Starting from the theoretical-political paradigm of activation, the chapter analyses welfare reforms (focusing on pension and labour policies) in two European countries: France and Italy. Special attention is given to the intergenerational approach implemented in recent years, following international agencies’ recommendations. First evaluations of the devices put in practice to face employment problems affecting young and mature workers allow to develop some considerations on the ambiguity that characterize activation paradigm in the context of the global crisis, having produced a severe employment reduction and putting into question the validity of this widespread paradigm. In this context, the implementation of intergenerational measures seems to reveal little effects on unemployment rates for both young and older workers and on the availability of new jobs into the labour market. Nevertheless, they tend to improve the quality of work, reducing fixed-term contracts and allowing public finance savings. A cultural implication is also cited, referring to the change of perspective these measures may foster to overlap age discriminations in workplaces, as in public debate.
- activation paradigm
- intergenerational approach
- labour policies
- youth unemployment
- senior employment
1. Introduction: a look at demography and labour market dynamics
Last decades have been characterized by important demographic changes in Europe that will continue to produce effects for many times. The main change processes are: continuous population ageing, as a result of improvements in research on health care and in quality of life; persistent low birth rate, in consequence of difficulties in finding a job for young people; cost of housing; older age of parents at the birth of first child; and lengthening studies. The decrease in the number of young people that, for its size, has led experts to talk about the phenomenon of ‘deyouthing’ .
These trends are also visible in the structure of the projected population. In particular, the proportion of young people (aged 0–14) is projected to remain constant in the EU-28 area, declining from 15.6% of the total population in 2011 to 14.3% in 2060. The proportion of young people is projected to range between 11.6 and 18.1% in 2060. People aged from 15 to 64 years will represent a substantially smaller share, with a projected decline from 66.9 to 56.2% in the EU-28 area. The working age share of the total population is projected to remain below 60% in 2060. Furthermore, a similar increase is projected for the proportion of persons aged 65 and over. With the share of the elderly projected to rise from 17.5 to 29.5% of the population, they will represent almost one third of citizens by 2060 .
The worsening of labour market structure in consequence of the global recent crisis has doubled the negative impact of demographic issues. In fact, low employment levels and high unemployment rate, in the short run, increase the risk of poverty for affected workers, while in the middle or long run, they weaken the level of contributions for the social security systems and pay-as-you-go pension systems, even if the number of pensioners remains constant. This is why international agencies recommend national governments to promote economic activity among persons of a working age, both the younger, the most fragile group into the labour market, and the older ones, whose life expectancy has substantially increased. Experts suggest to pay attention to some synthetic indicators allowing to better understand demographic trend implications into the labour market.
A relevant index used to study demographic trends in relations to employment is the ‘total-age-dependency ratio’. It reveals the level of support given to younger (aged 0–14 years old) and/or older persons (aged over 65 years) by the working age population (conventionally aged 15–64 years old) and is expressed in terms of the relative size of younger and/or older populations compared with the working age population. The total-age-dependency ratio is the sum of the ‘old-age-dependency ratio’ and of the ‘young-age-dependency ratio’. The first, for EU-28, was 27.5% in 2013; as such, there were around four persons of working age for every person aged 65 or over. The old-age-dependency ratio ranged across the European member states from a low of 18.4% in Slovakia to a high of 32.7% in Italy. As a result, the old-age-dependency ratio in 2060 for the EU-28 is projected to more than double from its current level that represents an increase of 28.1% by 2060.
In contrast, the ‘young-age-dependency’ ratio is expected to follow a trajectory of small changes for all countries, either positive or negative. It is not expected to decrease significantly because the working age population—the parents’ generation—shrinks as well. Consequently the trajectory of the total-age-dependency ratio is shaped by the prevailing rise in the old-age-dependency ratio for all countries.
The global economic crisis started in 2008 has substantially changed the trends of growth and low level of unemployment having characterized the previous period. In many European countries, it led to a rapid increase of unemployment rates, in particular those of long term. In the European Union, the EU-28 harmonized unemployment rate averaged 4% from 2002 until 2016, reaching an all-time high of 5.30% in the first quarter of 2014 and recently decreased to 3.80% in the third quarter of 2016 .
The labour market main indicators confirm the crucial role of age in studying the future dynamics of employment.
In particular, unemployment and employment rates of the younger and the older components of the labour market show a recent improvement if compared with the rates of other years after the crisis. In fact, the EU-28 unemployment rate was 8.1% (19.969 million) in January 2017, down from 8.2% in December 2016 and from 8.9% in January 2016. This is the lowest rate recorded in the EU-28 since January 2009.
In January 2017, 4.017 million young persons under 25 (17.7%) were unemployed in the EU-28. Compared with January 2016, youth unemployment decreased by 357,000 in the EU-28 (19.3%). In January 2017, the lowest rate was observed in Germany (6.5%), while the highest were recorded in Greece (45.7% in November 2016), Spain (42.2%) and Italy (37.9%).
Employment rate of people aged 55–64 in the Europe has grown steadily to reach 51.8% in 2014, compared with 38.4% in 2002. In several cases, it has been the consequence of national reforms having increased retirement age. Figure 1 shows that the number of senior unemployed remained below the number of junior unemployed, at least until 2015, when mature workers started to experience unemployment at a higher level than the younger. The trend is inverted with regard to long-term unemployment. In this case the number referred to the senior is constantly higher than that of junior workers.
These considerations allow to understand that also the older workers may experience difficulties in labour market; especially once expelled from it, they struggle to regain a new contract. Over 55 participation to the labour market is lower than that of the younger. This is particularly true for women, as half of those aged 55–64 are inactive (50.2%, sets against 35.0% of men in the EU-28 in 2015).
