https://orcid.org/0000-0001-5285-521X
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Abstract
The investigation of the labor market challenges generated by an aging society is currently one of the central subjects of international academic literature. Previous research mostly analyzed the labor market participation of people aged between 55 and 65. However, as the raising of the retirement age is on the agenda in several European countries, the ability and willingness of the 65+ age group to work has become a key issue. Our questionnaire survey conducted in Hajdú-Bihar county, North-Eastern Hungary (N = 2,625, multistage probability sample) focused on this age group, which has received relatively little attention in research with respect to their labor market status. It investigated participation in the formal and informal labor market, the time management of the 65+ age group, and the factors that determine their willingness to work. Our analysis revealed that only a rather small proportion (2.7%) of the investigated age group is engaged in the formal economy, and the vast majority (93%) is not engaged in any gainful activity even in the informal economy. However, in 68.7% of the sample we can identify certain activities that aim to reduce expenses and can be clearly considered as work. Thus the members of the Silver Generation are working to a considerably higher degree than official employment statistics show. The primary obstacle for open labor market involvement is not age but rather education level and health status. According to our research, the level of employment of the 65+ age group is highly affected by the lack of pressing financial need and also by ageism. A total of 99.2% of the respondents possess transfer incomes that cover their living expenses, so in their case there is no financial constraint forcing them to return to the open labor market. At the same time, certain widespread stereotypes about the work involvement of older people are also strongly present among members of the 65+ age group (internalized ageism) and significantly reduce their motivation to participate in employment in the formal economy even among those members of the age group who are still fit for work.
Notes
1 The concept of the silver economy is currently quite widely discussed in the academic literature. The term and concept of the “Silver Economy” contains several approaches. For an overview of these, see the referenced writings of Klimczuk (Citation2012, Citation2021), Felix (Citation2016), and Coughlin (Citation2017). We use the concept in our study in line with the European Commission’s 2018 Silver Economy report. According to this, the “Silver Economy” refers to the segment of the economy whose participants (producers and consumers) are at least 50 years of age (EU, Citation2018). We have coined the concept of “Silver Generation” by analogy to “Silver Economy” and generally use it to refer to the 50+ age group, in line with the aforementioned publication. Although the use of the term “Silver Generation” has become common in recent years (Andersson, Citation2011; Tomczyk & Klimczuk, 2015), the scientific analysis of its emergence and use is still to be done. Since in our present study we focus on people who are 65 or older, the term “Silver Generation” means a smaller age group in the context of this article than the Silver Economy, which covers a broader age group (50+).
2 According to experts’ predictions, the proportion of the 65+ age group is expected to reach 29% by 2060 in Hungary (Monostori, Citation2015).
3 Although the duration of working age varies by country, in the OECD countries it is usually people between 15 and 64 years of age who are considered working age.
4 Poland 9.9%, Czech Republic 12.2%, Slovakia 6.5%, Hungary 5.3%, Spain 5.3%, Slovenia 5.2%, Belgium 4.7%, Luxembourg 0% (OECD Citation2017).
5 Retirement age (which corresponds to the Hungarian term nyugdíjkorhatár) is used throughout to refer to the age at which people become eligible for a state pension.”
6 The use of the term generation for the 65+ age group is very common in the literature, although it is worth noting that this age group includes several subgroups in terms of their life situation. Thus, the term “silver generation” is used in this study not in the scientific sense of the term but as a generic term for an age group.
7 See, for example, the interview with Bod Péter Ákos, published on February 27, 2018, https://piacesprofit.hu/gazdasag/bod-peter-akos-kockazatta-nott-a-munkaero-kerdese/.
8 Based on the 2016 Microcensus of the Central Statistics Office, the number of Hungarian citizens who had been living abroad for at least one year could be estimated at a total of 463,000. The vast majority of these were people active on the labor market. This constitutes ca. 7.5% of all Hungarian workers (Dickmann & Ligeti Citation2018, p. 10).
9 See, for example, the interview with the vice president of the National Confederation of Hungarian Industries, https://www.portfolio.hu/gazdasag/munkaugy/ez-a-legnagyobb-baj-mar-300-ezer-ember-hianyzik-magyarorszagrol.290744.html.
