Finland is generally regarded as the model for a strategic approach to the issues arising from an ageing workforce. In 1998, the government set up a 5-year National Program for Ageing Workers. It identified six major issues for concern :
_ early retirement;
_ low rate of labour force participation among ageing workers;
_ low rates of re-employment;
_ reduced working capacity;
_ low educational levels; and
_ ignorance and prejudice in the community at large.
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The National Ageing Program is targeted at the age group 45-64, whether employed or unemployed. The program depends heavily on concerted action, implemented through a Supervisory Group which includes five government departments (Finance, Trade and Industries, Labour, Education, and Social Affairs and Health); the Association of Local and Regional Authorities, the Institute of Occupational Health, and the Social Insurance Institute. Pension funds are also represented, together with representatives of the trade unions and employer organisations. The main responsible authority is the Ministry for Social Affairs and Health. The group as a whole are referred to as ‘social partners’.
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The program has had appreciable effects. Finland suffered badly from economic recession in the early 1990s, leading to a general drop in employment levels in all age groups. Older age groups were hit particularly badly. Employment rates for the decade 1989-1999 show a longterm decline of 8 per cent overall, but the older age groups have recovered considerably, so that the decline in employment has been smaller (5 per cent for the age group 50-54, 3 per cent for the age group 55-59, and 4 per cent for the age group 60-64).
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Other results of the program may be summarised as follows:
_ retirement ages have shown a slight upward trend, from an average 58 in 1989 to 59 in 1999;
_ active labour market programs have been promoted through the introduction of a job-seekers allowance. The goal was to have 10,000 people over 50 in employment and the same number in training programs. This target was reached in 1998, although the increase in the 55-59 age group was significantly lower than the result for the 50-54 cohort;
_ a special feature of the National Ageing Program is the involvement of the Institute of Occupational Health, which has developed a program of Maintenance of Working Abilities (MWA, or in Finnish, TYKY). MWA covers not only physical fitness but life styles, occupational safety, professional skills and management of the working environment. A measuring system has been devised, known as the TYKY Barometer, published biennially. According to the 1999 Barometer, measures to enhance occupational safety rose from 50 per cent to 69 per cent, and physical fitness activities from 51 per cent to 60 per cent;
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_ age discrimination is prohibited by law, but exists nevertheless. Part of the National Ageing Program has been to increase awareness of the problem and to combat ageist stereotypes. Two surveys, in 1996 and 2000, suggest that discrimination has decreased and that public attitudes have become more positive. However, employers remain reluctant to hire older workers, an attitude expressed in the maxim ‘50 but not 55’; and
_ early retirement has been facilitated in the past by a ‘pipeline’ system of unemployment allowances. An unemployed person has been able to obtain benefits at age 55, move to an ‘unemployment pension’ at age 60, and then to the old-age pension at 65. This pipeline route was especially popular during the recession period of the early 90s. An agreement has now been reached between the ‘social partners’ to vary these arrangements with the aim of postponing early retirement.
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Following the agreement described in the preceding paragraph, the Finnish government introduced legislation in November 2002 to reform the pension system. The changes are due to take effect in 2005.
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They include the following:
_ eligibility for the old-age pension will be in the age range 62-68;
_ contributions to the ultimate pension can begin at age 18;
_ the so-called ‘individual retirement pension’ will be abolished;
_ part-pensions will be available from age 58;
_ the unemployment pension will be abolished and replaced by a new system of unemployment benefits; and
_ an injured person will have a statutory right to vocational rehabilitation.
The Finnish pension system, like all European systems, is contributory. The flexibility provided by defining pension age within the range 62-68 is accompanied by provisions encouraging people to stay on in employment and continue contributing. Thus, people who stay in work after age 63 will receive a higher pension accrual rate until age 68, and a further increment if they continue working past 68.
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The legislation also provides for a ‘lifetime coefficient’, which means that pensions will be adjusted if life expectancy increases. The coefficient will be applied to all persons at age 62, and will be the same for men and women. This provision is due to take effect in 2010. The success of the National Ageing Program is, understandably, a matter of debate. A survey of employers and unions in 2000 demonstrated some predictable differences in their assessments of the program.(33) Employers were interested in blocking the ‘pipeline’ to early retirement by raising age limits, and felt that the program paid insufficient attention to stimulating employment in small and medium-sized enterprises. Union concerns were to increase ;emphasis on occupational health and safety, and to protect older employees from forced redundancy.
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