BUSINESSWEEK ONLINE : SEPTEMBER 25, 2000 ISSUE
ECONOMIC TRENDS

More European Men Opt Out of the Workforce
Fewer younger and older men have jobs

In both Europe and the U.S., the working-age share of the population will shrink considerably in coming decades--putting downward pressure on living standards. As a recent analysis by economist Patricia S. Pollard of the Federal Reserve Board of St. Louis makes clear, however, European nations face even greater pressure because of trends in labor-force participation by both younger and older men.

In most advanced nations, the share of women in the workforce has surged in recent decades. Yet in much of Europe, unlike the U.S., total labor-force participation has hardly risen. The reason? Many younger and older men no longer work.

In France, the share of 20- to 24-year-old males in the labor force fell from 86% in 1967 to 53% in 1998, and the share of those aged 60 to 64 plunged from 63% to 15% after the normal retirement age was lowered to 60 in the 1980s. In Germany, the comparable declines over the same period were 86% to 72%, and 78% to 30%.

In the U.S., these trends have been less pronounced, particularly among younger men. That fact, and the recent decline in U.S. unemployment and rise in productivity, bode well for America's ability to meet the demographic challenge ahead. But Europe will have to reverse its trends toward late entry into and early exit from the labor force in order to thrive.

BY GENE KORETZ

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