Senior citizens: The workforce of the future

While 85% of senior citizens in Chile are self-reliant, only a third are actively engaged in paid employment. This situation, in conjunction with the decreasing national birth rate, may affect the number of workers available to fill the jobs that are required for the long-term development of the country. It also poses a challenge to public policymakers and society as a whole regarding the need to create new and improved ways to boost the inclusion of older persons in the labor market.

By Claudia Marín

Turning 60 marks a significant milestone in Chile: the beginning of senior citizenship.  Chilean women are able to retire at the age of 60 and men can follow suit at 65, although thoughts about retirement among the latter often begin at the six-decade landmark. Nevertheless, the low pensions and high costs of living that older persons face in Chile are resulting in increasing numbers remaining in the job market, which in turn is generating numerous challenges related to inclusion.

In the medium term, the needs of the country mean that efforts must be geared towards encouraging a growing number of senior citizens to either postpone their retirement or remain in employment post-retirement. Projections indicate that, by 2050, one quarter of the population will be senior citizens. This requires Chile, which until relatively recently was home to a growing and primarily youthful population, to confront an entirely new demographic reality. In 1960, for example, women gave birth to an average of just over five children, whereas nowadays this number is falling in tandem with growing numbers of people living longer.

In 2014, there were almost 251,000 births and the birth rate was 1.85. Additionally, life expectancy reached 80.5 according to the World Health Organization (WHO), which ranks Chile number one in the region and well over the global average of 71.4.

The Director of Advocacy at Fundación Oportunidad Mayor, Consuelo Moreno, states that by 2025 there will be one million more retirees than at present. By taking the average rate of employment from 2014 into account, she asserts that “we can infer that 680,000 new jobs will become available in the next ten years and that all of these must be filled. Yet, if we consider the current rate of job creation, as well as the low birth rate, the most likely scenario is that only a third of the vacancies that arise from people retiring will be filled during the coming decade”.

That is why the integration of senior citizens into the labor market is so fundamental. Currently, almost a third of the more than three million older persons in Chile are in some form of employment, according to the 2015 CASEN Survey which provides a socioeconomic breakdown of the country. Data from the Instituto Nacional de Estadísticas (National Institute of Statistics) for the rolling quarter of May to July 2017 shows that 62% of individuals aged between 60 and 64 were working (a 10% increase from the same period in 2016). The figure for the 65 to 70 age range was 42%, up 8% from the previous year, while for the over 70s it was 16.4%, which marks an annual increase of just over 3%. Furthermore, since the general employment rate only rose from 58.3% to 59.5% over this period, it can be seen that senior citizens constitute one of the fastest growing sections of society in terms of their workplace presence.

Rubén Valenzuela, Director of the Servicio Nacional del Adulto Mayor (National Service for Older Persons), or Senama, states that this phenomenon can be partly explained by low pensions which can amount to less than 40% of retirees’ pre-retirement salaries: a reality which creates the need for senior citizens to generate additional income to complement their pensions. However, he also notes that another reason for their post-retirement work goes beyond simple material gain and relates to the need for some older persons to remain active, independent and to maintain a network of contacts. He adds that, “it has been shown that physical and mental illnesses reduce among senior citizens who stay in the labor market, primarily due to their ongoing activity and links with other people”.

Accordingly, data collected in the Encuesta Nacional de Calidad de Vida en la Vejez (National Quality of Life in Old Age Survey), which was carried out in 2016 by the Universidad Católica and the family compensation fund Caja Los Andes, is highly revealing. It found that 66% of senior citizens surveyed claimed to work due to economic necessity. Interestingly, a significant proportion (69.2%) of those who are working claimed that they would continue to do so even in the absence of this economic need. In addition, 79.4% stated that they feel very content to be doing their respective work.

Despite these findings, Jorge Alfaro, associate of Ossandón Abogados legal firm and specialist in employment affairs, warns of the most significant barrier of all confronted by those classified as a senior citizen: “one way or another, there is a prevailing belief, including from the State and an a priori assumption in general, that a person over the age of 60 is in the twilight of their productive life. This is, ultimately, a form of discrimination which leads to older persons accepting that the system is designed for their retirement rather than for them to engage in employment. As such, senior citizens seem to cease to be subjects of, and instead become objects of, State assistance”.