Retirement is the main reason given by men in this age category for being outside the labour market, while the second is illness or disability. For women, also personal or family responsibilities represent a reason for inactivity.
2. Challenges and ambiguity of activation paradigm in welfare reforms
The increased risk of exclusion from labour market for everyone, in consequence of the world crisis, along with the progressive deficit of public finance, stimulates a more wide discussion on how welfare system may face this kind of challenges.
In terms of policies, starting from Lisbon European Council held in 2000, a new paradigm arose in European welfare system reforms, in search of a balance between public and private engagements and resources.
From a theoretical point of view, it has been necessary to rethink categories and values to assume as central in welfare systems, for example, social inclusion, considering all life course phases and not only the last one. This is signified to abandon a passive vision of individuals and a role of mere reparation for the state, which acts a posteriori, in favour of an active vision of individuals and interventions a priori by public actor in order to prevent risks. In this way, resources devoted to the welfare system may be seen as social investment more than an expenditure. An investment in citizens, in the development of their abilities and capabilities (according to Amartya Sen theories), in order to give them the tools to participate in an active way, to the economic, social and political life of the community they belong to, is the essence of the so-called activation paradigm, whose perspective implies that the whole welfare system enhances the role of all actors involved, along with the state: firms, individuals and families and social formations.
The described development, however, does not follow a single logic of retrenchment or retreat of the state in all European countries. Moreover, the changing forms of governance confirm the thesis of welfare state renovation paths characterized by reduced public responsibility for the delivery of labour market services, decreased funds for subsidies and an increased spending for active labour market policies aiming to reinforce employment and citizens’ responsibility through the principle of conditionality for having access to public benefits. All together this confirms a change in the function of the state within welfare systems. Now it acts more as a coordinator in networks of different kinds of actors (such as third sector, firms, associations) than as an administrator inspired by the logic of hierarchical intervention in assigning social rights and subsidies . However, moving towards an activation welfare state implies the emergence of an enabling state, able to provide measures and services supporting citizens in the critical transitions of working life. This represents a change in the nature not only of welfare but also of the state itself.
According to the guiding idea of activation, citizenship—to be a guarantee of inclusion, protection and well-being—is a function, first, of an active inclusion in the labour market but also the commitment in answering to the needs, tiered.
Actually, the most common definition of activation paradigm (widely affirmed by European guidelines1) is centred on the link between welfare and labour policies, so between social protection and individual paid employment. The great part of European welfare reforms state labour at the centre of citizenship and as a requirement for having access to welfare system services and benefits.
A feature emerging also from the Organization for Economic Cooperation and Development (OECD) definition of activation strategies  is described as aiming ‘to bring more people into the effective labour force, to counteract the potentially negative effects of unemployment and related benefits on work incentives by enforcing their conditionality on active job search and participation in measures to improve employability, and to manage employment services and other labour market measures so that they effectively promote and assist the return to work’.
OECD and the European Commission encouraged member countries to implement effective activation strategies for the unemployed, since the evidence showed that they would help cut unemployment and boost employment. They also argued that, if suitably modified, it could be the case for adopting activation strategies also to favour other categories of citizens, to promote their working potential, for example, inactive people, or people affected by chronic diseases, disabled, early retired and sole-parent or social assistance recipients.
In particular, a series of OECD and European Commission country reviews of the implementation of the Jobs Study recommendations and the European Employment Guidelines, together with academic research, has stimulated a scientific debate on the definition of activation. A key paper written by Coe and Snower , for the first time, makes evidence on the potential for complementarities between policies and institutions in the fight against high and persistent unemployment [7, 8]. The evidence suggests that effective activation regimes work in the sense of assisting the unemployed to get off benefits and into work but also the inactive to find a job. Several empirical studies stressed the complementarity between Active Labour Market Policies (ALMPs) and unemployment insurance and related welfare benefit systems, suggesting a more complex definition of the so-called activation paradigm. It requires the involvement of a plurality of actors (public and private) and their coordination (at central and local level), in order to reach the higher number of people out of the labour market. A much richer view of activation encompassing the interactions between unemployment insurance systems, ALMPs and benefit conditionality insists also on the enlargement of group target for activation policies. This was fully articulated by OECD and taken on board in the later iterations of the European Employment Guidelines .
Early successes with activation strategies suggest that they can contribute significantly to mobilize benefit recipients back into employment, which is key both for reducing benefit spending and for shoring up government revenues, now and in the longer term. Comparative studies (see for example ) revealed that, in the long run, activation policies are successful in (re)inserting unemployed into the labour market, while less effective results have emerged for employed career progression. In most of the OECD countries, population ageing and the associated pressures on public social expenditure make a longer working life a key element of policies aiming to restore the fiscal sustainability of social protection systems.
Activation strategies were primarily developed for people receiving an income-replacement benefit, to enforce a principle of individual responsibility and reduce benefit dependency and long-term unemployment (and opportunistic behaviours sometimes linked to it, such as irregular work) and, finally, to make employment services and social security system less expensive. Elements of these strategies typically originated in countries with universalistic or more generous welfare systems. By contrast, countries with less generous welfare systems tend to invest relatively less in activation measures.
Beyond the outlined general and convergent changes due to the paradigm shift, however, this latter has been traduced into practice in different ways, in countries characterized by different welfare regimes. For example (referring to the countries here analysed), in the conservative welfare state of France and Italy, changes mainly entail a reduction in welfare benefits and a promotion of flexible forms of employment. On the background of still high unemployment rates, it seems that there is not a dominant strategy inspired by activation principle. In Italy, this is closely related to a low capability of reflexive governance, which is due to the contradictory family models followed in different policy fields. In France, integrated active labour market policies are conceived within the rigid normative framework that historically characterizes this country, with limited capacity of work creation.
