Introduction
In 1990, 9% of the population were aged 60+; this has now increased to 16% of the population and is expected to reach 25% in 2035 (Bravo and Hughes
2018; CEVE UC
2018). As in many countries, Chile
displays significant gender
gaps
in relation to employment and pension
income
. However, this nation holds one of the lowest rates of women in paid work
across the Organisation for Economic Co-operation and Development (OECD)
member countries (OECD
2017). Scholars have mainly attributed this gendered context to persistent social norms that associate women with both domestic and care
work (Madero-Cabib et al.
2019a). We now focus on understanding this scenario specifically among older individuals.
Labour Force Participation of Older People
Data
from
a national survey in Chile
(CASEN
2015) shows that from 2006 onwards an increasing proportion of older individuals have participated in the labour force (Table
12.1). Specifically, 72.6% of men
in the 60–64 age group
were working in 2006, as compared to 80.6% in 2015. Women display a similar trend, although labour force participation rates
are considerably lower.
Table 12.1Labour force participation (%) by gender and age group
Men
| 60–64 | 72.6 | 73.7 | 74.7 | 78.1 | 80.6 |
65+ | 29.4 | 25.2 | 26.0 | 29.4 | 36.1 |
Women | 60–64 | 29.3 | 27.5 | 29.1 | 34.6 | 37.6 |
65+ | 9.4 | 7.4 | 7.9 | 9.5 | 13.3 |
As seen in Table
12.2, labour force participation
in Chile
among individuals aged 65+ is clearly higher than in the OECD
average (OECD
2015,
2017).
Table 12.2
Labour force participation (%) of individuals aged 65+
Chile
| 18.7 | 17.3 | 17.0 | 19.8 | 23.0 | 24.3 |
OECD countries | 9.7 | 9.0 | 11.0 | 12.2 | 13.2 | 14.4 |
One explanation behind the high labour force participation
among people beyond statutory retirement
age
in Chile
are the financial obligations faced by many workers without adequate pension savings for later life. Indeed, as recent studies show (Centro UC Políticas Públicas
2017; CEVE
2018), ‘financial needs’ (64.5%) are the most important motive for extending working lives, while
‘health problems’ (66.5%) and ‘having other duties’ (18.1%) are the main reasons for leaving the labour market.
One of the main ways older Chilean adults remain active in the labour market is self-employment
(CEVE
2018). However, as previous literature indicates, most self-employment
among older adults is in the informal sector (Huenchuan et al.
2007; Vives et al.
2017), which often entails
precarious working
conditions
(Centro UC Políticas Públicas
2017).
Working Conditions of Older Workers
Average income
is
one indicator of older workers’
working conditions. The average income
of older workers
in Chile (65+) is equal to 67% of the average income
of the rest of the population, while in OECD
countries this statistic is 86.2% (CAPSP
2015; OECD
2013). Average income
for people aged 65+ in Chile
is about €458 per month, and there is a substantial gap between men
(about €541 per month) and women (about €291 per month) (CAPSP
2015).
Access to occupational training is another indicator of good working conditions. In one study, 20.8% of
older workers
say they would like to continue learning new work-related competences (Programa Adulto Mayor UC
2013). However, another study indicates that only 4% of workers aged 60–74 have been in an 8+ hour job training
session during the last year (Centro UC Políticas Públicas
2017).
The evaluation of health
risks in the workplace also measures working conditions. Vives et al. (
2017) assessed exposure to labour risks in four different domains: hygiene, ergonomics, security
and psychosocial wellbeing
. They found that 20% of individuals aged 70+ are employed in jobs that expose them to high temperatures and solar radiation. The most common ergonomic risks for
older workers
are harsh positions, repetitive tasks, and working while standing. Regarding psychosocial risks at work, 20% of older individuals believe that time allocated to work is insufficient for performing their tasks adequately, 50% believe that their jobs involve excessive concentration, and 45% state that their jobs are highly exhausting (Vives et al.
2017; Centro UC Políticas Públicas
2017).
In 1981, during the dictatorship of Augusto Pinochet, Chile was the first country to entirely replace a public defined-benefit pay-as-you-go pension scheme (PAYG scheme) with a private mandatory defined-contribution individual-retirement-account pension scheme (IRA scheme). Since then, every employee must contribute 10% of their monthly salaries to their pension savings. The savings are administered by private institutions called Pension Fund Administrators (AFPs), for-profit companies that invest pension savings in different economic and financial activities.
During the 2000s, the Chilean pension system was the target of multiple criticisms. The main critiques were (1) the absence of a strong welfare net for people with low pension savings
, (2) the unjustified administration fees for AFPs (about 2.6% of workers’ salaries), and (3) the gender inequalities both in replacement rates and pension
income
(Arenas de Mesa et al.
