Working Better with Age: Korea

Assessment and recommendations

Korea’s population is ageing faster than any other OECD country’s

Korea is currently in the midst of an unprecedented demographic transformation, with population ageing progressing faster than in any other OECD country. The median age of the population is projected to reach around 55 years by the mid-2050s, compared with a median age below 20 years back in the 1970s. There are currently less than 200 residents in Korea aged 65 and above for every 1 000 of the working-age population (ages 15-64) – well below the OECD average of 246 in 2015. The Korean figure, however, is projected to quadruple over the coming decades, exceeding the OECD average quickly and peaking at a projected 760 by around the year 2065 – the highest ratio of any OECD country.

Such sweeping demographic changes are likely to have important consequences for Korea’s fiscal institutions and social cohesion, as labour resource utilisation remains a key engine of economic growth. Population ageing thus presents a major challenge for Korea, requiring a comprehensive and decisive policy response.

Shortcomings around job quality are a particular issue for older workers

At almost 70%, Korea’s employment rate of older workers aged 50-64 is relatively high – 6.6 percentage points above the OCED average. However, many workers retire early from their main job (most of them before reaching age 55) and find new employment in poor quality, highly insecure and low-paid jobs or become self-employed. Older workers in Korea effectively retire at an average age of 71-73 years – the oldest of any OECD country. Almost two out of every five workers aged 55-64 in Korea hold a non-permanent job, compared with an OECD average of just one in every ten. Precarious work is even more common among still older workers, with three out of every five of those aged 65-69 in non-permanent positions – roughly three times the OECD average.

For a majority of workers, early retirement from the main job results in lower earnings and potential hardship. Poverty is very high among Korea’s elderly population, despite the fact that such a large proportion of them are economically active. Korea has one of the highest rates of relative income poverty among those aged 51-65 among all OECD countries – second only to Mexico. Work is therefore not an effective antidote against poverty for a sizeable number within Korea’s elderly population.

Structural reforms and better social protection are needed

When labour regulations that govern hiring and firing are ill-adapted to businesses’ needs, they may end up being bypassed in practice. In Korea, many non-typical salaried workers – including those in bogus forms of self-employment – enter into a regulatory grey area, holding jobs that are in practice neither strongly regulated nor coverable under social protection measures. This provides a great deal of flexibility for firms but at workers’ expense in terms of greater insecurity and higher risk of poverty – most notably among older workers after early retirement from their main job.

Human resource management practices in Korea rely predominantly on a seniority-based approach to setting wages and granting promotions. As a result, long working hours, mandatory early retirement, and voluntary “honorary retirement” practices widely encompass older workers as employers seek to reduce labour costs within their rigid seniority-focused workplace structures. Such outcomes are ultimately detrimental for employers and workers alike. Introducing worker appraisal and wage-setting mechanisms that are less rigidly tied to individuals’ seniority – and more weighted towards their actual skills and competencies or the demands of the particular role they fulfil – would align Korea more closely with the norms in other OECD countries and benefit all economic stakeholders alike. In particular, such a move could help older workers to retain their main jobs until their effective retirement.

Policy makers have few direct tools to intervene in wage-setting arrangements agreed between social partners. Nevertheless, policy makers should make direct efforts to challenge the status quo in order to improve both economic growth and social cohesion within the context of population ageing.

Recent reforms are well-directed but could go further

Korea’s Tripartite Agreement, signed in September 2015 by the government, trade unions and employers’ representatives, marked an important step forward in developing a modern regulatory framework. Likewise, recent government initiatives such as regulating mandatory early retirement, promoting wage-setting mechanisms based on job and skill requirements and reducing working hours should help increase workers’ productivity and improve working conditions. Questions remain around the extent to which these measures will finally be implemented. The aim of this report is to identify what more could be done to promote more and better jobs for older workers in Korea. It focuses on policies along three key areas: a) making work attractive for older workers and tackling old-age poverty; b) encouraging employers to retain and hire older workers, including in core-career jobs; and c) promoting the employability of workers throughout their working lives.

Making work more rewarding for older workers and tackling old-age poverty

Korea is still relying heavily on labour regulations and collective agreements to protect jobs instead of social protection measures capable of protecting workers themselves throughout their career plus under any spells of unemployment or underemployment. Shortcomings with this approach are evidenced through the prevalence of precarious work that results, for many, in insufficient income security. Workers outside of regular salaried employment often face a double penalty of poor working conditions and little or no social protection. While such dualities are a somewhat general feature of Korea’s labour market, they affect older workers disproportionately.

