EurWORK European Observatory of Working Life

Retirement on the agenda again

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The Central Organisation of Finnish Trade Unions (SAK) has voted in February to allow its President, Lauri Lyly, to take part in talks on raising the retirement age. Discussions about how to tackle the issues raised by Finland’s ageing population have been stalled for some time. SAK represents more than a million workers, a fifth of Finland’s population, and the Confederation of Finnish Industries has greeted SAK’s new approach that promises a real possibility of pension reform.

Background

In 2009, the Finnish government appointed two tripartite working groups to draft proposals for pension system reforms, with the aim of persuading unions and employers to agree on ways of lengthening employees’ careers and working lives. The working group tasked with identifying ways of improving working life reached agreement. The second group, discussing the raising of the retirement age, did not.

The present pension system allows employees to retire between the ages of 63 and 68. However, the actual average retirement age has been much lower because of the large number of workers who have stopped work on grounds of ill-health and claimed disability allowance. In 2011, the average retirement age was 60.5, up from 59.6 in 2010.

In February, the Central Organisation of Finnish Trade Unions (SAK), the country’s biggest trade union confederation, agreed to discuss raising the retirement age with the country’s other social partners. The partners’ common target is to raise the average pension age to 62.4 years by 2025.

A shared target of longer careers

Although the social partners involved in the working group failed to agree on raising the general retirement age, they did agree to raise the age for unemployment pensions and partial retirement pensions from 60 to 61. Pension rules allowing a person to retire at 62 will be abolished in 2014.

Changes are also planned for unemployment benefits. Unions have agreed that where someone who is unemployed turns down a job or training offer, the maximum number of days for which they can claim unemployment benefit can be reduced from 500 to 400. People who have less than three years’ work experience will have their maximum benefit period cut to 400 days if they lose their job. Benefits for those actively seeking work are to improve.

Further talks will be held to discuss more far-reaching changes to the pension system, including a rise in the statutory age of retirement. Pension reforms are scheduled to be implemented by 2017.

Prime Minister Jyrki Katainen thanked the social partners for their efforts in negotiations and their willingness to agree reforms which would, he added, help prevent any increase in the public debt and would promote confidence in the economy.

Commentary

For many years, lengthening the active working life of Finnish employees has been one of the most challenging issues facing its labour market. Pension policy and retirement age questions have dominated Finnish social policy debate. SAK’s decision to negotiate on raising the retirement age promises a new era in the effort to find a solution.

Pertti Jokivuori, University of Jyväskylä

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