11 Before the change of regime (1990), women at the age of 55 and men at the age of 60 reached the retirement age in Hungary, and it took at least 10 years of employment to qualify for an old-age pension. In the following years, we can observe a continuous change the mandatory retirement age from 55 (1996) to 62 (2009) for women and from 60 (1996) to 62 (2001) for men. The continuously amended Act on Social Security Pension LXXXI of 1997 raised the retirement age between 2013 and 2022 from 62 to 65 years. Those born after 1957 can retire from the age of 65, and a minimum of 20 years of service is required to the pension. Since 2011 women can retire early at their own request after 40 years of service and receive a full pension. The rules for the employment of retirees changed July 1, 2020. All employed pensioners will be exempt from insurance and contributions and will only have to pay 15% personal income tax, which applies equally to all income. (There is a single rate of personal income tax in Hungary.)
12 Discrimination against the older generation in the labor market is also problematic because the level of unemployment benefits in Hungary is very low compared to most European countries. According to Act IV of 1991, a jobseeker who has worked at least 360 days in the previous 3 years is entitled to a jobseeker’s allowance for 3 months, which is 60% of previous earnings, up to a maximum of HUF 200,000/month (ca. US$615). After 3 months, if the jobseeker has not found a job, s/he can claim a social benefit (employment substitution allowance) of HUF 22,800 (ca. US$70) per month in 2022. This benefit has no time limit.
13 In the 2013 Randstad Workmonitor survey, the rate of rejection toward older employees was the third highest in Hungary compared to all other countries participating in the survey. Only the Czechs and Slovaks were more dismissive of those older than 55, but the proportion of negative replies was only higher by 1 or 2% even in these countries. https://www.profession.hu/cikk/20130717/kellenek-az-idosebb-dolgozok/2993; https://piacesprofit.hu/kkv_cegblog/mindenkinek-rossz-de-az-otven-felettieknek-a-legrosszabb/.
14 According to Act CXLVI of 2012 amending certain laws as required for the implementation of the job protection action plan, employers who employ workers over 55 years of age (including both current and newly hired employees) receive certain benefits: The combined sum of the social security contribution and the vocational training levy is reduced from 28.5% to 14%. Additional benefits were introduced in 2018 to expand the employment of retired workers. The earnings limit for retired workers was abolished, and all retired workers in employment were exempted from paying insurance and other contributions from July 1, 2020.
15 According to a survey conducted by GKI on a sample of 250 in June 2018, 80% of the pensioners are not interested in any kind of work, 11% would accept part-time jobs, and only 2% would consider working full-time (GKI, Citation2018).
16 The region chosen for the study is traditionally disadvantaged, with an aging, mostly agricultural population. It is situated along the Romanian-Ukrainian border in the eastern part of the country. The emigration of young people from the region is continuous, and job creation has always faced serious difficulties.
17 The address lists used in the course of the research were compiled based on personal data and address registers purchased from the Office of the Deputy Undersecretary of the Ministry of Interior Responsible for Registers.
18 Data collection and management was carried out in accordance with the standards adopted by the international scientific community, following the guidelines of the International Sociological Association (ISA) Code of Ethics (2001), and in compliance with the rules of volunteering and anonymity. In collecting and using the data we also followed Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 (GDPR) on the protection of natural persons with regard to the processing of personal data and free movement of such data, repealing Directive 95/46/EC and the Hungarian Act CXII of 2011 on the right to information self-determination and freedom of information.
19 The sample included independent individuals of the 65+ age group living in their homes who undertook to collaborate with the researchers. The research did not cover individuals living in residential homes.
20 The European Commission defined undeclared work in a 2007 communication as “any paid activities that are lawful as regards their nature but not declared to public authorities.” In the case of undeclared work performed without a legal employment contract, neither the employer nor the employee pays taxes and social security contributions. The activity ranges from informal domestic services to casual work but does not include criminal activities (European Comission, Citation2007).
21 We can assume that following January 1, 2019, the positive change concerning the costs of employing people who receive a pension resulted in the decrease of this group of illegally employed workers. Our data were recorded before the relevant legislation was amended; thus the effect of this change on the illegal employment of the Silver Generation needs to be investigated further.