2006). To address some of these issues, in 2008 the Chilean government, led by President Michelle Bachelet, implemented an important pension system reform, which aimed to strengthen the non-contributory dimension of pensions as a way to reduce old age poverty and to address gender
gaps
in pensions (Cumsille
2015; Todd and Joubert
2011). Regarding gender inequalities, with the objective of compensating for women’s interruptions in pension contributions—mainly caused by pregnancy and periods of child rearing—the 2008 reform introduced a new pension subsidy, consisting of an economic bonus in which, for each child—born or adopted—women receive a once off contribution equal to roughly €663 into their private pension
accounts. Another measure stated that in the case of a divorce, a judge is allowed to take up to 50% of the individual
pension
savings
of either member of the couple and reallocate it to the personal account of the other member.
Despite the changes introduced in 2008, by 2014 the Chilean pension system still presented several deficiencies (Mesa-Lago
2015; Barr and Diamond
2016). The government at the time commissioned an Advisory Committee to identify existing weaknesses in the pension system and suggested policy measures to overcome them. The analyses of the Advisory Committee indicated three main limitations of the pension system: (1) low pension
incomes
, (2) low replacement rates
, and (3) gender inequalities. For instance, official statistics show that in Chile
between 2007 and 2014 the monthly pension median was about €112 (for women approximately €57 and for men
approximately €152). The commission elaborated several recommendations. Among other measures, they proposed (1) strengthening and expanding public subsidies
for pension
incomes
, both in terms of coverage (from 60% to 80%) and amount of income (by 20%); (2) that not only workers but also employers
contribute to pension savings
(about 5% of worker’s salary); (3) that self-employed
individuals contribute to their pensions by promoting financial incentives
; (4) that a portion of the new employers’ contributions goes to a shared fund which benefits those with lower pension
incomes
; and (5) reducing gender
gaps
by equalising the retirement age
of men
and women, and eliminating the use of gendered mortality rates
to calculate individual monthly pensions.
Debate on Extended Working Life in Chile
In October 2018, President Sebastián Piñera announced a new bill that aims to improve the living standards of current and prospective retirees, which is now being discussed in Congress. Among other measures, this new bill proposes to provide moderate financial incentives from the state for those who extend their working life beyond statutory retirement age. However, what this bill project also aims, beyond providing incentives, is for individuals to have longer occupational careers and therefore to postpone retirement, for them to access a salary for a longer life period (a salary often higher than a pension income), as well as to increase the accumulated fund of pension savings.
This is the very first time a bill aiming to foster extended working life
is proposed in Chile
. It is a policy measure that stresses individual accountability for dealing with
poverty risks
in old age. Yet, this policy focus strongly differs from the viewpoint of some members of the Advisory Committee on pensions, union leaders, members of non-governmental organisations
, and academic scholars, who have instead claimed for responsibly increasing welfare and public benefits to prevent and eliminate high poverty ratios among men
and women in old age. They have specifically claimed that these welfare and public benefits are especially relevant in the frame of the IRA pension system in Chile
, which mainly relies in contributory programs, and non-contributory gains for individual
pension
accounts are very scarce. These public benefits are even more relevant if we consider that, according to a recent Chilean study on pension contributions histories (Madero-Cabib et al.
2019b), only about half of people currently aged 65 contributed continuously to a pension fund
during their thirties, forties and fifties; while the rest of people from this cohort either did not contribute (e.g. people working in the informal sector), or they remained permanently inactive (mostly women focused on care
and domestic tasks at the expense of labour market participation
). Therefore, the new bill corresponds to a policy measure with a very specific focus: it aims to ameliorate poverty in old age not by increasing welfare state
benefits
, but primarily by individualising the responsibility of keeping a decent living status after the retirement transition
.
Furthermore, specialised literature in Chile
points out that the reflection on the extension of labour-force trajectories should consider not only the financial benefits
of later retirement
, but other occupational aspects such as the possibility of working fewer hours per week, working conditions that protect individuals’ physical integrity, accessible public transport, as well as reduced transport costs for
older workers
(Madero-Cabib et al.
2019c). On the other hand, it is of utmost importance to reflect on the differentiated impact of these policy measures between men
and women who, especially in Chile
, have very different labour-force trajectories during adulthood, with women often being in longer periods of inactivity (Madero-Cabib et al.
2019b). Finally, a crucial assumption of these policy measures is that most older workers
will be healthy enough to remain active in the labour market until later ages, which is why it is essential to consider the advantages and disadvantages
for health fostered by these public policies
(Azar et al.
2019; Baumann and Madero-Cabib In Press; Madero-Cabib et al. In Press).
