Government proposes compulsory right to work until 67 years of age

In late March 2001, the Swedish parliament was due to approve a government bill giving all employees the right to remain in employment until the age of 67. This will also have the effect of prohibiting collective agreements providing for compulsory retirement below the age of 67. Trade unions and employers' organisations oppose the proposals.

The Swedish government has recently proposed the addition of a new, compulsory rule to the Employment Protection Act (lagen om anställningsskydd1982:80) giving employees the right, but not the obligation, to remain in employment until the age of 67. This will mean that it will not be permitted to conclude collective agreements providing for obligatory retirement before the age of 67 - the average retirement age in most collective agreements is currently 65 years. Collective agreements covering the age at which employees have a right to leave employment and receive a retirement pension will, however, still be allowed. A provisional regulation is proposed to cover collective agreements concluded before the change in the law comes into force: these "old" agreements will still be valid, in spite of the new rule, until they expire, but no later than 31 December 2002.

The government also proposes a rise to 67 years in relation to various age limits in other areas of employment protection legislation, such as notice periods and priority in employment in the event of redundancy. The regulations on fixed-term employment will be adapted to the new age limit and this kind of employment will be allowed after 67 as well. There will also be changes on age limits in social insurance and labour market legislation. All the legal changes will come into force on 1 September 2001.

The proposal from the government should be seen in the light of the new Swedish pensions system, currently being introduced (SE9811120F), whereby employees will have the possibility to go on working longer than previously possible and contribute to their pensions for a longer period.

Parliament was likely to approve the government's bill in late March 2001.

Collective agreements

The right and obligation to retire and receive a pension has normally been regulated in collective agreements on pensions. For most workers, provisions in the collective agreements mean that there is an obligation to retire at the age of 65. For certain occupational categories the retirement age arrives much earlier - examples are air-traffic controllers, staff in the armed forces, fire fighters and some employees in the arts. A memorandum on a possible right for employees to retire later than 65 was presented in October 1999 by the Ministry for Industry, Employment and Communications (näringsdepartementet) (SE9911106N). The memorandum stated that the issue of the right and obligation to retire has been discussed since the beginning of the 1990s in various working groups, with the social partners heavily involved. At that stage, the most probable solution discussed was regulation through collective agreements between the social partners.

However, the social partners never implemented a change in the retirement age and the government now found it necessary to have the issue regulated by law. The aim of changing the law, according to the memorandum, was to give employees real possibilities to go on working longer than was allowed by the present rules. Under Sweden's new pensions system, earnings over a whole career will be the basis for an employee's retirement pension and there will be no upper age limit for contributing money to pension schemes. In the new pension system, employees may choose after reaching the age of 61 whether and when they will retire.

Social partners opposed to bill

Between the publication of the memorandum and the bill there were opportunities for the government authorities, trade unions, employers and others to express their opinions. The Swedish Employers' Confederation (Svenska Arbetsgivareföreningen, SAF) and the trade unions rejected the proposal. The social partners questioned if the proposed increase in the retirement age to 67 might mean an encroachment on present and future collective agreements that is contrary to certain International Labour Organisation (ILO) Conventions. For example, the Swedish Metalworkers' Trade Union (Svenska Metallindustriarbetareförbundet, Metall) stated that legislation which abolishes the provisions of collective agreements is in principle contrary to the right to free negotiations and to many international conventions that Sweden has ratified.

The government conceded in its final proposal that many people do not have the strength to continue working after 65 years of age, as had been stressed in the public debate. However, it is important that an employee who is willing to do so (and has the physical and mental strength to do so) should be given the right to work for another two years. Another reason for increasing the retirement age is that the population is ageing. The number of retired people has increased and a decreasing number of workers must support more and more pensioners.

As for the issue of interfering with collective agreements, the government argues that international conventions allow for compulsory regulation in this area. It has thus now proposed a fully compulsory rule that employees have the right to remain in employment until the age of 67, without any exceptions (widening a little the earlier proposal). All workers covered by the Employment Protection Act should have a right to employment protection until 67 years of age as well as the right to work until 67. The new rule will also apply without exception for employee groups, such as those in the arts and armed forces, with lower agreed pension ages. In this way, the government reasons, it will be clear that the new rules provide a right for all employees to stay at work until the age of 67. Employees should be given the opportunity to decide for themselves if they want to work, and continue contributing to a pension, for a longer period than is currently possible today.

From an equal opportunities perspective, the government believes that the consequences of the proposed change is marginal. As women often work part time during the period when their children are growing up, the change may allow them to increase their pension entitlement by working when they are older.

Commentary

The proposed legislation will mean that in the future it will not be allowed to conclude collective agreements providing for an obligation to retire before the age of 67. Both the employers and the trade unions oppose the government's proposal. Accustomed to resolving labour market issues by themselves, through collective agreements, the social partners become concerned almost automatically whenever the possibility of state intervention is raised.

In this case, however, there are some genuine question marks hanging over the government's proposal. First, the social partners believe that there is a possibility that the way in which the state is proposing to intervene in the operation of collective agreements is contrary to several international conventions. The Swedish Confederation of Professional Employees, (Tjänstemännens Centralorganisation, TCO) stated on 15 February 2001 that it is considering reporting the matter to the ILO and other international bodies.

Second, along with TCO, the Swedish Confederation of Professional Associations (Svenska Akademikers Centralorganisation, SACO) and the SAF employers' confederation are concerned about the position of those employees - such as dancers, singers, pilots, miners and soldiers - who currently have collectively agreed pension ages of 60 or lower. The social partner organisations are concerned that in future these employees may possibly have to be dismissed when the employers find that, for health and safety reasons, they can no longer do their jobs. The government, however, rejects this argument, stating that the new rule will apply only to an - absolute - right for employees to work until 67 years of age, if they want to. (Annika Berg, Arbetslivsinstitutet)

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