The economic crisis has given rise to a severe employment reduction, putting into question the same activation paradigm. In particular, ‘which kind of activation is possible without job opportunities in labour market?’—a question particularly crucial for some categories of workers considered ‘weak’, like the younger and the older ones. As said above, although for different reasons, all these groups suffer problems due to age. The questioning of activation paradigm highlights a sort of ambiguity of this kind of policies, synthetizing in three dilemmas :
The paternalism dilemma: activation in labour market policies constrains individual choice, if the required full employment as a one‐fits‐all solution ignores individual preferences and choices. This is particularly true for persons with care responsibilities which cannot be completely de-familized (this is particularly evident in Italian familistic welfare, charging of care responsibilities not only women but also old people).
The structural dilemma: supply‐side oriented, strictly individualized activation approaches ignore structural labour market problems and often result in eroding employment standards and low job quality. A consistent industrial policy, aiming to increase the number of job available into the labour market (demand-side policies), needs to be implemented as a complementary to other activation policies.
The implementation dilemma: activation is a complex and costly policy strategy. Costs depend from the range of beneficiaries, as well as from the level of service personalization and from the integration of activation policies with other ones, for example, those related to families, in order to avoid inconsistent incentive systems. For reasons of cost containment, policy makers usually opt for partial reforms cutting the effectiveness of the same policies.
Another source of tension may emerge from the theoretical framework of activation, for example, concerning the power of social inclusion of work. Activation paradigm is based on two assumptions: unemployment is tantamount to exclusion, but inclusion is equivalent to employment. This latter is not a homogeneous group, and therefore it is not always able to positively contribute to the realization of corporate citizenship; not all the work is employment (just think of the voluntary work, the activities of informal care, the actions of reciprocity inscribed in a community). Inclusion is neither a unique nor a static concept; you can disconnect between autonomy and pursue employment , and this is especially true in a context of high flexibility of work.
Furthermore, the experience of the last decade in different territories clearly showed that activation policies are effective in dynamic environments and aimed at full employment. They are thus fragile if not properly integrated with other types of policies, also passive, when these optimal conditions are missing, and this may have significant effects on welfare financial sustainability. In this sense, the international economic crisis and the heavy impact on employment make it quite clear the aporias of the model.
A last consideration concerns the role of training policies. According to the activation paradigm inspired by a social investment perspective, training, lifelong learning and the relative investment in human capital must be considered as priorities. But defining for what purpose (employability vs. empowerment) and for who (target beneficiaries) to design training measures appears rather difficult, because the highly differentiated groups in need are in and out of the labour market.
These tensions and dilemmas are answered in different ways by governments according to path‐dependent contextual settings in each country. However, they lead to think that, under some circumstances, citizen activation into the labour market could limit citizen’s autonomy than enhancing it and contradicting activation principles and aims. Thinking about how to encourage citizens to participate more actively and to avoid paternalistic treatment requires a more fundamental reform of the policy toolkit. For example, some practices have highlighted the need for more transparency and information policies, mechanisms of participation in implementation and decision‐making processes, especially with reference to selected disadvantaged groups of citizens.
Hereinafter the chapter will analyse activation policies addressed to young and mature workers put in practice by two countries, France and Italy. These cases are interesting because of their intergenerational approach to labour policies, proposing common solutions for the two groups (i.e. the contrat de generation and the staffetta intergenerazionale). Before this, a short reflection on the main criticalities affecting younger and older people in (re)entering and remaining into the labour market is presented. This is especially in order to dispel some stereotypes on age and describe the approach recommended by international agencies.
3. Age as a source of discrimination into the labour market
Political issues concerning the position of young and older workers are often described as the insider-outsider problem. The insider-outsider theory is concerned with the conflict of interest between insiders and outsiders in the labour market. Outsiders are those individuals who incur a particularly high risk of being in atypical employment or unemployment during their work life. This risk is measured on the basis of specific rates of unemployment and atypical employment of social groups defined by class, gender and age. Considering institutional context, in particular with reference to the social protection system, the said risk is stronger, which spreads in Southern Europe regimes, especially for women and young people, given their male breadwinner tradition . When considering the labour turnover costs (LTCs), the following perspectives are defined: (i) the insiders are workers whose positions are protected by LTCs; (ii) outsiders, who have no imminent prospect of such protection (e.g. the unemployed, workers in the informal sectors and inactive individuals); and (iii) entrants, who hold jobs that may lead to insider status. Following this perspective, as people’s duration of employment rises, the labour turnover costs associated with their positions often rise as well. Consequently, the greater their seniority, the more protected their positions become. Similarly, as people’s duration of unemployment rises, their connections with their previous colleagues and employers often fade and the more difficult it becomes for them to compete for the available jobs .
Since the young have more frequently flexible and insecure labour contracts, they are defined as outsider; on the contrary, older workers are considered the insider. Nevertheless, welfare systems reformed on the basis of activation paradigm expect workers to act more responsibly, to be employable, flexible and mobile. Individuals who have the most difficulty meeting these new expectations (especially those possessing obsolete skills or a low level of expertise) run the highest risk of welfare losses . In this case, the younger may appear as the insider and the older the outsider (respectively, the higher and the lower educated). This consideration reveals the complexity of the problems; age is not the only one feature to define who are the insider and the outsider, but this condition of vulnerability affecting both the two groups of workers, although for different reasons, may become an incentive to ‘cooperate’, to accept and to try shared solutions .
