OECD: Europe should stop backing early retirement
LUCIA KUBOSOVA
10.10.2005 @ 17:39 CET
EUOBSERVER / BRUSSELS - Europe needs to stop subsidising the early retirement of its citizens, despite social protests caused by pension reforms, according to a new OECD report.
The Paris-based body presented its new survey on Monday (10 October), two weeks before top European leaders meet at Hampton Court near London to discuss challenges posed by globalisation and ageing populations to the continent's social model.
According to the paper, several European countries have been striving to sustain their early retirement culture, introduced in the past as a way to tackle high unemployment among young people.
"The paper shows there is no link between these two factors. Just the opposite, the countries like Sweden or Denmark with highest participation of older workers in the labour market also score the highest rates in youth employment," said Mark Keese, the body's analyst.
Early retirement unsustainable
Within the EU, Portugal, Ireland, Denmark and Sweden feature as the countries where citizens stop working at the latest point.
By contrast, Belgium, Austria, Luxembourg and Hungary, have the lowest age of retirement and the highest frequency among workers to retire before the officially fixed term.
As living conditions in developed countries improve and people live longer, the number of years that workers spend in retirement is on the rise.
The trends are most visible in continental and Southern European countries, where French or Italian men, for example, now tend to spend over 20 years as pensioners, compared to around 11 years in 1970.
This tendency could lead to major burdens on public finances in the EU member states in future, as governments will have to deal with smaller workforces, and a rising number of retirees, dependant on state pensions and health care contributions.
The OECD argues the governments should stop subsidizing policies aimed at keeping older workers out of the labour market and either stop having a fixed retirement age, or raise it.
Learn more skills
"While some countries - like Sweden - have already achieved a public consensus about the need to reform the pension system, others will have problems with it. French people are more used to early retirement schemes, so they will oppose the change," suggested Martine Durand from the OECD.
The reform will also require changes in company rules - like setting wages according to seniority, in order to decrease costs of retaining or employing older workers.
On the other hand, EU citizens will need to improve their employability, by following various trainings and boosting their skills.
At the moment, Sweden, Finland, Denmark and the UK are performing best in terms of older workers participating in training.
Migration: the solution or a problem?
In its green paper on ageing populations published earlier this year, the European Commission argued a boost in economic migration to the union could also help to solve the ticking problem.
However, Mrs Durand suggested it is just a partial solution that cannot be a substitute for more complex reforms in pension systems and ageing policies.
"The success of migration policies relies on the ability of countries to boost integration of migrants into domestic societies. But the current experience shows Europe has so far not proved very successful in achieving this", she said.
The expert added that immigrants form a large part of the unemployed in some European countries, and they are not necessarily skilled enough to fill up the vacancies available.
