Page 8 - IDEA Study 3 2015 Duchodova studie

EXECUTIVE SUMMARY The aim of this analysis is to identify the risks and possible obstacles associated with faster increases in the statutory and effective retirement ages in the Czech Republic. The study provides the first detailed quantitative insight on the phenomena of retirement and old-age-related departures from the labour market in the Czech Republic, and employs unique, internationally comparable data from the SHARE survey. Our analysis reveals that the older generations in the Czech Republic still exhibit a number of differences when compared with equivalent generations in more developed countries of Northern and Western Europe. Socio-economic conditions, educational attainment, occupational structure, and health status are still lower in the Czech population as a result of the country's historical development during the 20th century. On the other hand, there have been rapid and noticeable improvements in these areas in recent years, and these characteristics are fast approaching the standards seen in the more economically developed countries of the EU. Our findings provide little support for the notion that the early effective retirement age in the Czech Republic can be attributed to inferior personal and socio-economic conditions among the country's older population. Instead, our analysis indicates that early retirement and departure from the labour market are driven by the institutional setup and incentives induced by the country's tax, welfare, and pension systems, and most likely also by employment policies that affect both workers and employers' expectations. The prevailing lower incidence of employment among older men and women in the Czech Republic, compared to more developed EU countries, can be only very partially attributed to differences in personal characteristics. We document that individuals' health deteriorates much more slowly than the age profile at which people retire and leave labour market. We find that the local incidence of unemployment relates to retirement patterns for women, but not for men. Finally, retirement and employment age profiles are significantly affected by statutory early retirement conditions. Our analysis does not identify any major risks from raising the retirement age further above its current levels. Our simulations show that were the Czech population, with its demographic, health, and socio-economic characteristics, to be subjected to the Swedish institutional system, the whole employment gap for men and around 80% of the gap for women would disappear. While the efficiency and social gains from eliminating this underuse of human capacity are not directly observable, they are both substantial and essential for the sustainability of the welfare state in the Czech Republic. 6