Active ageing and the exit from work

Download article in original language : BE0602304FFR.DOC

During 2005 the Belgian government and the social partners discussed the subject of older workers and the exit from work. The government has widened the debate beyond the issue of older workers to include the employment of young people and social security funding. Despite numerous difficulties and a lack of consensus, the Prime Minister wishes to introduce a strategy of 'active ageing', which aims to encourage people aged over 50 years into employment.

Introduction

The debate on the exit from work was initiated by Prime Minister Guy Verhofstadt (Flemish liberal) and follow on from a series of reports from the Consultative Higher Council for Employment (Conseil Supérieur de l’Emploi/Hoge Raad van de Werkgelegenheid, CSE/HRW) and the Committee for the Study of Ageing (Comité d’Étude sur le Vieillissement/Studiecommissie voor de Vergrijzing, CEV/SCvV), which was commissioned by the government in January 2004 (see BE0412306F).

This article is divided into four parts, each part concerned with a report produced by the government or the Minister of Employment. It gives the background to the issue and examines the agreements that have been drawn up between the social partners and the government, as well as the viewpoints of the actors. The negotiations initially took place against a background of deteriorating relations between the social partners, quite apart from the facts and figures on employment and activity rates.

The final document referred to here - the ‘solidarity contract between the generations’ (Contrat de solidarité entre les générations) will be amended again before it is forwarded to parliament, which will then transpose it into the law on the Solidarity pact between the generations (Pacte de solidarité entre les générations) that was adopted on 23 December 2005. Although the law dates from that time, there was still room for manoeuvre in the negotiations, e.g. concerning the definition of physically demanding jobs, and certain decisions on implementation must still be taken.

General policy statement

The Belgian debate on the exit from work was initiated by Prime Minister Guy Verhofstadt in his general policy statement to the Chamber of Representatives on 12 October 2004. It was based on a CSE/HRW report setting out 30 proposals grouped into four strands for the attention of the social partners.

In relation to the first strand, which aims to discourage early retirement pension schemes, the Prime Minister believes that this will come about ‘by making early retirement more onerous for employers, and also by making financial regulations less attractive for salaried workers seeking early retirement. Certain forms of early retirement will be rendered obsolete’.

According to the Prime Minister, the second strand (increasing availability in the labour market) is necessary to keep young, early retirees in the labour market. Taking Ford Genk as an example, he rejects the payment reserved for workers taking an early retirement pension from 48 years onwards, and who, while waiting for official early retirement at 50 years, were trapped in a temporary lay-off status for two years.

The third strand is presented as a new way of thinking about careers - less on the basis of age, and more on the basis of other criteria such as length of career. Currently, everyone works up to a certain age, but it would be more equitable to expect all Belgians to be actively employed for a certain number of years. In other words, those who start working at a younger age could stop working earlier, whereas those who enter the labour market later would remain in employment until they are older.

The Prime Minister qualifies this approach by pointing out that it would be necessary to take account of the nature of the work in calculating length of career, such as for workers doing physically demanding jobs, and those engaged in shiftwork or night work.

The fourth strand is aimed at early retirees and older job seekers, who should be encouraged to return to work. ‘The additional benefits given to early retirees who return to work, for example, could act as an incentive. Younger workers who take early retirement from the age of 60 onwards must have a choice: either they work or they draw their pension. In parallel, current ceilings can be raised and then gradually abolished for those who reach the statutory retirement age.’

Reactions of the social partners

The Federation of Belgian Enterprises (Fédération des Entreprises de Belgique/Verbond van Belgische Ondernemingen, FEB/VBO) said that the statement of 12 October had been ‘balanced and prudent’, and welcomed the effective introduction of the reduction of charges for 2005, but stated clearly that it would not be enough. To quote from the Federation’s press release of 12 October 2004, ‘However, it [the government] leaves room for social concertation, so the FEB/VBO Masterplan [a study setting out the FEB’s positions, see BE0412306F] on the exit from work can be implemented across the board…The Federation will discharge its responsibilities in the debate constructively as long as no conditions are set in advance.’

The Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV) and the Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) issued a joint press release in which they expressed their misgivings about the direction the debate was taking, and argued that ‘the debate on the exit from work has finished before it has even started’. Their main points were:

  • the many concrete proposals leave little room for open social concertation;
  • the concertation is being steered in a particular direction: older workers would become less expensive, more mobile and more available, and must fund their own retirement either by additional work (time credits) or through existing salary benefits, e.g. holiday allowances and end-of-year bonuses;
  • little is asked in the way of adaptations of employers who do not want to take on any more older workers.

The Federation of Liberal Trade Unions of Belgium (Centrale Générale des Syndicats Libéraux de Belgique/Algemene Centrale der Liberale Vakbonden van België, CGSLB/ACLVB) believed that the general policy statement contained positive points, but that it tended to sign away concertation, focusing as much on negotiations of the intersectoral agreement as on those dealing with exit from work.

The trade unions criticised both the government’s method (tabling proposals that they believe are difficult to negotiate) and also the fixed timetable. They also feared that negotiations on the exit from work would interfere with negotiations on the intersectoral agreement taking place concurrently, and which would end in the absence of an agreement between the social partners.

Active ageing

Despite the failure of the intersectoral agreement, informal contact between the government and the social partners was maintained. In March 2005, at the request of the CSC/ACV, Employment Minister Freya Van Den Bossche met the social partners separately (méthode du confessionnal) since joint discussions proved unproductive.

The Council of Ministers set out 15 new measures aimed at altering the government’s initial proposals on the problematic issue of early retirement. By advocating a new approach to early retirement, the particular situation of an enterprise undergoing restructuring, within which early retirement can play a role, is addressed.

Four days later, and on her own initiative, the Employment Minister sent the social partners a document dealing with the Council of Ministers’ 15 measures, and added another 45 measures. Entitled Vieillissement actif (Active ageing), the document focuses on the October 2004 proposals. It strongly embraces the so-called active ageing strategy, for example, introducing the idea of a pension malus (whereby employers that allow early retirement have to make payments to the unemployment insurance system; debates had hitherto been restricted to a pension bonus, where no such payment had to be made). The document further proposes: reducing access to collectively agreed early retirement; that older and early retired unemployed workers (two categories that should never be available on the labour market under certain conditions) could be obliged to make themselves available for work; that employers’ investment in training is insufficient, and that enterprises that do not train their older workers or do not invest enough in R&D should be penalised. The paper also suggests activating early retirement complementary payments as an incentive to work (on returning to work, early retirees would continue to receive such payments, which has not been the case in the past). For workers, this would also represent a major incentive to return to work, even at a lower salary than before.

Reactions of the social partners

After their meeting on 28 June 2005, the FGTB’s Federal Committee was unambiguous: they were opposed to changing early retirement pensions and ‘assimilations’ (a scheme whereby non-active workers who have had to stop working retain their entitlement to benefits in the future, possibly by paying contributions); and also opposed to extending the monitoring of availability for work to unemployed workers over the age of 50 years; and also to the pension malus.

For the CSC/ACV, the Vieillissement actif document contains 13 points with which it disagrees. The trade unions defend the early retirement and the pension scheme, criticise the concentration on the exit from work to the detriment of the rest of the career, censure the absence of an overall employment policy and of the lack of interest in social security, and argue against the idea of extending availability for work in the labour market to everyone who does not already have a career lasting 40 years.

The employer organisations, i.e. the FEB, the Union of the Middle Classes (Union des Classes Moyennes, UCM), Organisation of the Self-Employed (Unie van Zelfstandige Ondernemers, UNIZO) and Agrofont issued a joint press release, recognising that everyone involved must discharge their responsibilities, and presenting themselves as a partner ready to negotiate.

