Juhani Artto

Another positive outcome of the agreement is that the expected extension of work careers will serve to balance the state budget, in the long-term, by over EUR 2 billion per annum.

The agreement also paved the way for the government to refrain from any major cuts in social spending. The labour market confederations agreed on the work career agreement at the 11th hour prior to a meeting where the government was due to make (and also made) decisions on a budget framework for several years to come.

The agreement raises pension contributions - paid by both employers and employees - in 2015 and again in 2016. The contributions to be paid by both parties (employers and employees) are set to rise in these consecutive years by 0.4 percentage points. These increases are necessary to safeguard the financing of future earnings-based pensions. At first the employers resisted this rise in contributions.

Small changes to the pension system

The labour market organizations have negotiated many years on how to extend work careers. Three years ago they had agreed in principle to this goal but had ever since disagreed seriously on the means to bring it about.

The employers' number one demand was that the minimum age of retirement should be raised from the present 63 years to 65 years. This 63 year minimum age remains untouched in the agreement but the reform package will make it, in two other ways, more difficult to become a pensioner. The option to become an old-age pensioner prematurely will be closed in 2014 and the minimum age for part-time pension will be raised from the present 60 years to 61 years in 2015.

Negotiations on pension reform(s) will continue. The parties set the year 2017 as their deadline for reaching a common understanding on the next stage of pension reform. The negotiations will cover age limits, early retirement schemes, pension contributions and several other issues.

Measures to make employees willing and able to work longer

The agreement includes many initiatives to improve working life so that employees are able and willing to remain in working life longer. Measures are expected from, among others, the earnings-based pension institutions and company health care organizations. And at work places, the application of age programmes is to be safeguarded by preparing individual career plans. Late last year the parties agreed on the creation of age programmes at the workplace.

Easier eligibility in respect of earnings-related unemployment benefits

Eligibility for earnings-based unemployment benefits is also to be made easier. In future, a six months' work period (instead of the present eight months) will be enough to make one eligible for earnings-based unemployment benefits. On the other hand, a work career which is of less than three years duration only entitles one to pay related benefits for 400 days (instead of the present 500 days).

Read also:

• STTK: Proposals of labour market organizations set to extend work careers and safeguard justice, STTK 26.03.2012
• Labour market organisations agree on pensions and unemployment security reform, Helsingin Sanomat 23.03.2012