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Governments must take further action to boost job opportunities at an older age

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In the face of rapid population ageing, governments must promote more and better job opportunities at an older age to protect living standards and the sustainability of public finances, according to a new OECD report.

Working Better with Age projects that, based on current retirement patterns, the number of older people (50+) out of the labour force because of inactivity or retirement who will need to be supported by each worker could rise by around 40% from 42 per 100 workers in 2018 to 58 per 100 workers in 2050 on average in the OECD area. In some countries such as Italy, Greece and Poland, there could be nearly as many or more older people out of the labour force as workers by 2050.

But by delaying the average age at which older workers leave the workforce as well as reducing the gender gap in labour force participation at younger ages, this average rise for the OECD area could be cut to just 9%. “The fact that people are living longer and in better health is an achievement to be celebrated,” said Stefano Scarpetta, OECD Director of Employment, Labour and Social Affairs, at the launch of the report in Tokyo. “But rapid population ageing will require concerted policy action to promote active ageing so as to offset its potentially serious consequences for living standards and public finances.”

The report stresses that much progress has been made to encourage older workers to continue to work up until the age of 65 and beyond in some OECD countries. Nevertheless, in virtually all OECD countries, the effective age at which older people exit the labour market is still lower today than it was 30 years ago, despite a higher number of remaining years of life. This is explained by a combination of poor incentives to continue working at an older age, employer reluctance to hire and retain older workers, and underinvestment in employability throughout working lives.

Further measures are required in many countries to ensure that work at an older age is encouraged and not penalised. Employment regulations as well as seniority wages should be reviewed and reformed where necessary so as to boost labour demand for older workers and discourage the use of precarious forms of employment after a certain age. Greater flexibility in working time and better working conditions more generally are also needed to promote higher participation at all ages. For example, long working hours may deter some older people from working longer and prevent some women, returning from child-rearing breaks, from pursuing longer work careers. Poor working conditions at a younger age may lead to poor health and earlier retirement at an older age.

It is also important to invest in older workers’ skills, says the OECD. Many of them exhibit lower levels of digital readiness than their children and grandchildren, and they participate much less in job-related training than younger workers. “One key factor preventing older workers from closing the skill gap with younger employees lies in the fact that the employers usually do not see the benefits of investing in the training of their older employees”, said Stefano Scarpetta. “Providing good opportunities for workers to upgrade their skills and learn new ones throughout their working careers is a key requirement for fostering longer working lives in good quality jobs”.

In line with the OECD Council Recommendation on Ageing and Employment in 2015, the OECD recommends governments take further action in three broad areas, namely:

Reward work at an older age by: i) ensuring that the old-age pension system encourages and rewards later retirement in line with increased life expectancy, and providing more flexibility in work-retirement transitions; ii) restricting the use of publicly funded early-retirement schemes and discouraging mandatory retirement by employers; and iii) ensuring welfare benefits are used to provide income support for those unable to work or actively seeking work and not as de facto early-retirement schemes.

Encourage employers to retain and hire older workers by: i) addressing age discrimination in recruitment, promotion and retention; ii) seeking a better match between the labour costs and productivity of older workers by working with the social partners to review pay-setting practices and eliminating special employment protection rules based on age; and iii) encouraging good practice by employers in managing an age-diverse workforce.

Promote the employability of workers throughout their working lives by: i) improving access to lifelong learning and skills recognition; ii) improving working conditions and job quality at all ages; and iii) providing effective employment assistance for older workers facing job loss or wishing to find another job.

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Asia Poised to Become Dominant Market for Wind Energy

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Asia could grow its share of installed capacity for onshore wind from 230 Gigawatt (GW) in 2018 to over 2600 GW by 2050, a new report by the International Renewable Energy Agency (IRENA) finds. By that time, the region would become a global leader in wind, accounting for more than 50 per cent of all onshore and over 60 per cent of all offshore wind capacity installed globally.

According to the “Future of Wind” published at China Wind Power in Beijing today, global wind power could rise ten-fold reaching over 6000 GW by 2050. By midcentury, wind could cover one third of global power needs and – combined with electrification – deliver a quarter of the energy-related carbon emission reductions needed to meet the Paris climate targets. To reach this objective, onshore and offshore wind capacity will need to increase four-fold and ten-fold respectively every year compared to today.