Strengthened social security

After the summer break in September 2005, the government and the social partners examined a report from the National Labour Council (Conseil National du Travail/Nationale Arbeidsraad, CNT/NAR), containing a number of matters relevant to the debate. Since 2001, the rate of employment of older workers in Belgium has risen by 5% and has now settled at 30%. Although this rate is still low, the average increase in the EU15 is only 3%. The CNT/NAR believes that reductions in employer contributions, which the Prime Minister presents as a key tool in encouraging employment among older workers, will have an effect on employment rates. The Council also points out that although the Scandinavian countries are often regarded as a model, they have high income and consumer tax, whereas there is an imbalance (to the detriment of work) in Belgium.

The Prime Minister lodged a government policy paper for perusal by the social partners (Note d’orientation du gouvernement à l’attention des partenaires sociaux) on 21 September 2005. This document addresses not only active ageing (incorporated from the June document), but also issues that only the trade unions had defended, e.g. social security funding, youth employment, and the link between social benefits and well-being.

Comparing this policy paper with the June document, it can be seen that the pension malus proposal has disappeared. This could be regarded as a trade union victory; however, the paper implies that the idea may be revived in the future: ‘the rate of getting the over-50s back to work will be assessed after 2010. If no improvement is observed as a result of the system that is chosen, there will be grounds for a review’.

The government paper concludes with measures designed to respond to trade union anxieties concerning social security, and introduces a new social contract for strong social security based on solidarity, whereby the government will aim to reduce financial pressure on income with a view to creating jobs. One objective is a reduction in social contributions targeted at older workers on low salaries. The government also reiterates its commitments made in March 2004 relating to the link between social benefits and well-being: the latter will have to be ensured by 2007 (higher minimum pensions and adaptation of integration income (revenu d’intégration)).

Reactions of the social partners

The employers reacted positively to the new regulation, although they pointed to limitations in implementing the reductions on social contributions, and refused to accept restructuring exercises that would cost more under the terms of the new vision introduced by the Council of Ministers in June, and confirmed in this paper.

The trade unions were more circumspect. The FGTB Federal Committee made an evaluation of the government paper, much less optimistic in tone than that of the employers because the trade unions believe that the paper contains many inaccuracies. The General Council of the CSC/ACV offered a similar criticism, and emphasised its fears concerning the deadlines imposed. The liberal trade union took a similar position.

Solidarity contract

There were several meetings held between the government and the social partners between the end of September and 11 October 2005. The period is notable for the media coverage of the 7 October strike mounted by the FGTB with a view to putting pressure on the negotiations. The other trade unions preferred not to demonstrate on the grounds that the pressure could damage the talks process.

Despite the number of meetings, the Prime Minister was unable to secure the social partners’ agreement. As in the case of the intersectoral agreement, he had to decide alone. The paper he presented to the Chamber of Representatives was entitled Contrat de solidarité entre generations (Solidarity contract between the generations). The following are the differences between it and the preceding document.

  • The number of measures aimed at the young worker has increased substantially.
  • On the subject of active ageing, notable features include:
    • the fact that while the regulation concerns the private sector, the public sector is likely to be affected in the future;
    • the development of a special employment unit, whose services must be offered to workers by employers in cases of restructuring; older workers who refuse to attend, or who do not cooperate actively, will be penalised. Early retirement could be a solution, but only as a last resort;
    • various measures outlining precise figures on pension bonuses (accessible at 62 years, although the paper suggests 60 years); higher pension ceilings, allowing for workers to be in employment and draw their pension at the same time; and the financial disincentive of early retirement provisions;
    • access to these measures, unlike access to collectively agreed early retirement, will be raised from 58 years to 60 years from 2008, and will be gradually reduced as the period of necessary length of career increases. A series of exceptions included allowing early retirement to be taken at a younger age in particular circumstances (in cases of long careers, and under the terms of a collective agreement specific to certain sectors such as engineering, glass manufacture and chemicals, and for unfit manual workers in construction). The CNT/NAR is responsible for defining what is meant by physically demanding jobs, as these also trigger a more favourable entitlement to early retirement.
  • The measures announced in September in relation to a new social contract for strong social security based on solidarity have been confirmed: lowering the labour factor in social security funding, providing higher minimum social charges from 2007, and control of health care expenditure.

