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Balance restoration

Published on May 16, 2012 by: in: Society

Extension of the retirement age is necessary and it results from both demographic transformations and future challenges of the labour market

The contemporary Pole’s life looks more or less as follows – he spends about 25 first years of life outside the labour market trying to overcome next stages of education. Next, there is about 40 years of occupational activity, and then, he is retired for another 15 years. We should remember that one can be unemployed within the period of theoretical occupational activity, then we realize that the period of inactivity is longer than the period of activity. Such a situation is possible for the first time in the history of the world. Well then, the extension of the retirement age is essential to enter simply logical process, in which the man works more within his whole life, after all. It seems to be very logical, especially when we look at the structure of the week, in which we work for 5 days and have a rest for only 2.

The extension also makes sense from the labour market’s point of view. A group of employees, whose skills and health condition will let them be active longer at work, will be getting bigger in the following years. Nowadays, a lot of them decide to leave the labour market, only because they have been involved in retirement pension due to their age. One should restate a well-known argument that the number of people at the age of occupational activity will be successively on the decline in Poland, which will influence unemployment risk limitation. Since people learn and study longer, and their professional career has to be often given up not only due to the unemployment periods but also the necessity to improve one’s skills, then we have to assume that the extension of the retirement age is needed.

photo:pedrosimoes7

Pension reform is one of these reforms, which requires spreading over time because it affects too many and too big social groups. Its gradual implementation lets minimize negative consequences and spread them over time, and from this point of view, the ruling party’s approach to ways of its implementation seems to be right and reasonable. A general form of reforms, which the ruling coalition has negotiated among themselves, also appears to be acceptable. However, this plan – at least in the education sphere, because we cannot deal with a document yet – has also some significant drawbacks. Let’s focus on partial retirement. Such a solution is the most acceptable and employed also in other systems than the Polish one. Nevertheless, the way of implementing it mispresents the idea of the whole reform so to speak. It was supposed to make the retirement age of women and men equal, establishing it at 67 years. The present form creates a new inequality, though, as women can go into partial retirement at the age of 62, and men – 65.

In addition, Polish People’s Party tried to slip the thread which disappeared and concerned connection between possibility of going into retirement earlier and having children. At the beginning, elements of the family policy were supposed to be introduced to the retirement system, and such an approach could be defendable, though, methodologically doubtful. Nowadays, women who are mothers and have decided to bring up children, will be in worse situation than those who have no children. Mothers will simply have less amassed capital, from which partial retirement and full pension will be calculated. Well then, benefits for mothers will also be lower than for childless women. Moreover, one should notice that not only the principle of gender equality is violated here (creation of other regulation for women pure and simple because they are women), but also the age of 62 for women is definitely too low. There is a justified risk that employers will dismiss women quicker, thereby they will move them from remunerations to partial retirement, which is very low for mothers and counterproductive. Talking about privileging women, especially mothers, this plan de facto hits their interests. Partial retirement would make sense, if the age of 65 was established for both men and women.

A professional privilege is another important issue. Farmers are the only social group that is not supposed to have lesser capital (earlier retirement is to be calculated from full capital). Yet, the basic principle of social policy is that the retirement system is not to accomplish the aims of welfare, but to provide people at specific age with day-to-day expenses. We have other systems for it. So if farmers receive very low retirement benefits, then it should be compensated from other funds. Then, a part of the benefit would be paid from general retirement system and a part from welfare (when income threshold is met). The current form of the project is contrary to the universality principle of the retirement system. Of course, implementation of the income tax settlements in agriculture would also be necessary here, which has already been heralded for some time. I am afraid that implementation of privileges for farmers in the retirement system dismisses this prospect very much.

One ought to take into consideration the fact that individual professions differ from one another and one can work shorter in some of them (e.g. due to physical strains). It is truism, though. It is important for such people to have as much developed opportunities of retraining as possible or a total change of qualifications. We can imagine that e.g. a miner receives appropriate benefit for a year after finishing work in this profession, which will allow him for such retraining. The state also serves actively as a mediator and suggests individual approach, which guarantees that a new job will be found after retraining so to speak. Meanwhile, we place the elements of social policy in the retirement system again instead of building up the system, which would support such mechanisms. Therefore a system of the active labour market policy should be created. Miners, policemen, servicemen or any other group could be retrained using special companies (public or private) financed from labour fund. No one has security of employment today. Everyone has to improve their skills, supplement knowledge and have a little bit of retraining during their career – either a miner or a professor. So, people should be trained to search for and take up new employment. It can take a few years or even a dozen or so, but it is profitable. If we take a look at the groups privileged in the trade systems, then it appears that very few former employees, who went into earlier retirement, support themselves exclusively from benefit granted to them. So they are able to find a new job and capable of further activity, and there is no reason to hasten them to leave the labour market.

A specific Poland’s advantage in relation to other countries dealing with problems on the ground of the retirement system is the fact that we have as many as five numerous groups at our disposal, whose members are not professionally active enough. These are women, farmers, disabled people, youth and people who are over 50 years old. In many countries like Sweden, Germany and Netherlands the indicators of employing these people reached a maximum level, so one ought not to expect to search for people among them, who would supplement the shortage on the labour market. In Poland the situation is completely opposite.  Then, one should seek mechanisms which would motivate these groups. Reaching the European average in employing the representatives of these groups (40-60% from each) would bring additional 500 thousand people paying contributions to our labour market. In this respect trade unions are right when they talk about unused human potential.

It is also worth taking stance on the critics of raising the retirement age, who threaten us with the vision of elderly people forced to do hard work. In the meantime, you should remember that today’s labour market is probably something completely different than the labour market of 2040. Changes, we sometimes have opportunity to observe in relation to earlier times, can give us a good image of some tendencies. A profession of the bus driver is a good example here. Once it was reserved for men, because turning the steering wheel required considerable vigour, which practically no woman had. But surprisingly introducing a relatively minor innovation, that is power steering, made it possible for women to drive a bus. Technological progress is a factor which significantly limits – and will probably still limit – the number of professions physically strained, making other factors than vigour significant. Experience, out of verbal skills will be included in them, which make the labour market far friendlier for elderly people than this today. That is why, one should also consider such solutions, which will allow young people to gain experience as early as possible and compete with elders. The future labour market can be paradoxically far friendlier to elderly people rather than youngsters.

Well then, the governmental proposal is important and formulated rightly in pretty large measure, however, it has some drawbacks. Actions such as motivation of professionally inactive people or creation of the system that favours retraining of employees, has to follow the change implemented. First of all, you should remember that the changes in the retirement system are the changes concerning many years ahead, that is why they ought to be thought in a long-term aspect without considering today’s conditions.

Translation: Sylwia Syposz

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About Maciej Duszczyk

Deputy Director in the Institute of Social Policy, Warsaw University. Member of the Board of Centre of Migration Research, Warsaw University and Head of Migration Policies Unit. Member of the Board of Strategic Advisers to the Prime Minister of Poland. He received his PhD in political science from the Institute of Social Policy, Warsaw University (2002).

Original Liberte.pl
Fredrich Naumann Foundation For The Freedom
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