Social partners debate older retirement

In December 2010, the German government published its first report on increasing the statutory retirement age to 67 years. While it intends to maintain changes introduced in 2007, which raised the age from 65, the German Metalworkers’ Union has called for retirement at 67 to be abandoned. The Employers’ Associations for the Metal and Electrical Industry, meanwhile, has highlighted measures already in place to help workers and employers adjust to a longer working life.

Changing demographics

In 2007, the statutory retirement age in Germany was increased from 65 to 67 years, as a response to an ageing society and the higher costs that will ultimately be borne by the public pension system (DE0612039I, DE0702019I). When the legal changes were introduced, the federal government also pledged to report every four years on the feasibility of maintaining a higher statutory retirement age.

On 2 December 2010, the Federal Minster of Labour and Social Affairs, Ursula von der Leyen, presented the first report on increasing the retirement age (in German).

This report shows that in 2030 there will be around six million fewer people aged between 20 and 64 years. In the same period, the number of people aged 65 or above will have grown by about five million. Over the past 50 years, average life expectancy has increased by 11 years.

This means that the average duration for which pension benefits are payable has also risen, from 9.9 years in 1960 to 18.2 years in 2009. These figures once more highlight the necessity of reforms to the public pension system.

These developments not only affect pensions, but will also have an impact on the availability of labour. The report shows that the working population will shrink and age in the next two decades. Therefore, companies will have to adapt their human resources policies and their workplaces to the needs of older employees.

The views of the social partners diverge on the matter. According to figures (in German) from the Employers’ Associations for the Metal and Electrical Industry (Gesamtmetall), with more than 3.5 million employees in 2009, the metal and electrical industry is one of the biggest sectors in Germany in terms of employment and thus serves as a good example.

Position of social partners

On 2 December 2010, the German Metalworkers’ Union (IG Metall) issued a press release (in German) reiterating its calls for repeal of the increase in the statutory retirement age to 67 years. Its Chair Berthold Huber told the press that it was just not possible for many employees to work until that age. Instead of a longer working life, he called for a flexible and fair transition to retirement.

Retirement schemes had to take into account the strains at the employees’ workplace and the length of time they had paid into the system, said Mr Huber.

IG Metall’s expert on social issues Hans-Jürgen Urban emphasised that in industry alone, around one-third of all employees had to retire early due to health problems and the strains caused by working shifts, at night or at weekends. In his view, a statutory retirement age of 67 took no account of real working conditions.

On the same day, Gesamtmetall published a press statement (in German) highlighting its latest figures on the age structure of staff working in the industry: the number of employees aged 60 or above has risen from 85,000 in 2000 to 141,000 in 2009. Their number as a proportion of all employees has doubled within a decade and currently stands at 4%.

The employer association stressed that, in cooperation with IG Metall, it had facilitated a change in thinking and introduced many measures to make a longer working life possible for older workers and allow companies to adjust to the demographic changes.

For example, a joint industrial pension scheme called MetallRente has been operating for nearly 10 years. Collective agreements have also led to the establishment of funded pension insurance systems. After incentives for partial retirement were reduced by the federal government, another collective agreement on this issue was concluded in 2008 (DE0810039I). Finally, Gesamtmetall called on IG Metall to continue these concerted efforts instead of returning to the ‘old ways which have already been diagnosed as wrong’. The association stressed that by 2030 there would be five million more pensioners, but six million fewer contributing to the public pension scheme.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)