Managing the transition from work to retirement

In 2007, the Central Statistical Office published an analysis of the module survey on ‘Transition from work into retirement’, which is based on Labour Force Survey data from the second quarter of 2006. The analysis focuses on the characteristics of people receiving pensions, including their employment rate and level of education. Some of the respondents highlight the lack of flexibility in working life as a factor discouraging them from continuing in a professional capacity.

Economic activity levels

According to the analysis of the survey findings on the Transition from work into retirement (3.5Mb PDF, in Polish and English) which was published by the Central Statistical Office (Główny Urząd Statystyczny, GUS) in 2007, persons aged 55 to 64 years show a very low level of economic activity (Table 1).

Table 1: Employment rate of population, by age group (%)
This table outlines the proportion of employed persons in Poland by age group, according to the findings of a recent GUS survey.
Age group Employment rate (%)
34–44 years 76.6
45–54 years 65
55–64 years 27.3

Source: GUS, Labour force survey data (second quarter 2006) and module survey on transition from work into retirement, 2007

In this context, it should be noted that, in the oldest of the age groups given in Table 1, unemployed persons accounted for a mere 2.5%, compared with an unemployment rate of 9% to 11% in the age groups covering persons from 15 to 44 years. Such a low level of unemployment and the low employment rate of persons aged between 55 and 64 years are associated with a high rate of people taking early retirement. In this age group, the proportion of economically inactive persons is as high as 70.2%, of whom almost 59% are men and 75.3% are women. Early retirement is a significant factor when it comes to accounting for economic inactivity among older persons.

Profile of persons receiving ‘normal’ and early pension benefits

‘Normal’ retirement benefits are granted to employees after they have reached the statutory retirement age and built up the required period of social insurance contributions for pension eligibility. Under current regulations, the statutory retirement age is 60 years for women and 65 years for men.

However, Polish law also provides for early retirement schemes offered to certain professional groups, pre-retirement benefits for unemployed people and disability benefits for those who are incapable of taking up paid employment.

Early retirement benefits are mainly granted to employees performing jobs in hazardous working conditions. The main professions eligible for early retirement schemes under various legislative acts include teachers, miners, railway workers, police officers, soldiers and firefighters. Female employees can take early retirement at the age of 55 years and men at 60 years, under the condition that they have paid social insurance contributions for a certain number of years – 25 years for women and 30 years for men.

In addition, early retirement is also available for some privileged groups like veterans and employees of state authorities.

Table 2: Absolute numbers as well as proportion and characteristics of retired employees, by ‘normal’ and early pensions
This table highlights the number as well as the proportion of men and women receiving normal and early retirement pensions, including in relation to their place of residence and level of education.
Factor ‘Normal’ pensions Early pensions
Number of retired 1,665,000 1,060,000
Proportion of men 36% 32.1%
Proportion of women 64% 67.9%
Residents in urban areas 67% 70%
Primary and lower education Men Woman Men Woman
31.4% 40.7% 28% 26%
Third-level education Men Woman Men Woman
16.6% 13.3% 10% 16%

Source: GUS, Labour force survey data (second quarter 2006) and module survey on transition from work into retirement, 2007

Occupational activity of retirees

The dual concept of a normal retirement pension and early retirement pension allows for a transition from work into retirement while also maintaining paid employment. Despite this option, some 85.7% of Polish retirees are not economically active. Those retirees who do combine paid work with receiving a retirement pension are mostly women (53%) and residents of urban areas (59.1%). When looking at the overall picture, 30% of these retirees are aged between 65 and 69 years; 27.7% of them have only received a basic education and 25.5% hold university degrees or third-level educational equivalents. Among male retirees combining paid work with pension benefits, the largest group have a third-level education (30.5%), while most female retirees in paid work hold only a basic education (33%). Of those retirees who do opt to continue working, it is mostly retired persons with a higher education who live in urban areas (40.5%), while it is persons with a lower educational level who predominate in rural areas (58.3%).

Commentary

The research results confirm that a high level of early exits from the workforce among those aged 55 years and over prevails. In this context, the demand that early retirement rights should be maintained, which has been strongly reiterated by certain professional groups, such as miners or teachers, gives rise for concern. Nonetheless, the reasons cited by survey respondents which might motivate them to remain in active employment for longer give a potential glimmer of hope for the improvement of the situation in the long term.

Table 3: Reasons influencing older employees’ decision to remain economically active for longer (%)
This table shows the proportion of survey respondents citing reasons that might influence their decision to maintain an economic activity for longer.
Reasons Proportion of survey respondents
Flexible working time arrangements 24.7
More opportunities for improving skills and qualifications 11.4
Better health and safety conditions at the workplace 14.8
Better accessibility to care services 14.3

Source: GUS, Labour force survey data (second quarter 2006) and module survey on transition from work into retirement, 2007

In light of these findings, it would seem that if Poland wishes to lower the number of people availing of early retirement in the future, it would need to implement the complex system of ‘flexicurity’. A labour market based on the concept of flexicurity should also take into consideration the level of qualifications in relation to occupational categories. GUS data revealed that, in terms of occupational categories, craft and related trades workers represented the largest group of men (24.1%) taking early retirement, followed by plant and machine operators and assemblers (18.1%), and skilled agricultural and fishery workers (16%). Among women, the highest rate of retirees was observed in the occupational group of professionals (16.2%), followed closely by that of technicians and associate professionals (16.1%), and elementary occupations (14.3%).

Jacek Sroka, Institute of Public Affairs

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