Finland launches a five-year national programme for older workers
The age structure of the Finnish workforce is changing rapidly, largely due to demographic factors, and the proportion of workers over 50 continues to increase. There is increasing pressure on older workers to take early retirement and the unemployment rate among the over-50 group continues to rise. Finland is the first EU country to draft guidelines to improve the status of older workers and this article outlines the measures being taken by the Finnish Government in a five-year national programme for older workers, 1997-2001, and the responses of the social partners.
The age structure of Finnish labour force is changing significantly as the number of workers over 50 continues to grow. At the same time, there is increasing pressure on this age group to take early retirement, while the rate of unemployment among this group is also high. As a result, older workers are facing the threat of being excluded from the labour market.
The ageing of the labour force has an adverse effect on economic activity and studies have shown that this could be mitigated by implementing measures to improve the "employability" of older workers. The Finnish Government has now initiated a five-year programme to help to integrate the over-50 group into the workforce.
The policy of the Council of State
At the end of November 1996 a report was issued by a committee which had been studying how the employability potential of older workers could be improved. What makes Finland an exceptional country is that the Institute of Occupational Health in Finland has been systematically collecting information and conducting studies on factors which impinge on the working capacity and the health of the over-50 age group.
The Council of State's policy decision on the programme of necessary measures to improve the employability of older workers is mainly based on the committee's suggestions. One of the aims of the programme is to raise the average age at which older workers actually retire.
The five-year "national age programme", 1997-2001, provides for measures for organising training, information and research projects, and for monitoring the effects of measures proposed by the committee on improving older workers' employability. New measures will be introduced if necessary as the programme evolves. The purpose of the programme is to enforce amendments to regulations, to promote the training of older workers and generally to change the values and attitudes of society so that the contribution made by older workers to economic activity is seen in a more positive light.
Below, we outline the opinions of the social partners on the committee's proposals and on the content of the national age programme.
The views of employers and trade unions
The employers' organisations (PT, TT and the Federation of Finnish Enterprises) accept that older workers can and do make a positive contribution to the national economy. However, the employers are critical of the speed of the timetable for introducing the Government's new measures. They believe that the training requirements and the accompanying administrative measures have not been properly thought out. The employers claim that the committee's report does not resolve the complexities of the unemployment benefit system and pension provision. Nor do they approve of the committee's proposal that employers should include measures to maintain older employees' working capacity within their statutory occupational safety and health programmes. This, according to the employers, would mean that the existing voluntary arrangements currently carried out by employers would be replaced by legal obligations with the jurisdiction transferred to public authorities. Furthermore, say the employers, the proposed new training and information campaign would inevitably overlap in large part with other projects.
The employers believe that it is essential to consider reforming the existing pension system because it allows employees to retire 10-12 years before the official retirement age. As the numbers of workers over 50 continues to increase, the costs of pension provision will rise dramatically.
The committee on the potential of older workers proposes phasing out the employer-related part of the disability pension over a five-year period. This is considered to be a necessary step by the employers because it would lower the barriers to job creation for older workers. The employers also advocate that the incentives offered to them to take on more older workers should not be solely limited to the long-term unemployed, because it would provide a disincentive for employers to recruit other older workers.
The committee also proposes the elimination of additional work-related costs for employees who are over 50, providing that adequate arrangements are made to ensure that employers maintain correct wage records. The employers are opposed to this particular clause. They believe that, in accordance with the government programme, companies should be relieved from paying non-work related social security contributions and the minimum social security costs should be financed from tax revenues. According to the employers, reductions in indirect labour costs will encourage employers to take on more workers, including older workers.
The trade unions (SAK, STTK, and AKAVA) would like to amend the Labour Protection Act and the Hours of Work Act in favour of older workers. They also advocate that the committee should have made a clear proposal for the insertion of a clause into the Act on Collective Agreements which would oblige employers to arrange training for older workers as an alternative to dismissal.
The trade unions refute the view of the employers that changes should be carried out to prevent older workers from taking early retirement if they so wish, or to undermine existing pension rights.
One of the committee's proposals is to reduce the employers' costs where they recruit an older employee on a contract for an indefinite period. The trade unions support this proposal but they are sceptical as to whether employers would be interested in taking on workers who have been unemployed for a considerable time. The committee suggests that further studies should be carried out to explore the practicability of harmonising pension entitlements, regardless of whether the contributions came from those who are unemployed, those who take early retirement or those on invalidity benefits. The trade unions agree with this because they believe such a measure would help older workers to secure employment.
Finally, the trade unions are against any reduction in social security contributions because they do not believe that this encourages employers to take on more workers.
Finland has paid particular attention to the difficult employment prospects facing older workers. The over-50 group form the hard core of the unemployed whose employment problems are not easy to solve. The recent recession has intensified the employment problems of these workers. As the demands of working life have become more challenging and require more training, the employment problems of older workers have not been generally recognised by the public at large. One might argue that older workers are being discriminated against because of their age. Even though the economic situation has improved considerably, the employment prospects of older workers has worsened. The real threat they face is total exclusion from the labour market altogether.
The measures of the national age programme are focused on helping to solve this difficult problem by means of training, information and legislation. Employers are being encouraged to keep on older workers, although the views of employers and trade unions differ considerably about what should be done. During autumn 1997, it will be evident whether the two sides can agree on how the problems facing older workers within the labour market can be solved within the framework of the programme. (Juha Hietanen, Ministry of Labour)