Youth unemployment worrisome
The international conference on Changing Labour Markets, Life Course and Pensions on 19 May drew nearly 130 experts to the Finnish Centre for Pensions to discuss issues of growing inequality, rising employment rates among the elderly, the low future pensions of EU immigrants and the importance of investing in education. The keynotes were particularly concerned about the labour market situation of the young.
Dr Anna d’Addio, Senior Policy Analyst, talked about the rising unemployment rates and poverty risk among the young. Combining family life and work should be better taken into account in pension reforms. d'Addio estimates that inequality within the OECD countries will grow. The situation is particularly bad for women.
Kathrin Komp, Assistant Prof. (Univ. of Helsinki), pointed out that a "lost generation" is emerging particularly in Southern Europe. Too many young people are unemployed and have been so for too long.
Prof. Dirk Hofäcker (Univ. of Duisburg-Essen) spoke about the pull, push and retention factors of the elderly in the labour market. He also pointed out that the employment rate of 60-year-old men in Germany grew from 27 to nearly 60 per cent in 2000-2014.
Prof. Traute Meyer (Univ. of Southampton) presented a recent study according to which the pensions of work-related migrants relative to the pensions of the original population will be too low in many countries. The issue can turn into a political dilemma in the future.
Prof. Joakim Palme (Univ. of Uppsala), pointed out that the current discussions on ageing focus too much on savings and cuts. Instead, investments in education are needed to improve productivity and boost GDP.
The tax rate for an income that consists of pensions and wages is lower than if the income consisted of only a pension or only wages. This is because both pensions and earnings are subject to certain tax deductions. Combined, they result in a lower tax and contribution rate.
If people who draw a partial old-age pension cut down on their working hours, their total income will be less reduced since the taxation is progressive. Correspondingly, if they work full time while drawing part of their pension, the progressive taxation tightens.
The pension income can consist of an earnings-related, a national and the guarantee pension, as well as a housing allowance. Pensions are taxed as earnings, but no tax is levied on the housing allowance. Working while receiving an old-age pension does not affect the amount of the earnings-related or Kela pensions. A monthly pension income that is higher than €860 is taxed as earnings.
Quicker Access to Rehabilitation
The social and health care reform (SOTE), planned to come into force in 2019, is hoped to put a stop to breaks in the rehabilitation chain.
Maarit Gockel, Medical Director at Elo Mutual Pension Insurance Company, has high hopes for the reform: ”Performing a medical procedure, for example, a knee operation, is not enough. The aim should be to clearly improve the patient’s ability to function in everyday life and at work.”
To reach this aim, hospitals and occupational health care should cooperate more closely since the latter is familiar with the demands and opportunities at the workplace.
Gockel is worried that employees’ functional and work abilities and the required work task adjustments are not taken as a natural part of personnel management at workplaces.
“We should learn from countries such as Germany in which companies have a statutory duty to recruit a certain number of people with a reduced ability to work.”
Will I Get What’s Mine?
One hundred thoughts on work and pensions is a campaign arranged by the Finnish Centre for Pensions, the Youth Academy and TELA as part of the centenary celebrations in Finland.
In one of the workshops, students at Vuosaari high school ask, in Miriam Zahir’s (19 yrs) words, “Will I get my pension contributions back in the form of a pension one day?”
Although their retirement is far off, these students have clearly thought about it.
Minka Kytö (18) trusts that when she pays contributions, she will eventually benefit from it herself.
Jusa Huttunen (18) wants to become an entrepreneur and live on his pension and investment returns when he retires.
Aziz Ibrahim (18) finds pensions to be a good back-up plan, but working with something he likes is more important than making a lot of money.
Arttu Salonen (19) thinks the average pension of €1,600 should be enough to manage on.