“With renewables, it’s possible to achieve a climate-safe future,” said IRENA’s Director-General Francesco La Camera. “Low-cost renewable energy technologies like wind power are readily-available today, representing the most effective and immediate solution for reducing carbon emissions. Our roadmap for a global energy transformation to 2050 shows that it is technically and economically feasible to ensure a climate-safe, sustainable energy future. Unlocking global wind energy potential will be particularly important. In fact, wind energy could be the largest single source of power generation by mid-century under this path. This would not only enable us to meet climate goals, but it would also boost economic growth and create jobs, thereby accelerating sustainable development.”

The global wind industry could become a veritable job motor, employing over 3.7 million people by 2030 and more than 6 million people by 2050, IRENA’s new report finds. These figures are respectively nearly three times higher and five times higher than the slightly over one million jobs in 2018. Sound industrial and labour policies that build upon and strengthen domestic supply chains can enable income and employment growth by leveraging existing economic activities in support of wind industry development.

But to accelerate the growth of global wind power over the coming decades, scaling up investments will be key. On average, global annual investment in onshore wind must increase from today USD 67 billion to 211 billion in 2050. For offshore wind, global average annual investments would need to increase from USD 19 billion to 100 billion in 2050.

Statistical highlights:

Asia would account for more than 50% of global onshore wind power installations by 2050, followed by North America (23%) and Europe (10%). For offshore, Asia would cover more than 60% of global installations, followed by Europe (22%) and North America (16%).

Within Asia, China would take the lead with 2525 GW of installed onshore and offshore wind capacity by 2050, followed by India (443 GW), Republic of Korea (78 GW) and South-East Asia (16 GW).

Globally, the levelised cost of electricity (LCOE) for onshore wind will continue to fall to 2-3 cents USD/kWh by 2050 compared to 6 cents USD/kWh in 2018. Costs of offshore wind will drop significantly to 3-7 cents USD/kWh by 2050 compared to 13 cents USD/kWh in 2018.

Wind turbine size for onshore applications will increase, from an average of 2.6 megawatts (MW) in 2018 to 4-5 MW for turbines commissioned by 2025. Offshore applications will likely increase to 15-20 MW in a decade or two. Floating wind farms could cover around 5-15% of the global offshore wind installed capacity (almost 1 000 GW) by 2050.

Read the full report “Future of Wind”.

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Global solar PV market set for spectacular growth over next 5 years

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The installation of solar PV systems on homes, commercial buildings and industrial facilities is set to take off over the next five years, transforming the way electricity is generated and consumed, according to the International Energy Agency’s latest renewable energy market forecast.

These applications – known collectively as distributed PV – are the focus of the IEA’s Renewables 2019 market report, which was released today.

The report forecasts that the world’s total renewable-based power capacity will grow by 50% between 2019 and 2024. This increase of 1,200 gigawatts – equivalent to the current total power capacity of the United States – is driven by cost reductions and concerted government policy efforts. Solar PV accounts for 60% of the rise. The share of renewables in global power generation is set to rise from 26% today to 30% in 2024.

The expected growth comes after renewable capacity additions stalled last year for the first time in almost two decades. The renewed expansion remains well below what is needed to meet global sustainable energy targets, however.

“Renewables are already the world’s second largest source of electricity, but their deployment still needs to accelerate if we are to achieve long-term climate, air quality and energy access goals,” said Dr Fatih Birol, the IEA’s Executive Director.

The report highlights the three main challenges that need to be overcome to speed up the deployment of renewables: policy and regulatory uncertainty, high investment risks and system integration of wind and solar PV.

Distributed PV accounts for almost half of the growth in the overall solar PV market through 2024. Contrary to conventional wisdom, commercial and industrial applications rather than residential uses dominate distributed PV growth, accounting for three-quarters of new installations over the next five years. This is because economies of scale combined with better alignment of PV supply and electricity demand enable more self-consumption and bigger savings on electricity bills in the commercial and industrial sectors.

Still, the number of solar rooftop systems on homes is set to more than double to some 100 million by 2024, with the top markets on a per capita basis that year forecast to be Australia, Belgium, California, the Netherlands and Austria.

“As costs continue to fall, we have a growing incentive to ramp up the deployment of solar PV,” said Dr Birol. The cost of generating electricity from distributed solar PV systems is already below retail electricity prices in most countries. The IEA forecasts that these costs will decline by a further 15% to 35% by 2024, making the technology more attractive and spurring adoption worldwide.

The report warns, however, that important policy and tariff reforms are needed to ensure distributed PV’s growth is sustainable. Unmanaged growth could disrupt electricity markets by raising system costs, challenging the grid integration of renewables and reducing the revenues of network operators. By reforming retail tariffs and adapting policies, utilities and governments can attract investment in distributed PV while also securing enough revenues to pay for fixed network assets and ensuring that the cost burden is allocated fairly among all consumers.

