Mr Chairman, ladies and gentlemen,
Let me start by thanking for the invitation to participate this meeting today. Challenges, caused by demographic changes, are close to our hearts and in the core of the Finnish political debates nowadays. ;
The Finnish population is facing a considerable demographic change caused by a rise in life expectancy and a declining birh rate. This will lead to two major consequences: the Finnish population will begin to diminish and grow old. At the same time, the labour market in Finland have to adapt to two trends. One the one hand, the available workforce will grow smaller, and on the other, the age profile of the workforce will change.
In European countries, the working-age population is declining fastest in Finland and Italy. In 2030 every fourth Finn will have attained the age of 65 years. Already, when studying our working age population, the only amount of people increasing is the age group of +55 years. Therefore, one of the solutions to answer the challenges is to increase the participation of older workers in the labour market.
The employment rate of older workers in Finland in 1997 was only about 37 %, but in 2003 it was already 50 %. This development was not the highest in Europe, but the improvement was the best at that time. So, the question is how has Finland achieved this good performance? Is it just by coincidence? The first conclusion would be no, this is not a matter of good luck, but a matter of combination and development of systematic policies.
If we look to the beginnings of the 1990’s, one can honestly say Finland had an unfriendly labour market for older workers. To aggravate, only youth and underrated experience in working life were appreciated. Furthermore, we had the most generous early retirement schemes. For example one had the opportunity to choose the so called ‘unemployment pension pipe line’ at the age of 53. It was a
joint interest of both the employees and the employers to use this opportunity. Ironically, this was the only flexibility we had in our retirement scheme. This was why Finland needed to create true incentives for employees to work longer and incentives for employers to keep older workers longer at work.
In 2002 a comprehensive work pension reform was adopted and it came into force in the beginning of this year. The pension reform will encourage people to remain in work longer based on its so-called accelerated accrual, will reduce early retirement, and ease the pressure for increased pension expenditure due to increased life expectancy.
The effects of this reform are to be seen in the long-term, but it aims to offer people flexible retirement age, between 63 and 68 years, and at the same time to provide a bonus for people staying longer at work. It is estimated that the working time of older workers will be increased by 1,5 years by the year of 2030. The reform is presented at length in a new publication ‘Finland’s national Pension Strategy Report 2005’ that is available in the Internet.
Since pension system reforms alone will not extend working lives, several actions are taken. Measures to raise the employment rate of people aged 50 and over have also been planned, including the harmonisation of the employer’s pension contribution, rendering it irrespective of age for all employers, and the equalisation of the own-risk component in disability pensions.
Improving working life for older employees is another important scheme that was endorsed in Finland already in the late 1990’s. At first, there was a separate national programme on aging. This programme included hundreds of concrete work-place level development projects, including information and attitude campaigns, vocational training for key groups and research. It was, again, a joint effort of the Government and the social partners.
Since 2003, however, we have not had separate working life programmes for older workers. This aspect has been mainstreamed in all working life programmes. In addition to changes in social security, extending working lives and continuing in working life have been supported by working life programmes launched by various ministries in cooperation with labour market organisations and by reorienting occupational healthcare and rehabilitation. Extended working lives will require the promotion of well-being at work and improvements in working conditions.
The participation in working life of ageing people depends on a number of factors that the Government can influence even if it cannot control them on its own. One of these is occupational well-being, which is dependent not only on personal factors, but also on workplace practices. Another is demand for the ageing workforce and compatibility of the skills of ageing workers with changing tasks. A third comprises the rules of the pension system, which could encourage entering the labour market and restrict retirement.
It can be assumed that a strong economic situation that generally improves the demand for labour will also encourage the ageing workforce to participate in working life throuhg various channels. As the workforce diminishes, employers will find it more worthwhile to adjust working conditions to the needs of ageing workers. Favourable employment prospects and the consequent favourable developments in earned income will make remaining at work financially more attractive. In addition to a general policy promoting employment, special measures are needed to promote the employment of ageing workers.
The Finnish Government delivered a White Paper, ‘Finland for people of all ages’, to the national Parliament in November 2004. This White Paper, which I had with me today, is also public and available in the Internet. It was – and is – a very comprehensive aging strategy for our country. The policy areas enshrined in this book are among others; how to improve health and capacity in all age groups, how to increase employment and how to further increase incentives to work longer. The White Book is currently discussed in our national Parliament. Finland will also pursue these discussions during the Finnish EU Presidency next year.
Although the next few years will bring about profound changes in Finland resulting from the changing demographic structure, we are however optimistic. Active ageing should be understood as a broad concept, and its benefits should be seen not only from the point of view of older people themselves but of the entire society. The starting point is to look at aging as an opportunity and not as a problem.
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I ;thank you for the attention.