The main pillars of a comprehensive system of social protection are in place, but many components of the system are still very young and, thus, only gradually capturing the entitled population. Public pension measures are not yet fully mature while other branches of social protection could be further aligned or expanded to better protect individuals against common risks – notably unemployment, sickness and poverty. Older workers currently remain underserved by existing social protection measures.

Reducing in-work poverty among older workers

Among Korea’s salaried employees aged 55-64, 45% are either working part-time or engaged on a non-permanent or non-typical basis; a share that goes up to over 60% for those aged 65-74. Well-designed in-work benefit measures and unemployment insurance programmes have proven effective in reducing poverty among disadvantaged groups of workers in a number of OECD countries. While Korea has both such types of benefits in place, they do not protect older workers effectively.

Korea’s Earned Income Tax Credit (EITC) covers couples with and without children as well as single household members aged 50 and over with very low wages. EITC presents rather strict eligibility criteria – notably around the real estate and financial assets requirements contained in the means test – and relatively low benefit amounts equivalent to roughly 2% of Korea’s average wage (even though EITC payments for single-earner couples may reach a maximum value of 5.3% of the average wage). For EITC to be a more effective instrument to tackle in-work poverty, notably among older workers in second careers, eligibility criteria and benefit amounts need to be revised.

For Korea’s Employment Insurance (EI) measure, the main priority going forward will be to extend the actual coverage for various groups of non-salaried and non-typical workers currently not formally encompassed by the measure and ensure that all employers including very small businesses comply with the mandatory requirement to register their workers and to contribute towards the EI fund. This issue was discussed extensively in a recent OECD report.

Reducing post-retirement poverty without impairing work incentives

In Korea, in 2015 just under four in ten individuals aged 65-76 had an income lower than 50% of the national mean – the common threshold used for defining relative income poverty in a population. This was significantly higher than the equivalent share of 11% among OECD countries on average. In large part, this reflects the fact that Korea’s public pension system is not yet fully mature. More broadly, however, it points towards the need for social protection measures to provide increased support for older people.

Steps have been taken to broaden the coverage and increase the value of benefits under Korea’s social assistance scheme, the Basic Livelihood Security Programme (BLSP), though more could still be done. While recent reforms have successfully put an end to the “all or nothing” nature of previous BLSP benefits, the benefit level itself remains low by OECD standards and eligibility conditions – notably the family support obligation by way of which people whose close relatives (children, siblings, parents) would in principle be in a position to provide financial support – still affect older persons disproportionately.

Building an employment-friendly and cost-effective pension system is a key requirement for ensuring those entering retirement have an adequate standard of living while those who still want to work may be rewarded in doing so. Korea’s Basic Pension could be better targeted and the payment value increased in order to provide a more solid safety net. This is all the more important as retirement benefits paid under Korea’s National Pension have been significantly reduced to ensure the measure’s financial sustainability.

Measures could also be taken to extend both institutional and effective coverage of the National Pension. For many non-regular workers, employers are still managing to evade their obligations to document their workers formally and pay into the measure, similar to EI. Moreover, employers are required to insure employees only up until the age of 60, although the pensionable age varies from 61 to 65 (and will be 65 for all workers from 2033 onwards). Past age 60, employees can decide themselves whether they want to continue paying into the National Pension. Those deciding to do are effectively obliged to double their contributions to the measure in order to compensate for the absence of employers’ contributions, which puts off many low-wage earners. Many older workers thus work for a decade or more without extending their pension rights.

Further measures could also be taken to foster the implementation of retirement pension plans, notably among small and medium-sized enterprises (SMEs). Despite several government initiatives over the past decade to encourage the conversion of the mandatory retirement allowance into a retirement pension, the allowance continues to be used as severance payment throughout workers’ careers. More radical measures need to be taken to transform the allowance into a second pillar of the pension system. First, the age when the retirement pension can be drawn should be aligned with the National Pension pensionable age, and therefore should increase progressively up to age 65 (from 55 currently). Second, retirement pension plans could be made mandatory for all workers irrespective of their contract type and in all firms irrespective of their size. Early withdrawals should be possible but limited to specific circumstances (e.g. the purchase of a principal residence or expenditure on children’s education) and, upon retirement, workers should be given strong fiscal incentives to convert their entitlements into an annuity instead of claiming a cash payment.

The following policy actions could be considered:

• Broaden the coverage and increase the value of EITC. For EITC to be effective in reducing poverty for older workers, eligibility criteria and benefit amounts need to be revised. In particular, means testing criteria relating to real estate and financial assets are currently too restrictive for older workers and could be relaxed.