“Distributed PV’s potential is breathtaking, but its development needs to be well managed to balance the different interests of PV system owners, other consumers and energy and distribution companies,” Dr Birol said. “The IEA is ready to advise governments on what is needed to take full advantage of this rapidly emerging technology without jeopardising electricity security.”

According to the report’s Accelerated Case, improving economics, policy support and more effective regulation could push distributed PV’s global installed capacity above 600 GW by 2024, almost double Japan’s total power capacity today. Yet this accelerated growth is still only 6% of distributed PV’s technical potential based on total available rooftop area.

As in previous years, Renewables 2019 also offers forecasts for all sources of renewable energy. Renewable heat is set to expand by one-fifth between 2019 and 2024, driven by China, the European Union, India and the United States. The heat and power sectors become increasingly interconnected as renewable electricity used for heat rises by more than 40%. But overall, renewable heat potential remains vastly underexploited. The share of renewables in total heat demand is forecast to remain below 12% in 2024, calling for more ambitious targets and stronger policy support.

Biofuels currently represent some 90% of renewable energy in transport and their use is set to increase by 25% over the next five years. Growth is dominated by Asia, particularly China, and is driven by energy security and air pollution concerns.  Despite the rapid expansion of electric vehicles, renewable electricity only accounts for one-tenth of renewable energy consumption in transport in 2024. And the share of renewables in total transport fuel demand still remains below 5%. The Accelerated Case sees renewables in transport growing by an additional 20% through 2024 on the assumption of higher quota levels and enhanced policy support that opens new markets in aviation and marine transport.

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Reforms in Latvia must result in stronger enforcement to tackle foreign bribery

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Latvia has continued to improve its framework against bribery of foreign public officials and subsequent money laundering but the reforms need to translate into further effective enforcement, according to a new report by the OECD Working Group on Bribery.

According to the Working Group, which is composed of 44 countries, Latvia’s enforcement results are still not commensurate with the country’s exposure to foreign bribery and subsequent money laundering. Since Latvia joined the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 2014, no foreign bribery case has been prosecuted and three foreign bribery investigations are ongoing. Proceeds of foreign bribery have been laundered through some Latvian banks and other corporate entities in at least two multijurisdictional bribery cases. However, while waiting for the outcome of recent prosecutions in court, the money laundering conviction rate remains low. The Working Group also regrets that the Minister of Justice’s repeated and open criticism of the Prosecutor General risks creating political interference into the operation of the Public Prosecutor Office.

The Working Group has just completed its Phase 3 evaluation of Latvia’s implementation of the Convention and related instruments. In order to improve Latvia’s implementation of the Convention, the Working Group has recommended that Latvia take certain measures, including that it should:

Provide sufficient resources and expertise to its authorities to effectively investigate and prosecute foreign bribery and subsequent money laundering cases;

Step up its enforcement actions against companies, especially against Latvian financial institutions and other corporate entities involved in foreign bribery schemes, where relevant;

Reinforce coordination between Latvia’s anti-corruption law enforcement body (KNAB), the State Police and the prosecutors and implement a strategic approach towards foreign bribery and subsequent money laundering investigations;

Strengthen detection of Latvian individuals and companies involved in foreign bribery;

Ensure the efficient operation of the banking supervisory body (the FCMC), to contribute to the prevention and detection of foreign bribery and subsequent money laundering.

The Report highlights positive aspects of Latvia’s efforts to fight foreign bribery. Latvia took steps to strengthen KNAB’s functional independence. Latvia also adopted comprehensive legislation on whistleblower protection and increased sanctions against individuals for foreign bribery, money laundering and false accounting offences. A lower evidentiary threshold to prove money laundering has been introduced and the number of cases prosecuted has increased. Reforms have been implemented to enhance the Financial Intelligence Unit’s operational capacity. Latvia’s efforts to upgrade its legislative and regulatory framework to prevent money laundering in the financial sector are welcome together with Latvia’s financial sector supervisor’ efforts to renew its approach to supervision of financial institutions. Whether these developments will substantially contribute to more detection and enforcement of the foreign bribery offence remains to be tested in case law and practice.

Latvia’s Phase 3 Report was adopted by the OECD Working Group on Bribery on 10 October 2019. The Report lists the recommendations the Working Group made to Latvia on pages 82-88, and includes an overview of recent enforcement activity and specific legal, policy, and institutional features of Latvia’s framework for fighting foreign bribery. In accordance with the standard procedure, Latvia will submit a written report to the Working Group within two years (October 2021) on its implementation of all recommendations and its enforcement efforts. This report will also be made publicly available.

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