With particular reference to the young, their general condition of weakness in labour market and in society has origins in the evolution of historical, economical and political context where the generation of the current 15–29-year-olds grew up—a context that, unlike the one where their parents (now older workers) lived, presents:
Greater market instability and less possibility of control for the public actor
Greater flexibility of labour relations, often accompanied by a lower continuity of employment and contribution payment, as well as lower wage levels
Poorer distribution of the income and downsizing of welfare systems and social protection
Increasing tendency to shift the economic-social-insurance risks from companies to workers and from public to private, with more instability in work and social relations
Lower correspondence between job opportunities and level of attained education
Higher costs for pension transfer between generations, only partially attenuated by the systematic introduction of immigrants in the labour market
Young people are one of the most vulnerable groups in the labour market because of the absence or shortage of work experience. For this reason, the passage from school to work may become critical, and if prolonged, it could increase the risk of unemployment. This is an issue that young people in most countries of Europe have in common, where the rate of youth unemployment is systematically higher than that of adult population and tends to reduce with the increase of age. At the same time, the rate of youth unemployment everywhere is greater than the overall unemployment rate; young people are the major holders of fixed-term labour contracts and so the first to lose their jobs during periods of crisis. However, highly diverse situations have arisen from the comparative analysis.
Generally, hardships among the young seem to be more marked in the countries of Southern Europe due to both the deficiencies of the entrepreneurship system and to those of welfare system that (especially in Italy) tends to consider the family as the social structure of the last instance in critical situations. On the one hand, this factor mitigates the consequences of the hardships of the young, but on the other hand, it delays transition towards adult life, promoting an intergenerational transmission of disparities, and especially inequality, in entering into the labour market. People tend to view younger people as energetic and comfortable with technology, in opposition to middle-aged and older workers seen as experienced, family oriented and more reliable than younger workers .
At the extreme opposite of professional life, older workers encounter difficulties especially when expelled or when they risk to be expelled from the labour market.
A series of stereotypes are diffused on seniors, concerning, for example, the lower flexibility in the performance of their work (especially for those with experience in highly structured organizational contexts), the greater exposure to a precarious state of health, and also the fact of having less familiarity with the use of new technologies and access to continuing vocational training. Indeed, there is a lesser availability on geographical and occupational mobility, as well as the time constraints, especially if there are minors or impoverished persons to be cared for within the family. Still, older workers are often more expensive owing to pension payouts and particularly seniority wages [16, 17].
Research dealing with the re-employment of older unemployed repeatedly concludes that age has a negative effect on the chance of finding a job [18, 19]. Consequently, older individuals may have to end their career more than once, making the transition from unemployment to retirement . Moreover, several authors agree that older individuals experience considerable wage losses in comparison with the previous job .
In this sense, if we compare this situation with that of the youth sector, the later prevails, especially when connected to the possibility of drawing up contracts which are more convenient for companies from the tax and economic point of view. Furthermore, in some cases it may prove vital for some mature workers to continue working in order to ensure a decent lifestyle, due to the insufficient income from their pension. Indeed, as already said, many countries have cut pension payments because of the financial crisis of the social security systems, forcing workers to postpone the age of retirement not only for the new generations but also for the 50-year-olds of today.
Considering demographic trends and the lack of public resources, the European Union suggested national governments to adopt an intergenerational approach, and as already said, as a consequence some of them have recently introduced initiatives seeking to foster intergenerational partnerships in the labour market.
4. Intergenerational approach legitimized by international agencies
Although intergenerational policies have been recommended by the European Union since 1993, studies on what has been implemented (number, type and success of programs) are scarce. Projects involving youth and senior are not easy to realize, and the limited understanding of conditions conducive to success further reduces the tendency of governments to adopt initiative favouring intergenerational relations. This is more true considering interactions into the workplaces, where the theme is intended to increase its importance in consequence of ageing processes and national policies rising retirement age. Just think, for the first time ever, four distinct generations share the workplace: the silents (mid-60s and up), baby boomers (mid-40s to mid-60s), Xers (mid-20s to mid-40s) and millennials (the newest workers). As we will see later, government may enable companies to deal with a multi-aged workforce through legislation.
The adoption of an intergenerational approach to deal with the labour market criticalities emerged in European debate more time ago. The 2005 European Green paper ‘A New Solidarity between Generations faced with Demographic Changes’, for example, recommends to consider the problems related to older workers in strict correlation with those encountered by the young entering the labour market or looking for a stable job. It proposes to interpret ageing not in terms of a trade-off between the insiders-outsiders citing demographic forecast and political economic analysis. In fact, over the next 25 years, in Europe, there will be an annual increase of about 2 million people over 60 years of age, which number was flanked in 2014 by a reduction of about 1.5 million people of working age as a consequence of the decline in the birth rate. In short, the incoming labour workflow from the market will not be sufficient to compensate for the estimated outgoing.
Whereas economists consider the supposed trade-off between young and old workers as a fallacy, because economies are not static and the number of (full-time) jobs is not fixed, economic theories stress the importance of policies aiming to increase the available supply of jobs in the labour market . They tend to recommend to avoid early retirement practices, because they may reduce unemployment in the short run, but in the medium and long periods, they may produce adverse consequences, such as lack of workforce, consumer price growth and reduced aggregate demand. Conversely, increasing the average age of labour market exit may increase the size of the labour force and boost unemployment, also for young workers . Finally, important explanatory factors pertain to general labour market conditions. When the economy is expanding, new jobs are created for both the young and the old; the opposite is true in crisis time [24, 25].