Reactions of the social partners

Reactions to the Prime Minister’s statement of 11 October 2005 were mixed. The employers declared that they were satisfied and wanted to see the measures applied as soon as possible.

On the trade union side, however, the document was rejected by the FGTB, in line with their earlier stance. The CSC/ACV, in contrast, was initially pleased, but changed its view after consulting with its membership. It then repositioned itself alongside the FGTB, and is now calling for improvements to the regulations. The CGSLB joined forces with these two trade unions in announcing a general demonstration on 28 October 2005. The demonstration attracted between 80,000 and 100,000 people, and was the biggest mobilisation in Belgium in the past 10 years.

However, the Prime Minister was not prepared to negotiate further. Instead, he confirmed his position on the Solidarity contract between the generations and explained it to the public via the press. Nevertheless, in mid-November, the Council of Ministers made its final proposals for improving the Prime Minister’s document, mainly by again extending measures aimed at young people and discouraging the use of certain early retirement schemes.

Commentary

An overview of the debate on the exit from work, which led to the Solidarity pact between the generations, highlights the considerable gap between the views of the trade unions on the one hand, and those of the employers and the government on the other.

Through the measures that came out of the discussion, a policy will be developed to encourage people aged over 45 years into employment, whether they are workers, older unemployed workers or workers on early retirement. The policy will affect individuals (through support under the employment unit scheme during restructuring activity, and as a result of the requirement to remain available in the labour market); social spending (the activation of complementary early retirement payments under the bridging bonus (prime-pont) scheme, e.g. when work picks up, or where people are in employment and draw their pension at the same time); and, to a lesser extent, enterprises.

Although concrete measures have been put forward - to reduce social contributions, discourage early retirement schemes, and introduce the employment unit scheme in cases of restructuring - the government’s actions are mainly targeted at specific financial incentives. It has not proposed any broad change of direction or of cultural and organisational attitudes, as the active ageing paper had suggested. The attitudes of workers who are keen to take early retirement need to be changed.

What has come in for criticism has been the approach that the government has employed throughout the debate and, by extension, the role played by the government and social concertation. The Prime Minister put pressure on the social partners from the outset but, with the social partners unable to agree on several key points, the scenario that has become more and more frequent over the years emerged once again: the government acting alone.

The reticence of the trade unions to take part in the negotiations is linked to the fact that the main element of the policy proposed by the government, which is in turn supported by the employers - a higher rate of employment among older workers - impinged on the autonomy of the occupational trade union centres (centrales professionnelles). These bodies have still not fully accepted that their wage bargaining autonomy is structured by the pay terms set at intersectoral level. They were urged to agree to rely less systematically on collectively agreed early retirement, and agree to older workers being given incentives, with penalties attached for non-compliance, to stay in work, even if it is less well paid. The outcome of the strikes mounted initially by the FGTB, and subsequently by the three trade unions, consisted of two relatively marginal adjustments to the government regulation. The adjustments that are still possible through negotiation at the CNT/NAR and on a joint committee are also seen as marginal, compared with what they have been asked to agree to.

The policy of getting people into work, advocated at European level, is supported by government funding. In this respect, the Flemish- and French-speaking socialist parties are closer to the ideas advocated by the EU and the employers than those of the trade unions, whose political relays they have been for decades. However, it has been difficult to achieve agreement between the liberal and socialist wings, particularly since it has been necessary, as was successfully negotiated by the trade unions, to broaden negotiations to include the funding of social security.

Once again, tripartite concertation looks as if it has failed, especially as the agreement did not meet certain crucial issues for the trade unions, although that does not mean that there was no agreement on most of the government’s proposals. However, concertation, as fashioned by the government, was above all an attempt to legitimise the direction that the policy is currently taking. It has not achieved legitimacy as far as the trade unions are concerned, and the document is improperly referred to as a ‘pact’.

The government is becoming increasingly involved as an actor in collective bargaining between the social partners, and an initiator of a policy that is more favourable to the employers and to an increase in the supply of labour. (Thibauld Moulaert, IST, Université Catholique de Louvain, Belgium)

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment