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Aging, and its effect on labor market

older-worker-handshakeIn recent years, quite some lines have been dedicated at pointing out scope and direction of the aging process in Aruba, and – among other issues - its consequences on the labor market. 

 

The Chamber of Commerce contributed to this debate, starting with a research study published in 2007. More recently, the Chamber, together with employers’ organization ATIA, organized a series of information sessions in different districts in Aruba. This, as an effort to raise more awareness about the consequences of this phenomenon, which will drastically change our community in the coming years.

In the 2007 report, attention was given to the effects of aging, more in particular the considerable number of persons retiring, compared to those available as newcomers onto the market. It was foreseeable that Aruba would soon reach the stage in which the total number of retirees would surpass that of the local newcomers on the labor market. The aging process is being accompanied by the phenomenon of a still dropping birth rate, which in the last decade has had as a consequence that the youngest age group is rapidly diminishing.

In 2014, we may observe that this process is now in a more advanced stage, but the question is still whether we have the proper statistics to illustrate this. In this article we will focus on this particular issue: are we currently already importing labor to replace retirees, as the local newcomers are increasingly insufficient to substitute them?

Let us first have a look at the demographic tendencies of recent years, in order to see in which direction the youngest age group is moving. In this article, only data published by the Central Bureau of Statistics (CBS) are used.

Currently, the age cohorts showing diminishing numbers are the 0 – 4, 5 – 9, and 10 – 14 cohorts. The fastest diminishing group of the population is that in the age cohort of 0 – 4 years, dropping from 6,577 in 2003, to 6,042 at end 2013. If we analyze the situation regarding locally born youth, we see that during the last decade and a half, substantially less children are born in Aruba. This on top of the phenomenon of the last decades wherein families were already having slightly under two children. The year 1997 was the last year in which a number of at least 1,400 births was recorded (1,457). From then on, the number of births diminished to under the 1,200, and even under the 1,100 mark. Even adding in those youngsters born elsewhere that acquired residence here, we still see substantially less youngsters in CBS statistics. In 2003, the 0 - 9 years cohort held 13,923 persons, and at end 2013 this had diminished to 13,048. In comparison, we may see that little changed between 2003 and 2013 in the 10 – 19 age bracket: 14,670 in 2003 and 14,970 in 2013.

Next, let us have a look at the situation in the last three years regarding immigration and emigration, in order to have an impression of how population growth is influenced by migration. In the following table we may observe an overview of departures and domiciliation in Aruba for 2011, 2012, and 2013.

Labormarketgraph

From this table we may conclude that in recent years the group of locally born Dutch citizens recorded a negative balance of over 900 persons, while a positive domiciliation balance is shown for both foreign born persons with other nationalities, and for Dutch persons born in the Netherlands. The growth of the population is accounted for mainly by the domiciliation in Aruba of foreign born, while those born in Aruba show a negative balance, as more depart each year than we have these persons returning.

How many people are retiring at age 60+?
With the consequences of aging to take into account, it is important to look into the possibilities of having as much as possible aged persons staying on the job, or some other job, for that matter. Hence the logical question how many persons actually are still holding a job. According to data from the Social Security Bank (SVB), we have currently about 3,000 persons 60+ years of age, registered as workers.

At the same time, about 19,500 persons are collecting pension, also according to SVB data. At the same time, we have over 10,000 persons at age 60 – 70, the age of most probably still willing to have a job, in spite of having reached retirement age. Hence we see that the great majority is already retired, losing a large potential of ‘early’ retirees who may still be recruited for jobs. This may be other jobs than previously held, or part time jobs.

Conclusion
We are clearly already in the midst of the process, where aging leads to a large substitution demand on the local labor market, which cannot be sufficiently replenished by the locally available youngsters. This, taking also into account the youth leaving each year for studying, while a good part of this group does not return. The domiciliation figures show that we have a steady outflow of locally born persons, while those registering for residency are mostly foreign born, and of other nationalities. Hence, our population is rapidly changing composition. This also means that even at zero economic growth, with no new job opportunities to be filled, we are still importing manpower to substitute retiring workers. If economic growth would occur in activities demanding low skilled jobs, we are definitely way off mark with our economic future.

If we are to minimize the import of foreign labor, maximizing the employment of elderly should be a major target, next to other actions, like measures to improve productivity, in order to be able to do the same job with less manpower, or do more with the same manpower. Regretfully, we hear little from those public authorities that should be totally involved in this matter by now. Hopefully, the Chamber, and other employers’ organizations may be able to capture the attention of those who should be instrumental in the effort of dealing with the greatest challenge we have before us in the coming years.

Leo J. Maduro MA
Chamber of Commerce & Industry

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