Active Ageing and Pension Policies in the Context of the European Employment Strategy

4. A European Trade Union View on the Future of Social Protection in General and of Pension Systems in Particular

4.1 The Defence of the Statutory Social Protection Systems

In the view of the European trade union movement, the statutory systems of social protection should remain the core of the European welfare state. These systems guarantee, better than any other, social welfare, social cohesion and social justice. They are also highly efficient in terms of poverty prevention and cost-effectiveness through their low administrative costs and non-profit-making status. In order to maintain and to increase their efficiency, the statutory social protection systems need to adapt both to the major changes in the labour market and new forms of work, and to the profound societal changes such as ageing, changes in family structures and the individualisation of our societies.
Apart from the fact that our social protection systems should respond to the growing need for active policies in favour of the millions of unemployed workers in the EU and the millions of job-seekers outside the EU, our systems should fully integrate the growing number of non-standard workers and of so-called ‘self-employed’, offering them equal rights and contribution obligations (see, in this context, the Preamble to the two framework agreements on atypical employment signed by the European social partners, in 1997 on part time work and in 1999 on fixed-term work). Greater flexibility in the labour market means higher economic insecurity and should go hand in hand with greater social security. In order to reconcile professional and family life, it is important that the social protection systems provide for the maintenance of social security entitlements during periods of parental leave and other types of career break (see, in this context, the European Framework Agreement on Parental Leave signed by the European social partners in 1996).

4.2 The Development of Occupational Pension Schemes

Besides the public social protection systems, supplementary insurance schemes, mainly of a contractual nature, are developing in Europe. This is particularly the case in the fields of pension insurance (occupational pension funds, group insurance schemes) and health insurance. The European trade union movement continues to give absolute priority to the public pension schemes based on solidarity between generations and financed on a ‘pay-as-you-go’ basis, and to statutory health insurance. Provisions for the development of second-pillar pension or health-care schemes are welcomed in so far as they do not infringe on the statutory systems, are not considered as alternatives to these systems, result from collective agreements and guarantee real rights to their members. Occupational pension funds should be organised on a collective basis, provide for compulsory membership and be accessible to non-standard workers. Mobile workers should be able to take full advantage of these supplementary schemes. The EU should (and has partially done so) set the legal framework for occupational pension schemes: guaranteeing workers’ rights and financial interests, equal rights for men and women, and portability rights; recognising the place and the role of the trade unions in the implementation, the monitoring and the investment policies of the supplementary schemes; and defining the prudential, transparency and taxation rules. The management of these funds should ensure a proper return on their investments as well as respect for social and ethical standards in their investment policies and choices. In this way, complementary pension funds can become an important instrument for the promotion of employment, decent labour standards and the protection of the environment.

4.3 Towards Progressive and Flexible Retirement

The European trade union movement is also very concerned about the growing number of older workers leaving the labour force long before the statutory retirement age: while statutory retirement ages are reviewed in an upward direction, more and more older workers are confronted with an early exit from the labour market. The employment rates for older workers decrease sharply after the age of 55. The European trade union movement cannot accept HR policies that involve systemically removing older workers from employment. In specific circumstances (high levels of unemployment, industrial restructuring, hard or stressful labour, long employment and contribution record) full time early retirement schemes are justified. Preference should be given to a system of progressive and gradual retirement, whereby reduced working time is combined in a flexible manner with partial retirement. An employment and social protection policy which seeks to take full account of the interests of older workers is committed to investing in lifelong training and learning and, in so doing, contributes to the sustainability of our social protection schemes. Such a policy should be an integral part of a strategy aimed at reorganising working time over the life span.

4.4 Towards the Individualisation of Social Protection Rights

The European trade union movement is also in favour of an individualisation of social protection rights in order to allow each adult, irrespective of matrimonial or labour market status, to benefit from his or her own rights (as opposed to the system of derived rights) on the basis of own contributions. If it is to be successful, such a policy shift requires a social protection model based on universal rights complemented by insurance rights (based on professional activities and on social contributions), care services and facilities for dependent persons and for young children, career-break provisions for the same purposes, a new division of family tasks between partners and, finally, an adequate transitional period to move from derived rights to individual rights.

4.5 Safeguarding the Future Financing of Social Protection

Safeguarding the financial viability of the social security systems in the long run is a basic concern of the European trade union movement. Governments should guarantee that the financial resources of the social protection systems grow in line with current and future needs. The best way to achieve this objective is through the promotion of sustainable economic growth and the expansion of employment. In this context it should be stressed that the European trade union movement has strong reservations about many of the arguments put forward in favour of a reduction of non-wage labour costs: any proposal in this direction should be linked to job creation and address the question of alternative financing. To help promote employment, the long-term trend toward higher taxes on labour should be reversed by shifting the tax burden towards other factors of production and by broadening the financial base of social protection. The erosion of the traditional tax base has to be reversed by increased efforts on the part of the EU towards tax co-ordination and convergence. Broadening the financial base of social protection presupposes that all forms of income, and not only income from labour, and all kinds of labour, and not just employed labour, should contribute equally to the financing of social welfare. Governments should therefore examine critically all existing tax exemptions, as well as all tax expenditures, especially those in favour of third-pillar provision (private pensions, life insurance policies, etc).
The full potential of the European single market and of the EMU in the areas of economic growth and job creation should be used not only for budgetary consolidation, but also for the consolidation of the social protection systems in the light of the ageing of our populations, and this must take place without weakening the redistribution effect and the solidarity principles which characterise the systems. The establishment of demographic reserve funds for public retirement pensions based on the increasing margins in the state budgets under EMU conditions (as has been done in the Netherlands, France, Belgium, Spain and Ireland) is an excellent example of such a policy. Governments should also guarantee the financing, on the basis of general tax revenues, of all non-contributory solidarity measures introduced into the social security systems.

5. Higher Employment Rates for Older Workers

The Lisbon European Council of 2000 adopted an ambitious plan for the future of Europe: by 2010 the EU should become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion. It specifically stated that the overall aim of employment and economic policies should be to raise the employment rate to as close as possible to 70% by 2010 and to increase the employment rate for women to more than 60% by the same year, not least in order to reinforce the sustainability of social protection systems.
In addition to the 2010 Lisbon targets, the Stockholm European Council of 2001 set a new target of raising the average EU employment rate for older men and women (aged 55 to 64) to 50% by 2010. Another target relating to older workers was set by the Barcelona European Council in 2002. It focuses on the average labour market withdrawal age which is to rise by 5 years by 2010. Recognising the limited progress achieved so far towards these targets, the European Council decided in 2005 to re-launch the Lisbon Strategy and refocus priorities on economic growth and employment. As part of this, a new set of employment guidelines for the period 2005 to 2008 was adopted and these form part of the “Integrated Guidelines” package also adopted in 2005, which lays out a comprehensive strategy of macroeconomic, microeconomic and employment policies to redress Europe’s weak growth performance and insufficient job creation. The employment guidelines continue to reflect the EU’s overall goal of achieving full employment, quality and productivity at work, and social and territorial cohesion, and advocate a lifecycle approach to work that tackles the problems faced by all age groups. Three broad areas for action were defined (EC, Employment in Europe 2006, p. 28):
• Attract and retain more people in employment, increase labour supply and modernise social protection systems;
• Improve adaptability of workers and enterprises;
• Increase investment in human capital through better education and skills.

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