Due to ageing population, working population is in decline in all European countries. Estonia has one of the fastest aging populations in all of Europe, therefore it is important to encourage prolonging working life and late exit from the work force.
Ageing population, mainly caused by lower fertility rates and higher average life expectancy, forces us to pay attention to older workers. Estonian average life expectancy and fertility rates are lower than in European average. It is forecasted that Estonian population will decrease by around 363,000 people leaving the population around 1 million people and this will increase the proportion of older people, and will decrease the proportion of working people.
In contrast to usual fall in work force participation and rates, there has been an increase in the older people participating in the work force in Estonia. This is taking place as a result of changes in the pension system, which encourages older people to work. Compared with other age groups, older people (45+) have the lowest unemployment rate. Estonian state pension is rather low, which encourages people to work, incentive not being higher pension in the future but immediate additional income.
“Compared with other European Union member states, working part-time is not as common amongst older people.”
One of the reasons for low participation rate in Estonia is poor health. Health is the main reason for leaving labour market before retirement age. Although older people are more afraid of being unemployed, their work motivation and satisfaction are relatively high. Older people also face some barriers when entering the labour market. These include direct and indirect hiring costs for employers and employers’ attitudes e.g. age discrimination.
International organisations have made recommendations to increase participation rate of older people. These focus on three main areas:
- increasing participation rate of older people
- improving work environment and conditions
- shaping social insurance system, that encourages participation in the labour market