pension Fund
24
total expenses, % of GDP
20
16
tax financed, % of total
expenses (right scale)
12
8
4
0
1999
2000
2001
2002
2003
Pension Fund revenues and
expenses in 2003 (million Huf)
Activity would need to increase
by 12 % points to balance PF
1325000
1300000
1275000
1250000
1225000
1200000
Pension F expenses
1175000
Revenues from Soical Sec.
1150000
0
2
4
6
8
10 12 14 16 18 20 22
increase in activity rate of 45-64, % point
24
Reasons behind low activity rates
in old age
•
•
•
•
Low qualifications
High unemployment
Pension receipt
Attitudes
Disability pension receipt has hardly
declined since transition schock
total (below pensionable age)
new claims
new recipients
16
14
12
10
8
6
4
2
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
1990
in % of population aged 40-59, %
18
Possible solutions
•
•
•
•
•
Increase statutory retirement age (62->65)
Tighten eligibility for disability pension
Premium for later retirement
Integrate taxes and social support
Subsidies for low wage employment and
old age workers
• Minimum wage legislation