The proportion of municipal employees in Finland who have postponed their exit from work has increased since the pension reform in 2005. Almost a quarter of those who retired on an old-age pension in 2007 had delayed their exit from the labour market, and each year some 3,000 public sector workers at municipal level are still working even after retirement. As the issue of prolonging work careers is a high priority for the government, it is important to take measures to ensure the well-being of workers.
Positive results of pension reform
The pension reform in 2005 in Finland aimed to increase the number of years in employment towards the end of a person’s work career (FI0403203F). The reform included a new flexible retirement age, ranging from 63 to 68 years, and the abolishment of some early retirement options. Moreover, financial incentives to stay longer at work were introduced as the growth percentage of the pension was raised to 4.5% for persons aged 63 to 68 years.
According to research by the Finnish Local Government Pensions Institution (Kuntien eläkevakuutus, KEVA), positive developments in this regard are apparent among municipal workers over the past few years (FI0706019I). Retirement has been postponed: almost a quarter of those who retired on an old-age pension in 2007 had delayed their exit from work. Furthermore, the number of working old-age retirees has increased. At the beginning of the 2000s, each year some 1,000 persons continued to work while receiving an old-age pension; however, the corresponding number had almost trebled in 2006. As many as 7%–10% of those in occupations such as doctors, nurses, practical nurses and teachers continued to work on a temporary basis after retirement. In addition, the general tendency has been that fewer people have taken a full disability pension and more persons have taken up either a part-time disability pension or rehabilitation. Moreover, the proportion of those who have returned to work after rehabilitation has been increasing.
Crucial to prolong careers
It is estimated that, during the next decade, almost 140,000 of 505,000 municipal employees will exit work mainly through retirement. Therefore, the issue of extending work careers is vital to the public sector at municipal level, and those who are willing to work during retirement create an increasingly important workforce reserve. The public sector at local government level employs about 40% of female employees in Finland and 76% of employees in local government are women; thus, the results are particularly significant from a gender perspective.
According to the research, the most important factors that increased willingness to stay at work for longer were good physical work ability, a moderate workload and encouragement from the employer to continue working (FI0610019I). Retirement intentions increased if the work atmosphere was bad, if staff were dissatisfied with the work of the supervisor, if major changes had occurred at the workplace and if fears arose of a greater workload in the future. Moreover, if the employer gave little support to older workers to prolong their careers, employees’ intentions to retire increased.
Importance of well-being at work
However, the number of employees experiencing exhaustion from work was high among municipal workers (FI0808019I). Almost every third employee had some symptoms of weariness from work. Employees experiencing work fatigue considered exit options such as a change of occupation, change of workplace, re-education, part-time work or a career break.
During the past three years, municipalities have clearly increased their efforts to support well-being at work and prolong careers through different measures. The most common actions include occupational education, management training and physical exercise. The challenge of any programme to enhance well-being at work and work ability is how to allocate the provisions to those workers most in need. In addition, the authors of the research underline that well-being at work should be viewed more as a policy action and that such well-being should be taken into account in municipalities’ overall strategies.
Commentary
Prolonging careers has been on the political agenda of both the EU and Finland for some time now. At political level, tools are available to tackle the problem of early exit from work. The 2005 pension reform in Finland – with its new retirement age, abolishment of certain early retirement options, as well as financial incentives to stay longer at work and to work after retirement age – is in line with EU employment and pension policies.
Nevertheless, in addition to reaching this political aim, decisions and actions by employers and employees are also important – as indicated by the KEVA research results. If the employer supports older workers’ ability to work and creates good working conditions, such as a moderate workload and effective supervision, older employees are more likely to remain at work. In light of the age structure of the population and the predicted labour shortage, these older workers will become increasingly valuable to local government. Therefore, investment in well-being at work should be considered as part of strategic planning; local authorities will not be able to supply their services without sufficient personnel.
About the study
The information is based on a 2008 KEVA research report entitled Ketkä tekevät kuntatyön tulevaisuudessa? (in Finnish, 751Kb PDF) [Who will do the work in local government in the future?]. Data were taken from the register of retirees of KEVA and from a longitudinal survey entitled Kuntatyö10, which was conducted in 2001, 2003 and 2006. The basic sample of 5,084 persons was drawn from the KEVA employee register; the response rate was about 50%–60%.
Anna Pärnänen, Statistics Finland