• Consider raising EITC payments for persons over 50 and improve the coverage of the EITC scheme among older self-employed workers. The very high poverty rate among older people relative to the rest of the population – and especially among those who are working – calls for a stronger focus on this target group.

• Take further steps to broaden the coverage and increase the generosity of BLSP. Benefit amounts remain low by OECD standards and the family support obligation still prevents many poor older persons from receiving BLSP benefits.

• Better target the Basic Pension and increase benefit amounts. These adjustments are essential to ensure a solid safety net for at-risk groups in the older population.

• Improve the coverage of the NPS among self-employed and non-regular workers and raise the contribution rate to achieve financial sustainability of the scheme. NPS coverage could be improved by increasing the penalties for employers who do not formally document and enrol their workers and by expanding the resources and mandate of the labour inspectorate to control compliance of employers.

• Foster the implementation of retirement pension plans, notably in SMEs. Retirement pension plans should be made mandatory for all workers irrespective of their contract type and in all firms irrespective of their size. In addition, the age when retirement pension benefits can be drawn should be aligned with the National Pension pensionable age, and therefore should increase accordingly.

Encouraging employers to retain and hire older workers

The willingness to work at old ages is very high in Korea, yet older workers bear the brunt of important inefficiencies in the labour market in terms of common wage-setting practices. A recent survey among Korean workers aged 20-50 years found that over 80% of respondents would like to work at least up to age 65, with over 30% of them seeking to retire at around age 70. Strikingly, respondents also expressed strong worries about their effective retirement age from their main job: over 80% have concerns that they will be coerced into retiring before age 60, and 56% even before age 55.

Addressing wage rigidities and mandatory early retirements

For older workers in Korea, the seniority-based wage-setting mechanism creates a gap between wage and productivity that, in turn, nurtures a culture of forced early retirement. Coupled with insufficient investment in skills development, such wage-setting practices are a major driver of early exits from the main job that also largely help to explain the precarious employment situation of older workers. However, this system does provide workers with the guarantee that they will receive relatively high earnings at a time when they will have to pay for the education of their children, provide financial support to their parents, and make pension contributions for their own retirement. High education costs coupled with weaknesses around social protection currently result in strong support among workers and trade unions for maintaining the status quo.

Various measures have been taken recently to prevent employers from setting mandatory retirement at ages lower than 60 years. While this is a big step forward, problems remain. First, this will put additional burden on firms by increasing the gap between the wage bill and their workers’ labour productivity, due to the high prevalence of seniority-based wage-setting practices. In the absence of any wage adjustments, the (overall) employment impact of this law is unclear and could even be negative. Second, “honorary retirement” which is formally voluntary can still be used by firms to bypass the new regulation.

In the short run, these issues can be addressed by the introduction of wage‑peak systems whereby the employer commits to maintaining older workers in their jobs in exchange for a wage cut that is partly compensated by government subsidies granted to the employee. To foster the take-up of such systems, these subsidies could be higher for low-wage earners. The redistributive effect of wage-peak systems needs to be evaluated; fine-tuning measures may be necessary to ensure vulnerable workers can benefit from the system. A well-designed system of in-work benefits is likely to be more effective in this respect while also being sustainable in the long term, unlike wage-peak systems that should remain transitory measures until reforms of wage-setting practices are rolled out.

From a longer-term perspective, the progressive implementation of a job-based system for setting wages and granting promotions is a key requirement for improving the labour market situation of older workers in Korea. The government is providing information and free counselling for helping companies to engage in a respective dialogue with the trade unions and the employers’ representatives. But compensating measures may be needed to find broader acceptance for reform among workers. The transition towards a job-based system may cause a loss in lifetime earnings for those who have been hired before that transition and paid according to a seniority-based system for a number of years. A rather simple response for firms to redistribute the accrued amount of deferred wages is to further postpone the age of mandatory early retirement. Hence, there is scope for the social partners to agree on a win-win strategy.

The roots of the problem may also include a lack of knowledge from key stakeholders regarding the market wage that could be applied for a given job that requires certain specific and/or general skills. In this respect, the progressive revamping of the National Qualifications System, based on the National Competency Standards, should provide an effective tool for recognising and validating the skills workers have acquired throughout their careers. This is essential for using, managing and rewarding the actual skills and competencies of the workforce more effectively and could support the transition towards more job-oriented wage‑setting practices.