Voluntary Contributions to Pension Funds
The Chilean pension system provides the option for workers who want to match the AFP contributions, to voluntarily contribute towards a supplementary
private pension fund
. This fund in Chile
is known as Aporte Previsional Voluntario (APV) and is administered exclusively by private bureaus. To make APVs financially attractive, the state offers economic incentives to individuals who contribute to them, notably the reduction of some taxes
. The 2008 pension reform
introduced an additional voluntary pension fund
that works similarly to APVs, but also requires the employer
to contribute to the employee’s
fund, known as APVC (or Collective APV). If employers contribute, their contributions are excluded from corporate taxes
. However, in spite of tax
exemptions and benefits, the overall coverage of these two plans (APV and APVC) is still very low, in 2014 only 0.2% of contributors had an APV and an even smaller fraction had an APVC (CAPSP
2015). Therefore, one proposal of the Advisory Committee for the 2015 pension reform
was to increase the number of employers
contributing to the APVC.
Voluntariness can also be analysed in the regular contributions to the AFP. This is because monthly pension contributions into private accounts are only mandatory for employees, but not for self-employed individuals. Chile is one of the few countries in the OECD (along with Australia, Denmark, Mexico, and Switzerland) in which self-employed workers are excluded from pension coverage. In Chile, only 6% of self-employed workers contribute to their pension funds. However, pension contributions by the self-employed will be mandatory from 2019 onwards.
Health Dimension of the Ageing Context in Chile
As already mentioned, a main assumption of extending working lives is that the vast majority of older individuals will have adequate health
status
in order to keep active in the labour market until later ages (Madero-Cabib et al.
2019d). In this section, we discuss some of the most crucial health
issues among current older people
in Chile
.
Disability in Old Age
Disability in older adults has been extensively addressed in Chile. One example of this is the National Study of Disability conducted twice by the Ministry of Social Development with two main aims: (1) to provide a detailed analysis of the living conditions of the disabled population, and (2) to find the most appropriate way of addressing disability issues through public policies. Results of the latest version of this study (2016) indicate, firstly, that 38.3% of the older adult population (30.3% of men, and 44.3% of women) report having a partial (20.8%) or severe disability (11.6%). Secondly, only 16.5% of older disabled people remain active in the labour market (compared to 40.6% of older non-disabled people). Thirdly, older disabled individuals who continue working earn an average salary of about €334, compared to approximately €500 for older non-disabled people. Finally, 51% of older disabled people report being dependent, 62.8% report a long-term health condition, and 73.9% of dependent and disabled older people are cared for by informal caregivers (mainly unpaid women).
Disability Insurance
The Chilean Pension System includes a Survival and Disability Insurance (or SIS Insurance). After the 1981 pension reform, every worker had to contribute not only 10% of their salary for pension savings but an additional percentage to SIS insurance. The 2008 pension reform introduced three crucial changes to this benefit. First, the SIS insurance contribution had to be paid exclusively by employers. Second, the disabled worker receives a SIS insurance pay out rate equal to 50 or 70% (depending on the degree of disability) of his/her average income during the 10 years before becoming disabled. To be eligible, a disabled individual has to prove his/her disability to a Medical Board of the Pension Regulator and be under 65. Finally, the 2008 pension reform introduced a Solidarity Disability Insurance targeting the poorest 60% of the population.
Dependency, Dementia and Caring in Old Age
A recent study analysed the risk factors of dependency in older Chilean adults (Cheix et al.
2015). The authors identified that besides the well-documented negative effect of ageing, there are some psychosocial factors, such as a higher educational level, close and consistent contact with family, and activities such as reading or exercise, that delay the onset of dependency in old age. This research also focused on the caring
of older dependent workers, which is often informally provided by female
family members
. The authors mention that caring
for older dependent adults can have negative effects both on the subjective wellbeing
(causing stress, depression
and physical fatigue) and the financial wellbeing
(no work income and interruptions in pension contributions) of caregivers. The research concludes by calling for a more active role of the state in the provision of
universal
caregiving
for dependent older people
.
Further studies on health
issues in old age indicate that dependency is much more prevalent among low socioeconomic groups (i.e. poorest and less educated
people) (Fuentes-García et al.
2013) and that dementia (experienced by 7% of individuals aged 60+ in Chile)
is a major determinant of dependency (Thumala et al.
2017). The latter study also underlines that despite the impact of dementia on older people’s
lives, this condition is not classified as one of the key diseases which are financially supported by the state, and is therefore not prioritised in health
services
.
Another recent study evaluated the economic costs of dementia in Chile
(Hojman et al.