In this sense, it is important to note the efforts of Fundación Las Rosas residential care foundation which houses senior citizens from the lowest income percentiles of the country and which conducts its work for an alternative perspective. The foundation cares for older persons with a range of health difficulties, the large majority of whom (95% of the 2,200 residents) have some degree of dependency. The foundation pursues its work in adherence with the WHO approach of “active aging”, a process that seeks to optimize opportunities for health, participation and security in order to enhance quality of life as people age.

Claudia Ríos, the Director of Health at Fundación Las Rosas, explains that the foundation aims to ensure that its residents enjoy a good quality of life during their old age while simultaneously taking their circumstances into account. “Each one of the senior citizens living in our care homes has a schedule of individual activities designed to improve their physical and intellectual abilities and to stimulate them to do different things that nourish their spirit, enhance their self-esteem and increase their potential”, she adds.

Training is key

In terms of the workplace, the ability of senior citizens to enter and remain in the labor market is confronted with a range of difficulties. On one hand, older persons tend to prefer shorter or more flexible working hours. On the other, issues of education and training can mean they are at a disadvantage compared to younger competitors.

According to figures from the Ministerio del Trabajo (Ministry of Labor) obtained from the latest national employment survey, the majority of jobs undertaken by senior citizens relates to the commercial sector, which accounts for 28% of working women over 60 and 16.3% of working men over 65. Additional findings from the survey show that 18.5% of women from the aforementioned age group are employed as domestic workers in private homes, while 21.2% of men over the age of retirement work in the agriculture sector.

“The majority of senior citizens who work do so in the informal economy as independent workers or in low-paid jobs. This situation is not unique to Chile of course and it is the general rule in emerging markets, where young persons tend to be far more educated than older people”, says Richard Jackson, President of the U.S. organization, Global Aging Institute. He states that while 84% of Chileans between 20 and 39 have completed at least elementary school, the figure for over 65s is just 44%.

“In Brazil, the comparable figures are 67% and 22%, while in Mexico they are 71% and 16%. The good news is that this skills gap is gradually closing as the younger and better-educated sectors are getting older. Meanwhile, governments can help by funding workplace training programs for senior citizens”, says Jackson.

Officials from Senama state that until recently there were certain barriers to training among senior citizens related to different additional requirements imposed by institutions prior to older persons being permitted to study. This includes insurance that only covered individuals up to the age of 60 and which was mandatory for any course provided by the Servicio Nacional de Capacitación y Empleo (National Service of Training and Employment), or Sence. In contrast, Rubén Valenzuela explains that insurance companies now cover well beyond the original limit of 60 years old.

“For a Sence course, an insurer will offer several alternatives for people up to 70 or 75, which was something that previously impeded the ability of older persons wishing to undertake training”, he notes.

However, according to Consuelo Moreno from Fundación Oportunidad Mayor, the issue of training remains unresolved. In her opinion, there is “serious discrimination” against older persons in almost all Sence training programs, “since they have upper age limits that exclude senior citizens”. For example, the Bono Trabajador Activo (Active Worker Bonus) and Certificación de Competencias Laborales (Workplace Competency Certification) programs benefit women only up to the age of 60 and men up to 65; and the Formación para el Trabajo (Training for Work) and Transferencias al Sector Público (Transfers to the Public Sector) programs are aimed at people only up to 65.

Pending issues

This situation demonstrates that several of the pending challenges relate to generating workplace positions for older persons, narrowing the prevailing digital divide, and overcoming certain rigidities in the labor market that impede, for example, more flexible working hours.

Regarding the latter, “the lack of flexibility in the labor market framework impedes the recruitment of senior citizens for less than 20 hours, despite the fact that most of these older persons are simply looking to increase the amount they receive from their pension”, says Jorge Alfaro, from Ossandón Abogados. He adds that while there are subsidies for the recruitment of young persons, this is not the case for senior citizens.

