1. Intergenerational fairness & solidarity Katarina Jaksic Thematic Analysis Unit DG Employment, Social Affairs and Inclusion, European Commission

2. The storyline Inter-generational fairness today and in the future
The demographic challenges and the cost of ageing
Policy implications

3. Generational divide in the labour market
Employment: stagnation for younger workers; major improvement for older ones
Employment rates by age in the EU
Own calculations based on EU-LFS

4. Younger workers are more exposed to non-standard work contracts
Generational divide in the labour market
Younger workers are more exposed to non-standard work contracts
2016
% involuntary temporary employees =
10% of year-olds
5.3% of year-olds
Widespread use of temporary work may harm productivity growth
Own calculations based on EU-LFS

5. Younger workers earn lower wages than older workers
Ch. 3: Working lives
Younger workers earn lower wages than older workers
Average hourly wage of workers younger than 30 (relative to workers 60+)

6. Consequences of the generational divide
Younger workers are losing income share; Prime-age & older workers are gaining
Shares of labour income by age group, EU-28
Own calculations based on EU-SILC

7. EU-28 Employment will face its limits… +1.1% p.a. Working-age
population
HIGH activity scenario
scenario
LOW activity
scenario
HIGH activity
Activity rate
Active
population
LOW activity scenario
Employment
+1.1% p.a.
Employment rate
Own calculations based on Eurostat 2015 population projections, Eurostat LFS

8. Employment will decline sooner or later.
For keeping GDP growth, we need to speed up productivity growth.

9. Employment rates 25-39, by educational level, EU-28
What to do?
The role of education
Education and skills are becoming even more important for employment
Young people have more incentives to invest in training
Impact of parental background on tertiary attainment still strong
Employment rates 25-39, by educational level, EU-28
 Investing in human capital and equal educational opportunities is key!
Own calculations based on EU-LFS

10. The operational stock of robots in the EU has quadrupled since 1993.
Source: International Federation of Robotics

11. Labour market policies can help 2.
Model simulations presented in ESDE: Policies targeted to older workers
Reforms in the pension system (FI):
coupling pensionable age, pension level to life- expectancy
Better labour market matching trough LM integration support (DE)
Tax incentives (SE): payroll and income tax cuts
Main transmission channels:
Contain increase in the cost of social security.
Invest in employability

12. SE Cut labour taxes – the Swedish way (esp. for older wokers)
Labour demand: Payroll tax credit for 65+
(Lowering Employers' Social Sec Contributions from 26% to 10%)
Labour supply: Earned Income tax cut
Long-term effect compared to the reference (do nothing) scenario

13. Sweden Tax relief raises employment; different impact on wages
Overall budgetary impact:
-0.12% of GDP
Age-group 55-69
Long-term effect relative to the reference (“do-nothing”) scenario

14. Conclusions
Young people and future cohorts will need to speed up productivity – and bear the 'double burden' of demographic change.
How to strengthen the EU's transformative capacity for better long-term resilience?
Activate people on the labour market, fully using available human resources
Invest in people's employability (skills, education) to enhance their productivity
Engage in pension reforms: New forms of work may require rethinking of social security

15. Thank you for your attention!

16. Europe…
Ageing is not occurring only in Europe … but the ageing pattern will be particular in Europe.
Working-age population here: age group 20-64
Sources: UN World Population Prospects 2015 for the US,
Eurostat 2015 population projection for the EU

17. EU-28 Employment will face its limits … Working-age Population (20-64)
Activity rate
Active
population
Employment
Employment rate
Own calculations based on Eurostat 2015 population projections, Eurostat LFS

18. EU-28 Employment will face its limits.. Working-age population
HIGH activity scenario
scenario
LOW activity
scenario
HIGH activity
Activity rate
Active
population
LOW activity scenario
Employment
Employment rate
Own calculations based on Eurostat 2015 population projections, Eurostat LFS

19. EU-28 Employment will face its limits… „Europe 2020“: 75% by 2020
Working-age
population
LOW activity
scenario
Activity rate
Active
population
LOW activity scenario
„Europe 2020“:
75% by 2020
Employment
+1.1% p.a.
Employment rate
Own calculations based on Eurostat 2015 population projections, Eurostat LFS

20. With today's technologies, the share of automatable jobs could reach 70% of all jobs in some Member States.
Source: Lordan and Josten (2017)

21. Typical tasks performed by platform workers often require skills.
Task performed by … % of all platform workers in the sample (COLLEEM survey)
% of all platform workers
COLLEEM: Collaborative Economy research project (European Commission)

22. Pension contribution rate in the High Activity Scenario,
pension level: 47% of wages

23. Pension contribution rate in the High Activity Scenario,
pension level: 47% of wages