2017). Using primary data researchers identified three main dimensions of total economic costs associated with dementia: (1) direct medical costs, (2) direct social costs, and (3) indirect costs (i.e. those costs related to informal caregiving)
. Contrary to what occurs in developed countries, indirect costs in Chile
represent 75% of total costs, and it is inversely related to socioeconomic status; in poorer households in which low incomes
do not allow people to afford formal
care
, family members
have no choice but to assume the caregiver role. And, once again, women have the biggest burden of informal
caregiving
. The authors emphasise, therefore, that socioeconomic status and gender are key factors related to the cost of dementia.
Cultural Dimension of the Ageing Context in Chile
Attitudes and Opinions on Retirement and the Pension System
Another task performed by the Advisory Committee on the 2015 pension reform
was to develop a survey that examined attitudes and opinions towards the pension system and retirement. One of the survey questions (a multiple-choice question) referred to the way in which respondents planned to finance their lives after retirement. Most of them answered ‘through private pension
accounts in AFPs’ (55%), followed by ‘through personal savings’
(35%), and ‘through state subsidies’
(22%), while 15% of respondents answered ‘they have not thought about it yet’. Another question asked pensioners whether they would be willing to work five years beyond the retirement age
to increase their pension savings
. Only 29% of individuals were in favour, while 48% were against. Finally, 71% of retirees
declared that their pension
income
is not sufficient to cover their everyday needs (CAPSP
2015).
Another study highlights that most people aged 65+ negatively evaluate the performance of the current pension system in Chile
(Browne and Valdes
2017). However, workers aged 25–60 have a slightly more critical view of the pension institution than retirees
did. For instance, whereas 55% of retirees
state that their economic status
declined after retirement, 58% of workers aged 25–60 believe that after retirement their economic status
will decline. Additionally, 13% of retirees
state that economic status
increased after retirement and only 8% of workers aged 25–60 expect it to increase after retiring.
Age Discrimination Against Older People
According
to
some studies in Chile
, negative stereotypes
towards older people (or ageism)
are related to the perceived deterioration of their cognitive, biological and social performance (Abusleme and Guajardo
2013; Thumala et al.
2017). In total, 72.9% of Chileans think that older adults are not able to manage on their own (Thumala et al.
2015); although this kind of ageism
exists mostly among higher educated
young people (Arnold et al.
2008). Another study that examined ageist stereotypes
, specifically within work organisations, found that negative expectations of
older workers
are often associated with a decrease in their cognitive and physical skills, which in turn impacts their labour performance (Nazar and Figueroa
2015). The authors of this research claim that in Chile
there are still few measures to prevent ageism
, not only within work organisations but in society as a whole. In other words, as it currently occurs with racism, classism and sexism
, ageism
should also be seriously considered as an expression of discrimination against a vulnerable social group (Butler
2005; Thumala et al.
2017).
Conclusion: Towards a Lifecourse Framework to Better Understand Ageing Contexts
The substantial increase in life expectancy has led an increasing number of Chilean scholars and policymakers to devote more attention to economic, health, and cultural dynamics during the last stage of life. In this chapter, these dynamics have been discussed in light of gender differences. We would like to reflect on some ideas that we must consider when elaborating on measures that promote economic, health, and cultural inclusion of older men and women.
We suggest that policy measures that seek to foster economic and physical wellbeing
in old age should not exclusively focus on promoting extended labour force participation
in old age, but also to consider other life experiences and previous stages of lifecourse. This perspective—which in international literature is known as ‘lifecourse
sensitive policy approach’ (Leisering,
2003; Madero-Cabib and Fasang,
2016—indicates that adequate social and individual conditions in old age rely on multiple experiences across the lifecourse such as: (1) the transition to the labour market once compulsory education is finished in early adulthood; (2) risk prevention
policies as well as the promotion of healthy lifestyles in workplaces across the whole occupational trajectory; (3) adequate possibilities of balancing family and work life in middle adulthood; (4) public transport and mobilisation policies in cities and towns designed
with older adults in mind; (5) the presence of strict anti-age discrimination
policies.
In other words, policy measures that seek to promote economic, health, and cultural inclusion among older women and men should consider that wellbeing in old age is neither a phenomenon exclusively associated with work, nor is it only dependent on what occurs in old age. Instead, this is a process that depends on experiences in other dimensions of life such as family, education, transportation, diet, cultural values, sports, health, and work, which are confronted by people from infancy to old age, through early, middle and late adulthood. We hope that the discussion held in this chapter about the ageing context in Chile will contribute to a better and more informed reflection on the development of wellbeing in old age and of extended working life policies in this country.
Acknowledgements
This work was supported by CONICYT/FONDECYT/INICIACION/N°11180360, CONICYT/FONDAP/Nº15130009, CONICYT/FONDECYT/REGULAR/N°1171071, and Millenium Science Initiative of the Ministry of Economy Development and Tourism, Chile, Grant “Millenium Nucleus for the Study of the Life Course and Vulnerability (MLIV)”.
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