Indeed, European Union experts highlight the benefits deriving from the presence of both groups in the world of work. The decision of seniors to work longer or with less intensity, for example, can favour the work-life balance of young people. We read, ‘It is possible that active young people want more time to dedicate to their children and perhaps they want to work during another stage in their lives. The demographic changes can therefore contribute to a new work organisation that is more adaptable and flexible’, promoting the management of career paths differentiated according to age, as well as the number of years worked. In the latter case, tools such as competence balance and career assessment for workers between 40 and 50 years of age have been experimented in a number of European countries with significant results. Furthermore, we see how ‘technological developments offer all the groups the possibility of better conciliating the presence of older and younger workers in the workplace, as well as better conciliating family and professional life’. In particular, a crucial role for seniors in the coming years is assumed, as it forms a junction between the generations of active pensioners in significant numbers and in reasonably good health and generations of young people with a (working) present and a (retirement) future with decidedly fewer benefits and guarantees. In this regard, in addition to limiting the cases of early retirement and the extension of pension age, an option of advanced integrated policy aiming at intergenerational solidarity has also been put forward, providing for the renunciation of a part of the pension resources (to the levels where this is possible) in favour of the strengthening of family services, including education and training, together with incentives for pension-work accumulation schemes. Similarly, in the Proposal for the Joint Report on Social Protection and Inclusion 2009, the Council of the European Union states that the national systems should guarantee an adequate minimum income, considering the changing context of the redistribution of income between and within the generations. ‘It happens that a large percentage of families consisting of pensioners has a per-capita income which is equal or higher than that of young married couples, both with jobs and with children’. This prompts a more sophisticated reassessment of the problems of distribution of social security than simply increasing the rate of pensions as an end in itself, requiring instead the creation of a complex and global system, based on the consideration of many variables and of the life cycle.
The International Labour Office has also entitled one of its recent analyses ‘Young and Older Workers: Two Sides of the Same Coin’. The goal is to underline the need to govern the presence of different generations at work, young workers cannot always easily substitute older workers, and these ones have the right to move to a well-deserved rest when private life and economic or retirement conditions make it possible.
In the specific context of global crisis, international observer as OECD, in 2013, noted that certain groups, most notably low-skilled young men, are doing particularly poorly in the labour market. By contrast, older workers have weathered the crisis better than in previous deep recessions, but this did not come at the expense of youth. Therefore, governments are invited to pursue strategies that will improve employment prospects for both younger and older workers, including through growth-enhancing structural reforms and targeted active labour market measures to help those in both groups with specific problems in entering or staying in employment. In particular, an innovative approach is suggested, aiming to promote intergenerational relations in workplaces. This kind of interventions usually aims to strengthen complementarities between youth and older workers. In particular, the specific goals are to support intergenerational handover (with reference both to the position of company employee and owner), accompanied by training; to increase youth employment; and to prolong senior working life. Advantages are expected for all parts: the young to enter the labour market more smoothly, the older to exit the labour market gradually, firms to remain competitive (thanks to a more efficient age management) and finally governments to collect and save more tax revenues (paid for young unemployed and early pensioners).
Examples of policies promoted in a similar way, seeking to strengthen complementarities between youth and mature workers, envisage the transfer of competences between older and younger workers or the creation of jobs for youth maintaining older workers in employment. Their success derives from an interplay among actors representing different institutional levels and the convergence of interests. Indeed, advantages are expected for all parts: the young to enter the labour market more smoothly, the older to exit the labour market gradually, firms to remain competitive (thanks to a more efficient age management) and finally governments to collect and save more tax revenues (paid for young unemployed and early pensioners).
While little is known about the effectiveness of these schemes to create jobs for youth and retain older workers in employment, they seem unlikely to have played a major role so far . Even though, as we will say in final remarks, this could be a source of weakness, it is possible to recognize that the main value of such schemes is to foster a culture of greater cooperation across age groups and institutional actors.
This work will cite the cases of France and Italy where welfare reforms (in particular concerning retirement and labour) have provided pacts and programmes cross-generations.
5. Labour policies cross-generations in practice: two attempts
5.1. Intergenerational policies in France
Ageing process is particular evident in France where old-age-dependency ratio2 was 28 in 2013, and it is projected to increase of 15 points until 2060 , along with the economic old-age-dependency ratio3 (+18). France has seen progress with respect to ‘young senior’ (55–59 years) employment rate, which has reached 67.1% in 2012, higher than the international averages. By contrast, employment rate of people aged 60–64 (21.7%) remains far below European average (32.2%). Employment rate of workers between 44 and 64 years remains below 40%, far from the European level (46%).
The French case is interesting because the government has developed a regulatory system for enterprises, in order to improve the functioning of the entire labour market, adopting a long-term perspective. The regulatory provisions, inspired by the European Union’s recommendations, as it will be better explained hereinafter, are operational and provide precise directions on how to set human resource management policies and tools, aimed at preventing that age represents a factor of discrimination into the labour market and into firms. The approach clearly tries to enhance employment opportunities for the younger, while retaining the older into the workforce.
In the last decade, French government has developed labour reform aiming to face difficulties of different groups of workers due to age.
In 2003, pension reform changed the requirements to qualify for a full pension (from 40 to 41 years and three quarters), from 2009 until 2020. The 2010 reform provided, between 2011 and 2017, the rise of age for pension entitlement (from 60 to 62 years) and access to the full rate (from 65 to 67 years). Public funding for early retirement has been abolished.
In 2006, French government launched the ‘National Action Plan for Employment of senior 2006–2010’. This has required that, by the end of 2009, companies with more than 300 employees have to enter into agreements to improve seniors’ employment, both increasing their number through targeted recruitment processes and improving their permanence in enterprise through internal management measures by dedicated staff. Firms with 50 employees could, and still can, be limited to adhere to a sectorial agreement.
