Income from Work – The Fourth Pillar of Income Provision in Old Age
Despite substantial improvements in life expectancy, the employment rate among men aged 55-59 in the United Kingdom have decreased from over 90 per cent to less than 70 per cent between 1968 and the end of the 1990s. The figures for men aged 60-64 and men aged 65-69 slumped from around 80 per cent to 50 per cent and 30 per cent to about 15 per cent respectively.
Recently, there has been some reversal of the trend of declining employment at older ages. For example, the employment rate for males aged 55-59 was about 80 per cent in 2008.
Not only do recent improvements not reverse the earlier decline; employment rates among the elderly should have increased since the 1960s to reflect increasing life expectancy and improved health.
Many other EU countries have lower labour market participation amongst older workers than the UK. In Italy, for example, only 40 per cent of 55-64 year olds are active in the labour market. In Switzerland, however, employment is around 70 per cent of the workforce in this age group and both the USA and Japan have higher employment rates than the UK.
Well-functioning retirement-income systems are desirable to enable people to retire from work. However, it is undesirable to have state welfare systems that encourage early retirement and impose the costs on others. It is also undesirable for labour market regulation to prevent those who would like to remain in employment from doing so.