Moreover, Consuelo Moreno contends that one of the main barriers impeding greater numbers of older persons from taking up work is the possible loss of the Pensión Básica Solidaria (Basic Solidarity Pension). If a senior citizen takes on formal employment, they risk losing the necessary conditions required to access this pension. In turn, this “disincentivizes the search for work and encourages the rise of informal, unstable and low-paid jobs” she argues.

In addition, Moreno states that law 20.935, which establishes the minimum monthly wage of older persons as lower than other groups, should be amended to raise this amount and bring it in line with the rest of the adult working population.

Regarding legislation, Juan Bravo, senior researcher at the Centro Latinoamericano de Políticas Económicas y Sociales (Latin American Center for Economic and Social Policy), or Clapes UC, looks at the issue from the perspective of new technology: “a law on teleworking is a big challenge that has not been addressed and neither has priority been given to devising a legal framework to clarify matters in relation to remote forms of employment. A number of aspects need to be regulated in this regard to avoid the legal gaps that are hindering contracts being drawn up for this type of work”.

At the international level, the United States has made progress in this area. Richard Jackson from Global Aging Institute believes that two developments in particular have helped to foster a growing rate of senior citizens in the labor market in the country over the past two decades: the enactment of clear anti-age discrimination legislation, and the adoption among employers of more flexible standards adapted to the needs of older workers.

“Of course, it also helps that the senior citizens reaching old age are the most educated in the history of the United States. Indeed, the skills gap that impedes the recruitment of older workers in Chile and other emerging markets is not such a big obstacle in America and other developed nations”, says Jackson.

The lawyer Jorge Alfaro maintains that a suitable program of integration in Chile should focus on incentivizing both employer and worker, who could also be an entrepreneur, in such a way as to enable the latter to continue his or her employment beyond the age of 60 or 65. A program of this type should also take account of flexible working hours and pay conditions, as well as the creation of training schemes and ongoing workplace and technological skills development initiatives.

Similarly, it is important to improve access to financial markets to provide senior citizens with the chance to become more independent in terms of starting their own business.

Changing the outlook

What is certain is that the incorporation of senior citizens into the labor market requires not only legislative but also cultural changes. According to Rubén Valenzuela, Director of Senama, this is because “there is a certain type of stigma attached to old age in Chilean society, and this negative perception can be felt in daily life in terms of practices such as abandonment, for example”. He adds that, as a result, this outlook needs to evolve in the direction of active aging across the communities in which senior citizens play a role, “whereby their families provide them with care and the State is present when needed, rather than them being abandoned and becoming more vulnerable than other sections of society”.

In this regard, the Director of the Programa Adulto Mayor (Senior Citizens Program) of the Universidad Católica, Macarena Rojas, notes the importance of understanding how Chile as a country “must change its outlook towards older persons, who are playing an increasingly active and empowered role in different areas, including the labor market”. She says that the opening up of workplace possibilities for senior citizens should be seen as a development opportunity rather than simply an economic solution. As such, she stresses the need not to ignore the pending challenges facing Chilean society in terms of the development of social security and other related aspects “which enable us to retire with greater economic peace of mind”.

As part of the required change in perspective, research conducted by the OTIC of the Cámara Nacional de Comercio (National Chamber of Commerce), in conjunction with the Universidad de Santiago and Sence, has shown that 96% of companies in the retail, services and tourism sectors are open to recruiting senior citizens. The research found that the most highly valued attributes by these sectors were senior citizens’ commitment, responsibility, vocation for excellence, punctuality, low levels of absenteeism and, above all, optimism.

Gradually, senior citizenship is opening up new spaces and knocking over old barriers, carving a fresh path that in a few decades will lead older persons to act as key protagonists in a completely different labor market; one that will have to give way to greater inclusivity and seek renewal not only through young persons, but also through the knowledge accrued over the years of their older, more experienced counterparts. However, to ensure that such a tomorrow is possible in the future, the pressing challenges need to be resolved today in the present.

Low salaries

The Chilean Senate has recently ratified the Inter-American Convention on Protecting the Human Rights of Older Persons, which establishes and safeguards the rights of senior citizens. Article 18 of the Convention stipulates that “older persons have the right to dignified and decent work and to equal opportunity and treatment on the same terms as other workers, whatever their age”. Therefore, the document obliges signatory States to adopt measures to prevent employment discrimination against senior citizens.

