The removal of the pension pipeline is the government’s most significant single employment measure. It aims to have 9,000 additional employees.
From the pension tube the abandonment was a painful decision for the country’s government, but scholars support the reform for a number of reasons. First, researchers interviewed by STT believe that the reform will not lead to a worsening of unemployment among the elderly – at least not significantly.
“As far as this type of action is concerned, the time is right, as employers are now reporting a growing labor shortage,” says the director of Laboren (formerly the Employees’ Research Institute). Mika Maliranta.
Maliranta, who also works as a professor of economics at the University of Jyväskylä, says that according to the research results, reforms such as the removal of the pension tube should be done in the upturn in which Finland is now. There is also evidence that removing the retirement tube will increase the supply of work.
Government your line just over a year agothat the so-called pension tube will be phased out from the beginning of next year. Employees who have become unemployed near retirement age will therefore not receive additional days of earnings-related unemployment insurance before retiring. The lower limit for additional days is to be raised in stages so that those born in 1965 are the first age group not to enter the pipeline.
The government’s proposal to remove the pension tube ended on Thursday.
Retirement tube research professor who studied the effects Tomi Kyyrä The State Economic Research Center (VATT) believes that after the reform, more and more older workers will be able to continue working directly until retirement age.
“The purpose of the pension tube is to secure the livelihood of the elderly unemployed, as it is more difficult for them to find employment. But the key problem is that employers often target redundancies at employees who are eligible for the pipeline, ”says Kyyrä.
When employers need to lay off a lot of people at once, the pipe has been a handy tool.
“It is more socially acceptable and easier to lay off people whose livelihoods are secure. It may be that the unions have also thought that this is a better option than laying off younger workers, ”says Kyyrä.
According to Maliranta, the pipeline has been a so-called profitability tool for companies. It has been particularly attractive during downturns.
“The pension pipeline has reduced the incentives for companies to think about work organization and staff training in such a way that older people are productive in the company.”
Ministry of Finance (VM) Specialist in the Budget Department Allan Seuri acknowledges that reform is a weakening of social security. For some people, that means a decrease in disposable income.
“To my understanding, the decision to remove the pension tube was not an easy one for the government. At the same time, therefore, there was a desire to re-introduce measures to support employment, such as a new security package and changes to wage subsidies, ”he says.
Unemployment benefits are roughly halved if the pension tube changes to labor market support.
According to Kela’s unemployment security statistics, in 2020 the average level of unemployment insurance for a person with a pension tube was EUR 1,550 per month, while for an employee with labor market support it was EUR 740. There is not that much difference in disposable income due to taxation and supplementary benefits, Seuri says.
Seuri also points out that even after the removal of the pension tube, a person who is at least 57 years old retains the opportunity to restore their earnings-related daily allowance by participating in compulsory work, ie working as a so-called support worker.
VATT has found out whether the tightening of the pension tube is reflected, for example, in an increase in the use of disability pensions or sickness benefits. However, according to Kyyr, no such effect has been found.
“One fear has been that if people are not allowed into the unemployment pipeline, they will be so frustrated that they will not be able to continue in employment and will therefore end up on a disability pension.”
The number of people who end up in the pension tube is not uniform. However, researchers say a low level of education is a key threat. According to the Board’s proposal, the number of people in the pension pipeline was just under 6,000 at the end of 2020.
Malirannan according to him, the unemployment problem should not be addressed with solutions such as the pension pipeline, even when the economic cycle worsens in the future.
“I would introduce other tools to secure the welfare effects. This could be education, for example, ”says Maliranta.
The general tube for all older people also does not serve those in different labor market situations.
“The same formula has now been used to solve the problems of older people who do not really have significant problems finding a new job or keeping an existing one.
According to the curve, the age limit for the pipe has been phased up since the 1990s, when it was 53 years old.
“Whenever the age limit for the retirement tube has been raised, for the group targeted by the blackmail, employment has improved.
Government aims to eliminate about 9,000 additional employees by the end of 2029 by removing the retirement tube. Of all the employment measures that improve the government’s employment, the removal of the pension tube is, according to the Ministry of the Environment, the most significant single measure.
Weakening of such benefits will have to be made because there is a structural deficit in the general government that needs to be corrected in one way or another. The removal of the pension pipeline will strengthen public finances by an estimated EUR 190 million per year.
According to the government’s proposal, the financial impact of removing the additional days would be small next year. However, they will increase until the last persons entitled to additional days are of retirement age at the end of 2029.
The removal of the pipeline is part of a broader law reform to raise the employment rate of those over 55 years of age.
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