Easing employment protection regulation and labour market duality

Improving the set of rules that govern layoffs and hiring is also essential to reduce Korea’s labour market dualities and improve the labour market situation of older workers. Although there are no statutory severance payment requirements in place and also no particular regulations around collective dismissal, individual dismissals of permanent workers are quite strictly regulated. This can be a strong barrier for vulnerable groups – including older workers – to retain quality work or to (re)enter the labour market.

Individual dismissals are allowed for urgent managerial reasons, an ill-defined criterion that is difficult to prove in front of a court. Therefore, layoff costs are difficult to predict for employers and can be high due to long and complex judicial procedures. Furthermore, if a dismissal is recognised as unfair, reinstatement into the old job is generally offered to the worker; this regulation is also likely to affect employers’ hiring behaviour.

At the other end of the spectrum, many non-regular workers are deprived of basic social protection and employment rights, as regulations and legal requirements are often not respected or well-enforced, most notably among SMEs. There is scope for reducing labour market dualities by improving the quality of non-regular jobs and other forms of precarious employment. This may require new regulations around fixed‑term contracts, temporary work agencies (TWAs) and non-typical work. In particular, the use of in‑house subcontracting should be restricted, while TWA regulations should be improved. TWA employment can open opportunities to improve the quality of non-standard forms of work, provided legal provisions are backed up with collective agreements. Experience from the Netherlands suggests that providing additional rights to TWA workers while opening up new business opportunities for TWAs can constitute a win-win strategy. But achieving this requires collective, well‑coordinated efforts by public authorities, employer representatives and trade unions. It also requires the TWA sector to be large enough to be well structured and organised, and led by large firms that are unionised.

Combating age discrimination

Korea has enacted laws to combat age discrimination. This should be complemented by other initiatives to promote age diversity, such as positive and affirmative actions. As the enforcement of legal rules is essentially based on discriminated workers’ willingness to claim their rights, public awareness and incentives for victims of discrimination to lodge complaints are crucial elements of an effective anti-discrimination policy.

In Korea, very few cases are brought before the relevant bodies, the National Human Rights Commission (NHRC), the adjudicative body, and the Ministry of Employment and Labor (MOEL), the enforcement body. Legal rules could be a stronger vehicle of cultural change if enforcement is not exclusively dependent on individuals deprived of their rights. NHRC and MOEL are empowered to investigate companies and organisations, but they cannot take legal actions against employers who operate discriminatory practices, their scope for action being limited to providing administrative guidance and making recommendations. The extent to which such non-binding measures are effective is rather unclear, also because the split of responsibilities and insufficient co-ordination between the two bodies complicate the task further. More should be done in this respect.

The following policy actions could be considered:

• In the short run, foster the introduction of wage peak systems by increasing the amount of subsidies for low-earners. This is crucial to help employers coping with the new legal requirement to postpone the age of mandatory early retirement in order to ensure that workers can retain their main jobs for longer.

• Proactively tackle the seniority-centred professional appraisal culture. This could be achieved by promoting the gradual implementation of job- and skill-based professional appraisal measures. To achieve broader acceptance among workers, the government could continue its support through compensatory measures.

• Reduce the uncertainty surrounding dismissal costs. Clarifying the definition of unfair dismissal and the modalities of reinstatement in case of unfair dismissal would make protection for regular workers more efficient, in turn reducing the incentive for employers to have recourse to precarious forms of employment.

• Restrict the scope for using lawful in-house subcontracting, while improving TWA regulations. A balanced reform that provides both additional rights for TWA workers and new business opportunities in the TWA sector could benefit workers and employers alike.

• Complement legal provisions against age-discrimination with an effective implementation body, which can take legal actions against employers who operate discriminatory practices. Legal rules could be a vehicle of cultural change if enforcement is not exclusively dependent on individuals deprived of their rights.

Promoting the employability of workers throughout their working lives

Maintaining the employability of workers throughout their working lives is essential to ensure that they can stay longer in their main jobs and retain good-quality work right up until retirement. For Korea, the challenge is threefold. First, as many workers begin a second career after retiring early from their main job, employment services and active labour market policies have an important role to play in helping them to make successful employment transitions or, at the very least, to minimise the implied costs. Second, from a longer term perspective, building an effective system of lifelong learning is critical to ensure that workers can use and upgrade their core competencies and skills throughout their working lives and stem the widespread practices of forced early retirement. Third, efforts to improve working conditions must continue to make working longer with full work capacity possible for older workers.

