WP 48 - Population ageing in the Netherlands: Demographic and financial arguments for a balanced approach

Wiemer Salverda

Figure 6 Employment rate* for calendar years and cohorts retiring 1973-2038
Persons aged 20-64 by gender

Cohort-women

60

Calen der-women

o -I

1973     1979     1985     1990     1995     2000     2005              2038

*) According to international definition of labour force including jobs of less than 12 hours per week

I thank Peter van der Meer for making available his 1973-1997 dataset based on the research of Huijgen et al.

Source: Author’s calculation from Peter van der Meer’s Huijgen dataset 1973-1985, OECD LFS 1990-2000 and CBS/Statline 2005.

Nor does the extra funding seem impossible financially for the young in the sense of a compensating
additional employment participation of those younger than 65. A 4.5% increase in the required
contributions means a 3.3 percentage-points higher employment level, given that current incomes
are based on an employment rate of 73%. This increase would cover the additional costs while the
20-64-year-old group would retain its existing net income. In order to keep the burden on income
for the under-65-year-olds unchanged at 8.1% - and thus to grant the younger group a
proportionate increase in real income - a 12 to 13% increase in participation would be required, to
an employment rate of up to 82.5%. This is somewhat over 80%, the target rate of government
policy. An increase in average hours worked of no more than 3% could make up for the gap. Figure
6 illustrates the feasibility of such a level without the need for much policy effort. It follows from an
extrapolation to the future of the changes in employment participation of 5-year cohorts of men and
women as they have occurred since the early 1970s. Cohort and calendar-based participation of
men is virtually identical, while for women most of the gap will disappear as cohort-participation will
grow quickly when present high-participation cohorts age.

AIAS - UvA

<<   14   15   16   17   18   19   20   >>

More intriguing information