22 In 2021, in Hungary, the employer will have to pay 17.5% social contribution tax and 1.5% vocational training contribution in addition to the cost to the employee, and the employee will pay 15% personal income tax, 10% pension contribution, and 7% health insurance. Contributions, 1.5% on the labor market contribution. This is a total cost of 52.5%, which does not appear in the case of illegal employment.”
23 Survey of Health, Ageing and Retirement in Europe (SHARE). A total of 27 European countries plus Israel participate in this research relating to the population above 50 years of age. See the SHARE website for further details: http://www.share-project.org/home0.html.
24 The bigger the household the respondent lives in, the higher the chance of working at an older age.
25 The claim that health status acts as a barrier to employment is well founded in Hungary. According to data published by the OECD, in Citation2018 the life expectancy of women at the age of 65 was the lowest among the European countries (18.5 years) and men also held last place with 14.6 years of life expectancy. It was only in Latvia and Lithuania that the situation was even less favorable (https://www.oecd.org/health/OECD-Health-Statistics-2020-Frequently-Requested-Data.xls).
26 This fact is especially remarkable if we consider that if the retirement age were raised by 1 or 2 years, which is constantly on the agenda, most employees would usually spend this additional time remaining until retirement at their previous jobs. This is because one or two years before retirement it is hard to switch to a new job. The members of the Silver Generation would experience this situation as something that was forced upon them, which would probably affect their performance and quality of life (Dubois, 2016; Flynn & Yuxin, Citation2016).
27 Referring to the outcomes of the SHARE survey, Kézdi notes that Hungarians are far below the average of the European countries as regards factors such as: chronic health problems, being limited by such problems in daily activities, obesity, and the subjective assessment of their health. Furthermore, they are also placed among the worst on the objective tests (lung capacity, general fitness) (Kézdi, Citation2013).
28 We assume that if we looked into what the respondents were doing during the time spent with grandchildren (playing, taking a walk, cooking, eating, learning, etc.) we would find greater differences between grandfathers and grandmothers. However, our current survey did not examine the inner structure of these time commitments.
29 The low level of volunteering is not only characteristic of this age group. Volunteering has no tradition in Hungary (Fényes, Citation2015).
30 Here stereotype is meant to refer to a view that is widely accepted and unconditionally entrenched in the respondents’ thinking, affecting their value systems and determining their individual decisions and social behavior.
31 In June 2018, Economy Research Institute Ltd. Conducted a representative population survey of 1,000 people by age, gender, education, and place of residence, which also included questions related to the employment of pensioners.
32 A total of 8.5% of the income comes from work, and only a mere 2.5% is capital income (OECD, Citation2017). For further details, see http://dx.doi.org/10.1787/888933634458.
33 According to Stock and Wise (Citation1990), employees decide whether to enter or remain in employment or to retire by comparing the income that is available to them through employment and through pension. When weighing each option, the person also takes further pros and cons of employment and retirement into account (such as time management, investments, change of social capital, etc.).
34 See, for example, the preferential pension program for women (Nők40 program), which facilitates the early retirement of women. A woman who has at least 40 years of entitlement is entitled to a full old-age pension, regardless of age.
35 The survey conducted by Századvég Research Institute in 2018 in Hungary among the 55+ age group also showed that the age at which the respondents would like to retire is 58.7 years on average (Századvég, Citation2018, p. 51).
36 As regards the validity of the conclusions of our research, it is worth pointing out that the data were recorded in the northeast region of Hungary, which is characterized by adverse financial and labor market conditions, and this has shaped the habits related to employment in the age group under examination considerably. Consequently, our results probably present a somewhat overly negative picture compared to what could be expected from a representative sample for the whole of Hungary. Another limitation of the validity of the research results is the low level of educational attainment rates in the region, which may also have an impact on the time use of 65+ age group.
37 The validity of this relationship is influenced by the new system of benefits for retirement introduced in the summer of 2020, which is likely to have a positive effect on the more active participation of the 65+ age group in the labor market. In this case, the retired employee does not have to decide between work or pension income. Both incomes are achievable under the new favorable conditions. However, the short time that has elapsed since the introduction of the law does not yet allow us to analyze these changes at the statistical level.