Expanding vocational education and training

The main challenge faced by Korea is to better link the education system, including vocational education and training programmes, with labour market needs. Driven by rapid technological advances and strong economic growth, business needs have changed dramatically over the past few decades. But older workers in Korea are not well equipped to deal with the new skill requirements, compared with both their counterparts in other OECD countries and younger adults in their own country. While this is partly due to Korea’s rapid economic growth, this also indicates that vocational education and training policies have not been responsive enough to this fast-changing environment. Nearly two out of three persons aged 55-65 in Korea have either no experience with the use of computers or (at most) very low familiarity with computer devices and applications. This is by far the highest proportion in OECD countries, raising concerns on the employability of older workers in productive and rewarding jobs.

Strikingly, the willingness to learn among older workers is very high in Korea compared to other OECD countries, as survey data demonstrate. Slightly more than one in five persons aged 55-64 report unmet demands for training, more than twice the OECD average for this age group. Korea would rank among the best-performing countries with respect to education and training for older workers if all these demands were met, whereas the actual participation rate is significantly below the OECD average.

Time-related constraints are a major obstacle to training participation in Korea (for all age groups), where being too busy at work is the most prevalent reason reported by workers to explain why they did not participate in any work-related training although they wanted to do so – at almost 40%, Korea’s share is the highest among the OECD countries.

The new guidelines on working time can contribute to ease these time constraints, but additional measures should be taken, notably for SMEs that often face labour shortages making it difficult for them to free up time for their employees to take training. In addition, SMEs often lack experience and training facilities to provide their employees with adequate opportunities to upgrade their skills and acquire new ones.

The National Human Resources Development Consortium (CHAMP) programme addresses a number of organisational and technical constraints faced by SMEs, as it provides financial incentives for large companies, business associations and universities to set up consortia for sharing know-how, equipment and training facilities with SMEs. Another important strength of the CHAMP programme is the provision of training that is relevant to the labour market, with a clear focus on practical and relevant work problems, since in essence this programme is based on a win-win strategy between training providers – most often a large firm – and beneficiaries.

Steps could be taken to further extend the CHAMP programme through specific measures, in close collaboration with the PES or Job Hope Centres for middle-aged and elderly people. For instance, the CHAMP programme could be backed up with support and assistance measures for SMEs to recruit a replacement worker for an employee on training, including public subsidies for hiring an unemployed person.

From a longer-term perspective, it is crucial to develop effective tools for measuring and recognising skills and competencies that workers acquire throughout their careers. The national qualification system has remained too focused on technical skills and does not constitute anymore an adequate screening device for employers, a proper signalling device for employees or a relevant policy tool for public authorities to evaluate skill developments and anticipate skill needs. The development of new National Competency Standards (NCS) is an important step forward as this is designed to provide a better picture of the skills and abilities that are required for various jobs and occupations at the industry level, in line with the competencies actually used and needed in the labour market. The big remaining challenge for the government is to operationalise and promote the effective use of the NCS. This requires a comprehensive package of measures to reflect the NCS in both vocational education and training provisions and qualifications frameworks to improve their labour market relevance. The reform process is underway, but more could be done to mobilise all relevant stakeholders, including training providers, employers’ organisations and trade unions, who will ultimately be responsible for the successful implementation of the NCS.

Strengthening public employment services and active labour market policies

The Public Employment Service (PES) provides a range of outplacement services and training opportunities to older workers. It mainly focuses on facilitating the matching between jobseekers and job vacancies, with less attention paid to monitoring job-search activities. As in many OECD countries, this matching function relies increasingly on online services, with public portals offering integrated employment services (Work-Net) and guidance for skill development (HRD-Net).

In addition, specialised employment services are offered for vulnerable individuals aged 40 and over. These Job Hope Centres for middle-aged and elderly people provide a wide range of re-employment services tailored to individual needs. Going beyond the matching function, counselling and guidance services are provided to older workers who need (re)training before starting their job search, and often lack the basic ICT skills needed to use online services. In addition, subsidies and counselling services are made available to firms providing outplacement services to their pre-retired employees. The government’s plan to make the provision of outplacement services mandatory for larger firms is commendable. Such change in legislation should affect medium-sized companies as well, maybe only excluding firms with less than 20 or 50 employees.