This last must correspond to a minimum commitment schema, indicating at least three measures (i.e. recruitment of older workers, improvement of working conditions, skills development, transmission of knowledge and promotion of mentoring), accompanied by a quantified objective.
To promote the observance of the device, from 2010 the law also provides a penalty of 1% of the total salary (paid in addition to the contributions of pension provision), for companies with over 300 employees who do not conclude the said agreements. Smaller businesses are exempt, provided they enter into an agreement in the productive sector to which they belong to.
The 2009 law of social security funding, for example, establishes sanctions for companies that do not draw management plans by age, while the law on vocational training reform of the same year introduces the obligation of mid-career professional evaluation, in order to programme the second part of the career, considering ageing of the worker, the principle of equal access to training for all categories of workers, the establishment of tutoring programmes for workers over 55 as well as ‘flipped’ tutoring in which junior workers transfer skills to the senior.
In 2013,4 French government introduced the ‘contrat de génération’, a tool dealing simultaneously with young insertion and older retention in labour market. It is an innovation, part of the government’s battle against unemployment and precariousness, particularly that of the youth (in France, one of two workers under 26 has a fix-end contract). The guiding idea is that it is the alliance of generations that will empower French economy and society. Firms risk to lose senior workers’ experience and, at the same time, may take advantage from up-to-date young workers’ knowledge, especially concerning technologies (hardware and software). Generation contract may create the conditions to improve the skills available for companies, along with the quality of relations in workplaces (at least this is the purpose). By 2020, more than five million active people will be retired, and in parallel, nearly six million young people will make their entry into the French labour market; therefore, anticipating the renewal of skills is a social and economic necessity that the generation contract seeks to ensure. In practice, with this contract, a young person is granted an open-ended contract against a new part-time work contract for a senior worker, thus allowing more sustainable and likely permanence at work and ensuring transmission of knowledge and skills within the company. According to this measure, a contract would be signed between an employer and two employees: a young person under 30 and a senior over 55. The employer would commit to training the young employee, benefiting from the experience of the senior, who would spend part of his time (25 or 30%) training, mentoring and guiding the young employee. The measure would be reserved for young graduates in order to act as an incentive to employment in industry avoiding the demotion of qualifications for young people who have difficulty finding jobs when they graduate.
The French law allows particular ways to apply ‘contrat de génération’, according to the type and to the size of the company.5 Firms with more than 300 employees have to sign a specific agreement stating contract conditions and engagements for all actors involved. Penalty is put into action if the terms negotiated are not respected. Medium and small companies can benefit from a tax concession for signing permanent contracts with people under 26 while maintaining a corresponding older employee aged 57 or over in work or hiring one over 55. Government subsidy amounts to 4000 euros a year for 3 years and for medium-sized companies is conditional on having a specific collective agreement, while this is not required for small firms.
The goal is to have 500,000 young workers hired during 5 years in small and medium companies.
Moreover, the ‘contrat de génération’ had foreseen benefits according to the number of seniors in the company. Benefits will be progressively increased between 2013 and 2016 starting from 180 million euro in 2013 to 920 million euro in 2016.
Evaluation reports [26, 27] allow to reflect on the impact of the generation contract on the target workforce and on the achievement of its goals. Data show about 45,000 contract signed at the end of 2014 (16,705 in 2013, 16,300 in 2014, 12,000 in 2015). About 80% of the assumptions involved young male workers, while senior recruitment occurred mostly in small businesses and in the cases of enterprise ownership, especially in agriculture. On average, the contrat de génération saw the pairing of a young worker already in business (one in two) to a senior with qualified work in the same firm. The sectors more involved have been construction, engineering, trade and agribusiness.
One third of the requests are made by companies with more than 50 employees.
About 21% of the generation contracts signed in 2013 and 23% signed in 2014 were broken in their first year, while 20% of the 2013 contracts were broken in their second year; most often (75%) the departure was of the young worker, especially (55%) to move to another company, while 58% of contract broken by the senior are due to retirement. The report underlies that these breakdown rates are lower than those recorded for ordinary contracts with indefinite duration (for the same cohort, young people from 15 to 24 years).
A study  presenting an ex ante simulations of the effects of the ‘generation contract’ provides interesting conclusions, because it is in line with the first evaluation results. In particular, the study shows that the impact of the contrat de génération is mostly on young people, with 30,000 unemployed people avoided, but also seniors who are kept in employment longer with the measure, with 5000 fewer unemployed and 14% of the unemployed avoided, thanks to the programme.
There is also an effect of decreasing youth unemployment. However, this effect is small, 0.38 points on the order unemployment and 0.03 points on senior unemployment. These effects were not predicted in the impact study, but the ambition of the law suggested a substantial effect. On the other hand, the contrat de génération improves the career path of the beneficiaries in terms of employment (more permanent contracts and fewer fixed-term contracts), which was an ambition of the programme. In addition, the gross cost and the net cost per unemployed person are less than the cost of social benefit systems.
The contrat de génération thus represents one more tool to enhance the age factor in enterprises workforce, balancing the representation of young and old, in a win-win relationship, where everyone can benefit, including the company.
For this reason it is an innovative tool of labour policy saw with interest by other European countries, such as Italy.
5.2. Intergenerational policies in Italy
Italy registers a low level of older worker participation to the labour force, compared with European average. Although it has increased over the time, in 2013, it was 48.4% (56.6% in Europe) . The rapid increase of ageing processes is evident looking at the evolution of old-age-dependency ratio (33 in 2013 and is projected to grow of 20 points until 2060) and of the economic old-age-dependency ratio (57 in 2013 and is projected to grow of 22 points until 2060). The great part of improvements is the result of reforms implemented in the last decade, particularly concerning pension policy.