Furthermore, the Convention states that “the same guarantees, benefits, labor and union rights, and pay should apply to all workers in the same employment or occupation and for similar tasks and responsibilities”.

Despite these assertions, the reality in Chile is very different. The law establishes a minimum monthly salary of CLP$192,230 for persons over 65, i.e., 25% less that the minimum salary of all other adult workers. And although men over 65 earn, on average, CLP$510,000 a month, half earn under CLP$256,000. The situation among women is even more concerning. While their average salary is CLP$263,000, half earn CLP$160,000 or less. Such statistics clearly demonstrate that the gender wage gap is present among senior citizens as well as the national labor market in general.

Justification for these wage discrepancies relates to the special needs of senior citizens in terms of their working hours, whereby they generally seek a more flexible timetable, among other aspects. However, this contrasts with the high costs of living that affect this age group particularly acutely. According to the senior citizen Índice de Precios al Consumidor (Consumer Price Index), or IPC, which is compiled by Clapes UC, in June of this year prices rose by 2%, compared to general inflation of 1.7%. This means that the price increase has been slightly higher for persons aged 60 or over.

“One of the key elements distinguishing the basket of consumer goods for older persons is that the expenditure weighting for their healthcare is around double that of the general population. And annual inflation in the health sector over the last year was 4%: much higher than the general average of 1.7%. Therefore, this price rise adversely affects senior citizens”, warns Juan Bravo from Clapes UC.

This reality is crucial in the impoverishment of older persons in Chile, who are the head of a third of all households in the country (an increase of more than 10% since 1990, according to the 2015 CASEN Survey). Of this group, almost 20% are classified as being in multidimensional poverty, i.e., poverty that goes beyond a simple lack of income and includes wide-ranging deficiencies related to education, health, work, social security, housing and general standards of living.

Retail at the vanguard

Commerce is one of the sectors to have taken the biggest strides in the inclusion of senior citizens in the workplace. Walmart Chile, for example, believes in integration and diversity and safeguards these principles closely, since they enable the company to recruit associates from different backgrounds, cultures, nationalities, ethnicities and generations with distinct perspectives, ideas and sexual orientations, “and all the characteristics that make each of us unique”. That is why Walmart Chile claims to afford space and opportunity for everyone, valuing and accepting individual differences regardless of personal conditions. This approach “allows us to provide all associates with the opportunity to learn, grow and progress, according to the potential of each and every one”.

The following case can be used to illustrate the Diversity and Inclusion Policy of Walmart Chile in action. At the Príncipe de Gales Líder supermarket in the Santiago district of La Reina, 92-year-old José Sáez works in the fruit and vegetable section as part of the company’s Generational Diversity Policy. “With everyone’s help, I have kept on going” says Sáez, gratefully, despite his belief that senior citizens are not generally well treated in the workplace. This, he contends, is because “people think that they (older persons) won’t be able to fulfil their responsibilities”. On the contrary, Francisco Eguiguren, Sales Manager at the Príncipe de Gales store believes that the contribution of older persons, represented by José, is that “they provide support that we have not always been able to value and integrate. José brings us knowledge, wisdom and experience. He gives us an outlook on life which says that rather than just giving up and walking away, you’ve got to reinvent yourself and push ahead”.

Similarly, 20% of all associates at Cencosud are aged over 50, with 11% over 55 and 4% over 60. Overall, the company goal is to have 5% of the workforce aged over 60 by 2018. This pro-senior citizen initiative was launched two years ago and includes a range of health benefits for workers and a provision that older persons can occupy any type of position in the company.

“Having more than 3,700 workers over the age of 50 not only enriches work teams in terms of the experience they bring, but it also gives rise to a complementary and collaborative workplace environment with a strong social conscience. This is because the interaction between the younger generation, the so-called ‘millennials’, and our older workers forms a bridge that connects everyone with the reality of modern society which seeks to ensure people work together to guarantee equal opportunities for all, regardless of differentiating factors such as age”, affirms María Paz Franzani, Deputy Manager of Culture and Inclusion at Jumbo.


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