PES interventions, however, remain limited in scope. Korea’s spending on active labour market programmes (ALMPs), at 0.37% of GDP in 2016, is only somewhat lower than the OECD average of 0.5%, partly because of a low level of unemployment. However, much of Korea’s ALMP spending is for direct job creation while spending on training and employment subsidies is low. Moreover, spending on the administration of the PES, at 0.04% of GDP, is also just one-quarter of the corresponding OECD average. For the future, priory must be given to the most effective support measures for the unemployed, such as the Employment Success Package Programme. There is now compelling evidence that intensive job‑search assistance coupled with targeted training can have large positive employment effects, while direct job creation is found to be less effective in terms of a sustainable transition into the labour market.

Steps should be taken to reduce spending on direct job-creation programmes in favour of expanding and strengthening ESPP and second-career guidance for mid-career and older workers. Alongside an expansion of ESPP, the income support provided to those ESPP participants who are not eligible for unemployment or social assistance payments should be increased while the screening process for participants should be made stricter to assess and monitor work motivation more closely and provide job-related training tailored to their needs. Likewise, steps should be taken to strengthen early intervention measures provided to mid-career and older workers by Job Hope Centres in order to help them prepare for their second careers after mandatory early retirement. In particular, these measures could include a comprehensive assessment of skills and work experience complemented by additional training sessions when necessary and, most importantly, by a formal recognition and validation of acquired skills and competencies.

Tackling working conditions

Progress has been achieved recently in terms of lowering working hours and establishing occupational health and safety systems, but further steps need to be taken to improve the working conditions especially for older workers. Many of them are still working long hours and this age group has been facing an increasing risk of occupational accidents in recent years.

While the new guidelines on working time are an important step forward, the government should assess their implementation closely to ensure the expected outcomes are achieved, also in SMEs. Reducing working hours of older workers is challenging since, in practice, older people need to work long hours to make ends meet before their retirement. Adequate income support is therefore critical, while employers would also need to be provided with guidance and consulting services.

Beginning in 2016, the Korean government introduced a new allowance system for older workers aged 50 or above, which subsidises 50% of their reduced income if they work 32 hours or less per week. This allowance could be a significant channel to promote the reduction of working hours and to retain older workers longer in their main job. It may also provide more time for older workers to participate in further training to enhance their productivity. In addition, the government should introduce a system which provides older workers with the right to request a reduction of working hours for health reasons if necessary. The combination of legal rights and financial supports could lay a solid foundation, thereby facilitating the reduction of working hours for older workers.

In order to reduce occupational accidents and improve the health of older workers, specific measures should be taken tailored to their labour market situation. It is essential to ensure older workers are aware of the risk factors they face in their job – especially any new job – and know how to deal with or avoid those risks before they start a new job. Employers should take into account the physical and mental health conditions of their older employees to ensure the overall work environment, including machinery, working tools, work methods, support from co-workers and supervisors, and working hours, is well adapted to their health conditions. The government could also consider establishing effective systems for monitoring the health of older workers, in cooperation with local health institutions. In addition, steps should be taken to introduce employer-financed paid sick leave and a statutory sickness benefit to facilitate the return to (main) jobs by workers facing temporary health problems.

The following policy actions could be considered:

• Strengthen and expand the CHAMP programme through specific measures, in close collaboration with the PES and Job Hope Centres. For instance, the CHAMP programme could be backed up with support and assistance measures for SMEs to recruit a replacement worker, coupled with public subsidies for hiring an unemployed person as a replacement for the employee on training.

• Involve all relevant stakeholders in the implementation of the new National Competency Standards. Vocational education and training providers, employers’ associations and trade unions should be mobilised more effectively since they will be responsible for disseminating and implementing the new standards.

• Refocus ALMP expenditure on the most effective support measures. Steps should be taken to reduce spending on direct job-creation programmes, to strengthen and expand ESPP and early intervention measures for workers nearing retirement.

• Strengthen second-career guidance for middle-aged and older workers. Support measures should include a comprehensive assessment of a worker’s skills and work experiences, complemented by additional training sessions where necessary and alongside formal recognition and validation of acquired skills competencies.

• Monitor closely the implementation of the new guidelines on working time to ensure that the expected outcomes are achieved for all types of businesses, including SMEs. In addition, steps should be taken to provide older workers with a right to request reduced working hours if it is necessary for health reasons.

• Explore possibilities to establish an effective system for monitoring the health conditions of older workers, in cooperation with local health institutions. This would allow preventive actions whereby older workers could be informed about the risk factors they may face in their (new) job and provided with guidance on how to deal with or avoid those risk factors.

• Introduce a period of employer-paid sick leave and a statutory cash sickness benefit as discussed at length in a recent OECD report. Such measures would facilitate the return to the main job of workers experiencing health problems.