The promotion of active ageing policies and related employment policies is a relatively new area of intervention in Italy. The majority of actions in favour of mature worker employment have been implemented at regional or provincial level within the context of ESF Regional Operational Programs.
At national level, a 2004 reform has enabled the introduction of a salary bonus to encourage seniors to continue their activity. By 2012, pension reform provided a shift in retirement age from 65 to 66 years, for both men and women and financial disincentives for who choose to retire before the age of 62, early retirement is possible (with reduced benefits) only after accumulating 41 years of social contributions for women, 42 for men. Reform has also established the transition to the contribution system for all workers. Despite these efforts, the employment rate of people aged 55–64 is 10 points lower than the European average.
Concerning the younger component of labour force, in 2011, as in the rest of Europe, a Youth Guarantee Plan has been launched, and agreements with the Ministry of Labour and Social Policy for the transfer of European funds have been signed by some regions. Plan foresees several services aiming to reinforce employability of weaker young people in labour market, and it allows to increase significantly Italian investment on activation policies for this target of people.
As in France, also in Italy, a programme is in place, since 2007, to promote solidarity agreements between generations (Law 296 of 27/12/2006). Thanks to this programme, the reduction of working hours from full time to part time for a worker close to retirement is matched to the employment of a young worker (under 25 or 30 if graduated) with an apprenticeship or fixed-term contract, by which firms’ employment balance should be positive.
Moreover, most policies have been traduced in local initiatives and projects carried out on a small or medium scale. The first initiatives originated from the regions of Friuli-Venezia Giulia and Lombardy. The former region provided specific funding devoted to ‘expansive solidarity contracts’, for example, corporate agreements between workers of different age. Agreements, which may also count on resources from the Ministry of Labour and on technical assistance provided by a Ministerial agency, Italia lavoro, will allow senior workers (the over 50s) to enter into part-time employment in return for the recruitment of young people on training contracts. The ultimate goal is to increase youth employment balancing the needs of younger and older workers in a perspective of intergenerational solidarity. Thus, with the intake of young people on apprenticeship and/or permanent contracts, it is the region that will pay integration contributions to National Institute for Social Insurance (INPS) on a voluntary basis for the benefit of those employees, of the same company, who voluntarily accept a part-time contract. Local agreements with social partners identify possible target sectors, companies and workers that shall participate in the project.
In December 2011, Lombardy Region, Assolombarda (the association representing firms’ interests at regional level), and INPS launched an experimental version of the ‘generation contract’, during 3 years, in the provinces of Milan, Lodi and Monza-Brianza. Recipients of the initiative are, on the one hand, those workers who will reach their pensions (both seniority and old-age pensions) in less than 36 months and, on the other hand, young people who are at least 18 years old. This experimental procedure entails transforming full-time employment contracts into part time (either horizontal or vertical), with a reduction of as much as 50% in work hours. The agreement signed between employee and employer on a voluntary basis must in any case be formalized and concluded with the trade unions at the competent Conciliation Commission setup at Assolombarda. Following the signing of the agreement, employer shall hire a young person on an apprenticeship contract or another kind of permanent contract, so as to produce a positive employment balance. Workers may also take advantage of training interventions entailing professional reorientation or coaching, as well as a transition path towards new realities, while firms may renew their personnel without losing the competences and firm-specific expertise. The coordination between local and central administrations is crucial in the context of this policy. Through joint agreements, they manage financial resources necessary to compensate the lower social security contributions paid by older workers with the part-time contract.
A new experimental version of the ministerial decree will be implemented in Lombardy in 2013 for a period of 3 years. In this case a limit has been introduced to the reduction of working hours in the senior contract hours; it should not exceed 50% of the previous working time. During this experimental phase, the ‘generation contract’ programme is expected to involve a total of 250 workers.
Another project is the AMVA, ‘Apprendistato e Mestieri a Vocazione Artigianale’, launched by the Ministry for Labour and Social Policies realized by Italia Lavoro agency and partly funded by European Union (European Social Fund (ESF) PON 2007–2013). The goal is to promote the generational turnover in the sector of handcraft and artistic professions, in favour of young unemployed (15–35 years). The project is articulated on two innovative measures. The first, named ‘Botteghe di Mestiere’, assigns financial incentives for entrepreneurs offering apprenticeship positions to young workers (18–28 years). They receive a monthly amount of 250 euros per apprentice, while young worker receives 500 euros. This project tries to maintain and perpetuate the know-how characterizing the ‘Made in Italy’ economic sector from a generation to another, considering the progressive desertion of young workers from the most traditional jobs representing Italian competitive economy. This can be particularly beneficial for the smallest firms, or self-employed workers, without resources to finance skills renewal.
The second measure within AMVA, ‘Impresa Continua’, aims to accompany entrepreneurs older than 55 years in the transfer of their enterprise to a young (18–35 years) aspiring to become entrepreneur.
Indeed, two similar interventions have been promoted in Sardegna and Veneto Regions.
In this case, no evaluation reports are available, but regional experiences have not led to a definite model of intervention, nor employment or unemployment rates of the groups studied have significantly improved. Funds invested are still scarce, and the continuous changes in regulations, especially on pensions, discourage workers to adhere to a cross-generation programme. Nevertheless, the government has renewed the importance of an intergenerational approach in labour policies, following the European Union, having affirmed the centrality of active ageing realized through an intergenerational approach in its financial planning for the period 2014–2020.
