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Indicator 22: Employment policies

Indicator 22: Existence of policies facilitating employment of older persons (no age-discrimination, special tax incentives for employment of elderly, etc.)
Indicator is fully reported? Yes, in that existing government policies are public knowledge.
Type of indicator Instrumental indicator Instrumental indicator
Our findings

Government policies can encourage or discourage the employment of older people. Population ageing has highlighted the importance of increasing the employment of older workers and delaying their complete exit from the labour force. It is a complex area.[1]

The following policies are generally considered to facilitate the employment of older people:

  • There is no set legal age for retirement for most people, which means that most people cannot be forced to retire because of age.[2]
  • The Human Rights Act 1993 outlaws discrimination in employment because of age. Another relevant prohibited ground is employment status, which means that someone cannot be discriminated against because they receive a pension.
  • The Accident Compensation Corporation (ACC) provides social and/or vocational rehabilitation and services to its clients regardless of their age.
  • People aged 65 or older who are receiving the Veteran’s Pension or New Zealand Superannuation can earn other income without penalty. However:
    • the amount of tax paid on total income from work and non-work sources may be a disincentive to work for some people if it puts them into a higher tax bracket, and/or may create an incentive to work in a lower paying job.[3]
    • low-income workers can have a higher standard of living when they retire and receive the pension; and higher still if they receive the pension and work. 

The OECD says that, in New Zealand, deferred retirement has no effect on pension wealth, meaning that financial disincentives to continue working are driven by taxes.[4] Put another way, decisions are influenced by the amount that someone receives "in the hand". 

Another OECD report (unpublished) stated that New Zealand had no special tax incentives or social security concessions to encourage employers to employ older workers or for older workers to keep working.[5]

The effect of the policies

Raising the age of eligibility for New Zealand Superannuation from 60 to 65 led to higher labour-force participation rates of older workers.[6]

The average effective retirement age in New Zealand from 2002 to 2007 was less than 65 years for women and higher than 65 years for men.[7]

How entities use the data Public sector agencies are responsible for implementing and monitoring the effect of government policies.
Entity responsible for this indicator The Ministry of Business, Innovation and Employment has the overall lead, but each agency is responsible for policy settings that facilitate employment of older people.

[1] Enright, Jamas and Scobie, Grant M. (2010), Healthy, Wealthy and Working: Retirement Decisions of Older New Zealanders, New Zealand Treasury Working Paper 10/02, page 67, www.treasury.govt.nz/publications/research-policy/wp/2010/10-02.

[2] Our report on Madrid indicator 20 discusses situations where age could force retirement.

[3] OECD (2011), Taxation and employment, OECD Tax Policy Studies, No. 21, OECD Publishing, page 97, http://dx.doi.org/10.1787/9789264120808-en.

[4] OECD (2011), Taxation and employment, OECD Tax Policy Studies, No. 21, OECD Publishing, page 104, http://dx.doi.org/10.1787/9789264120808-en.

[5] OECD (2010), The effect of taxation on retirement decisions, Note by the Secretariat, CTPA/CFA/WPS(2010)30/ADD2, page 22.

[6] Enright, Jamas and Scobie, Grant M. (2010), Healthy, Wealthy and Working: Retirement Decisions of Older New Zealanders, New Zealand Treasury Working Paper 10/02, page 67, www.treasury.govt.nz.

[7] OECD (2011), Taxation and employment, OECD Tax Policy Studies, No. 21, http://dx.doi.org/10.1787/9789264120808-en, page 98.

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