Dissertation_Paula Aleksandrowicz_12 ... - Jacobs University

was utilised already since the late seventies in times of high unemployment. Due to the
prolonged period of receipt of the earnings-related unemployment benefit and the release of
unemployed aged 58 and more from the obligation to seek work, this exit pathway could
start as early as at the age of 57 years and 4 months. The employer dismissed the older
worker or signed a cancellation agreement and granted him/her a severance payment
bridging the period until the receipt of the unemployment benefit and a smooth transfer to
an early retirement pension at the age of 60. Several provisions instituted since 1997, and
completed in 2004 (see section 3.2.2.) have made the ´59 rule´ less attractive to employers
and employees.
The dividing line between the ´59 rule´ and the statutory pre-retirement scheme
(Vorruhestand; see section on pension reforms) was blurred in many branch regulations
(Kühlewind 1988: 56) 18 , especially when the instrument was extended to a ´company-based
pre-retirement scheme´ (betrieblicher Vorruhestand) and freed of the obligation to hire a
successor (Voges 1988: 67-68). It was thus a classic example of ´instrument substitution´ in
the meaning of Casey (1989). Statutory pre-retirement and the ´59 rule´ also differed in the
locus of control – while the latter was often more attractive to workers in financial terms,
only the first gave them control over the exit process. This accounted for the dislike of
employers for pre-retirement (Jacobs et al. 1991: 209-211). Companies incurred lower costs
when utilising the ´59 rule´ (Oswald 1999: 215). The locus of control is related to the
question of voluntary vs. enforced exit. Statutory early retirement pensions, the preretirement
and the early retirement scheme entail a (larger) freedom of choice on part of the
employee. With regard to the 59 rule, the unemployment and the health pathway, the
delimitation between employee´s choice and firms´ enforcement is fuzzy (Jacobs et al.
1991: 202-204; Wurm et al. 2007: 81).
The early retirement scheme may be utilised past 2010, although the reimbursement of
increased salary by the employment office expires by that date. The companies may,
however, still profit from the exemption of the increased part of the salary from tax and
social contributions (Hanau/Rolfs 2008: 19).
Occupational pensions in Germany have not yet constituted a pathway into early exit as
is the case in residual welfare states (U.K., USA, Japan and Ireland; Ebbinghaus 2002:
193ff). As of June 2004, 42 per cent of gainfully employed women and 47 per cent of
18 Legal differences were that the pre-retirement scheme was subject to contribution payment and that it was
tax-free.
50