In particular, Italy’s 2016 Stability Law has reinforced a system to encourage ‘intergenerational staff turnover’ in companies. This would allow for knowledge transfer from older to younger workers and a phased, flexible movement into retirement for those close to the end of their working lives. The new law also regulates the so-called solidarity contracts that allow employers to reduce the working time of older workers while preserving their social security benefit entitlement, so that new, younger workers can be employed on permanent employment contracts. To do this, the law establishes a link between paritarian solidarity funds, paritarian institutions and employers to ensure that workers whose hours have been reduced under the measure do not lose the social security contributions that would have been calculated and paid on the share of their lost wages.
This paper moves from the assumption that achieving a high level of employment may help to contain negative implications of ageing processes on public finances for welfare policies. Indeed, ageing intensifies relations between generations not only within family but also within firms and, more in general, in labour market.
In the last decade, the study of intergenerational relations in organizational contexts has regained importance, both in political discourse and in academic research not only in Europe but all over the world. Generally, measures were collocated within the diversity management practices, founded on the idea that each generation has skills and talents that may complement one another and leverage an engage workforce leading to higher productivity and a competitive advantage.
However, labour policies supporting intergenerational relationships in the workplace remain still relatively underdeveloped.
Country case studies described above point at some innovative and targeted policies for both groups, the younger and the older workers with training programmes featuring prominently. They mainly focus on mentoring programmes and job sharing to promote productivity, reduce generational tension and enhance work satisfaction, with the consciousness that overall employment performance is driven by the institutional framework and economic growth, rather than particular active labour market policy measures. Then pension reforms, labour market regulation and vocational training schemes represent important explanatory factors in this respect, but not a substitute for job creation. Has said in the first part, in fact, policies for sustaining economy growth and an enlarged labour market are the most efficient policies to counteract unemployment, while activation policies are worthy of complementarity. These latter, traduced into practice in France and Italy, have confirmed the challenging but also the ambiguity emerging in their theoretical framework, as stated in paragraph 3. In particular, both France and Italy have not reinforced policies aiming to create new jobs; they have given priorities to the pension policies and measures to make more flexible labour legislation. France, however, has conceived an integrated policy system that improves the opportunities of lifelong learning for all, especially for groups of workers traditionally excluded, such as the older. Also the stressed role of training in the contrat de génération is a distinguishing feature aiming to reduce inequalities in the workplaces due to the lack of competences.
The main critics moved against innovative policy tools presented, such as the contract between generations, that they do not increase the number of jobs available on the market, but on the contrary, they simply aim to maintain existing employment, without effect in reducing unemployment. For Ref.  ‘It could be considered an incentive for employers to train young people using their senior employees. However, it risks to continue extending substandard work contracts and insecurity to a population with a higher and higher level of education’. So he concludes that the main challenge for employment policy in today’s crisis is to invent and promote a new professional status for the entire body of active people based on quality employment, the value of work and more secure professional pathways. But others (see, e.g. Ref. ) pointed that this is the right aim of labour policies and contracts between generations that is to improve quality of the last part of working life for a senior, giving at the same time, an opportunity to the entrance for a young. This is what emerges from the simulation ex ante and from the evaluation reports of the contrat de generation. It is generally observed that the reduction of youth unemployment thanks to the generation contract is not due to an improvement in the number of people entering employment, but rather to an improvement in the duration of employment, with less hiring on fixed-term contracts, with a significant positive effect of decreasing short episodes of unemployment between precarious contracts. In addition, the cost of the measure compared to the cost of the unemployed avoided saves the cost of social benefits. Then, if the effect on employment is modest, with 32,000 jobs created, on the other hand, it is a programme that weighs much less on public finances, at a cost of 625 million euros per year against 22 billion euros per year for the relief of burdens .
Some scholars [32, 33] highlight the limited convenience for older workers (especially for those enjoying good health or with a low level of expected retirement revenue) to accept this kind of contract which implies a wage reduction until retirement. Some others put into question the possibility for public employment services to govern efficiently complex processes (both form an organizational and administrative point of view) heavy-handed, bureaucratic scheme that does little to provide a real stimulus to combat high unemployment.
Moreover, the debate on technical solutions may be better off in the future when set of data on the impact of such devices will become available.
At the end of this brief analysis, it is possible to conclude that labour policies with an intergenerational approach may represent a vehicle to promote a change of perspective, from that of rational exchange to that of relational redistribution, not only in political debate but also in public opinion, fostering a cultural process aiming to overlap age discriminations in workplaces as in the society. To promote cultural change is an indirect result to be added to the other direct results such as to improve the quality of work for young workers, while making more sustainable the last part of career for senior, given by solutions like the contrat de génération, or contracts envisaging generational bridge. Their small effect on unemployment rates suggests that these devices have to be considered as complementary to other labour policy measures, even if ex ante simulation shows positive effect on the employment rate of young people in the long run. Variants supposed in the same simulation point out that it is not easy to improve the policy scheme.
Conceiving intergenerational policies could finally be one realistic way to deal with the labour and welfare crisis, preserving, at the same time, cohesive societies, at least in the short or medium term, until economy will start again to expand.
- For example, in European Employment Strategy defined in 1997, more explicitly in the Strategy “Lisbon 2000”, until the more recent Strategy “Europe 2020”.
- Population aged 65 and over as a percentage of the population aged 15–64.
- Inactive population aged 65+ as % of employed population 15–64.
- Loi n. 2013-185 du 1er Mars 2013.
- These ways are stated in the Accord National Interprofessionnel (ANI) signed in October 2012 by the representatives of trade unions and company unions.