Does extending the retirement age harm the youth labor market?
In 2010, the legal minimum age for retirement was raised from 60 to 62. A new reform introduced by Elisabeth Borne this Tuesday still wants to raise the age to 64. Again, the average age should be 65 or 66 to have the full rate. Indeed, it requires 43 years of contribution and according to the Organization for Economic Co-operation and Development (OECD) the average age of entering the labor market in France is 22 years.
In addition to these additional years, there is a will shown by the executive branch to reassess the work of seniors. “The employment rate of the elderly in France is appalling,” Economy Minister Bruno Le Maire said at the launch. At this point, the mantra developed by every minister involved: this reform should help increase employment of older people, which is currently very low.
A contest that has become more fantasy than reality
The Minister of Economy said that only 56% of the population aged 55-64 are still working. But assuming the reform passes and works, isn’t there a risk that by hiring too many seniors, we’re blocking the youngest from entering the job market? “For a long time it was believed, even the principle of early retirement: to make room for other workers. It was a failure: the unemployment rate increased,” recalls Stéphanie Villers, macro-economist and consultant at PwC France.
And indeed, “young and old are not in competition. The professions that those entering the market are engaged in are not the same as the professions that the elderly work, which require experience and expertise, “supports Bernard Vivier, director of the Higher Labor Institute. Conclusion: “The elderly do not give jobs to the young when they retire. »
Between the young and the old, preference is given to the young
And in the case of a possible competition for the position, for example, in the case of a change of profession for an older person, “we must not deceive ourselves with the economic reality: the younger, cheaper, more dynamic and with the technophile image. , will almost always be chosen against the older,” explained Stephanie Villers. So, while the employment rate for 55-64 year olds is 56%, this number actually hides a big difference: 75.1% for 55-59 year olds, according to Dares’ figures, and just 35.5% for 60-64 year olds in 2022. in April.
Admittedly, most positions are not the same, but isn’t the entire recruitment chain at risk of being delayed by five years, ultimately affecting youth employment? Imagine a company: the director retires at the age of 65, not at the age of 60, so the vice director will only be the director at the age of 50, not at the age of 45, the current person will be the deputy director at the age of 30, not at the age of 25, and postpones the hiring of a new employee. he is in office for five years.
The reality principle
But here again, Stephanie Villers brings us back to the raw reality: “A company will try to replace a 60-year-old director with a 45-year-old vice director, whether this reform passes or not. Therefore, the chain will not be broken” According to an Apec/Pôle emploi study published in January 2022, access to unemployment is the result of an employer-initiated breach of contract for 81% of senior managers. A job that insisted for a long time that it was difficult for him to find a job behind an old man.
“This pension reform should have no impact on youth employment, predicts Bernard Vivier. The problem he raises is mostly the employment of the elderly, who are undervalued in the labor market. “If Bruno Le Maire can complain about the employment rate of the elderly in France, we must remember that it is ‘just’ 8% below the OECD average – 42% of 60-64 year olds are employed. However, most countries in the organization have already raised the pension to 65 – France currently has one of the lowest legal retirement ages – suggesting that the effect on the employment of the oldest is far from magical.
In the end, “the labor market will remain the same,” continues Bernard Vivier. At times, accessibility is difficult for young people and increasingly dangerous for older people, who are almost fully employed between the ages of 30 and 50. ” Stephanie Villers insists: ” What France needs to look at is how to employ the elderly. Wanting full-time seniors until age 65 seems like an intractable equation right now. One could imagine the democratization of part-time work from a certain age. This is more of a problem than a threat to the younger generations. »
