Dissertation_Paula Aleksandrowicz_12 ... - Jacobs University
Dissertation_Paula Aleksandrowicz_12 ... - Jacobs University Dissertation_Paula Aleksandrowicz_12 ... - Jacobs University
gainfully employed men were covered by an occupational pension scheme (BmAS 2005: 112). The take-up age is bound to the receipt of a statutory old-age pension. As the overview has shown, the reform measures from the seventies till the mid-nineties were characterised by an expansion of opportunities for early exit. The social security systems took on the role of easing the labour market pressure. That trend started with the introduction of the ´flexible retirement age´ in 1972 and was completed with the introduction of the early retirement scheme in the blocked model. Only in 1996 did the legislator in Germany enter the retrenchment track in view of fiscal strain on the public pension system and of demographic change. This happened by the introduction of pension deductions and by lowering the target pension level. This was a decisive departure from the former de-activation and externalisation policy. A new risk awaiting oncoming generations of pensioners will be old-age poverty due to falling target pension levels and insufficient utilisation of additional sources of old-age income (FMoHSS 2005: 18-20). The recent reforms pose therefore a strong incentive to continued employment and additional saving. In time, the employment and retirement figures in Germany have started keeping up to the expectations of the legislator, as section 3.2.3. will show. In the future, the falling replacement ratio from the main pension pillar will make private and occupational pensions more important as complementary income sources but not as separate exit pathways. The basic protection for needy older people and for the disabled established in 2002 may serve as a disincentive to prolong working life and to invest in private pensions, as it is subject to means-testing. Especially the utility function of low-income earners is thereby altered. The variety of pathways within the German social insurance systems are complemented with pathways set up in a public-private partnership between social partners, employers and the state. The costs for early exit are mainly shifted to the public purse, as the more frequent utilisation of the ´59 rule´ than of the pre-retirement scheme distinctly shows. The locus of control on part of the employers in case of the ´59 rule´ also plays a role here. In contrast, the part-time model of ATZ and the partial pension are unpopular; inter al. due to the dislike of both employers and employees for part-time work. 51
3.2.2. Overview of Changes in Labour Market Laws The introduction of pension deductions, the raising of retirement ages and restricting access to disability pensions is one way to tackle the issue of early exit. Another one is to modify the levers of labour market policy which, on the one hand, regulate the access to the unemployment pathway and, on the other hand, mobilise financial resources in order to retain older workers on the labour market. Labour market policy in Germany has developed along similar routes as pension policy. Till the middle of the nineties, there existed a joint consent among the policy-makers, social partners and the individual workers that early retirement was a tool to combat labour market problems, especially among younger people. When older workers were considered as a target group, it was with the goal to fight (long-term) unemployment. Older workers “have been regarded more as a target group for cost-reduction initiatives and less as an important target group for active labour market policies” till a “change in paradigm concerning older workers´ issues” occurred at the end of the nineties prompted by the concern about the looming labour and skill shortage and the pressure on public sector funding (Naegele 2002: 223). That paradigmatic change was the shift of the focus to active labour market policies accompanied with the curtailment of early exit options. In the following, I will first expound passive labour market policy, which constituted an early exit pathway via unemployment, and then turn to activating measures as an element of the trend reversal and the turn towards longer working lives. The last paragraphs will deal with labour market laws which have an impact on the employment relationship and may constitute a barrier to re-employment, like seniority rules and protection against dismissals. The unemployment protection in Germany grants an earnings-related unemployment benefit (Arbeitslosengeld I, in the following: unemployment benefit or AL-Geld I) – to persons who had been gainfully employed for at least 12 months – and a means-tested lumpsum unemployment allowance (AL-Geld II) after exhaustion of the maximum period of receipt of the first one. Between 1985 and 1987, laws were issued which, as a final result, extended the maximum period of receipt of the unemployment benefit for persons aged 54 and older to 32 months (before, there was a uniform maximum eligibility period of 12 months). Moreover, older workers from the age of 58 on were since 1986 released from the obligation to actively seek work (´facilitated receipt of unemployment benefit´ according to §428 of Social Code III). In 1998, 20 per cent of all unemployed West Germans aged 58-64 52
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gainfully employed men were covered by an occupational pension scheme (BmAS 2005:<br />
1<strong>12</strong>). The take-up age is bound to the receipt of a statutory old-age pension.<br />
As the overview has shown, the reform measures from the seventies till the mid-nineties<br />
were characterised by an expansion of opportunities for early exit. The social security<br />
systems took on the role of easing the labour market pressure. That trend started with the<br />
introduction of the ´flexible retirement age´ in 1972 and was completed with the<br />
introduction of the early retirement scheme in the blocked model. Only in 1996 did the<br />
legislator in Germany enter the retrenchment track in view of fiscal strain on the public<br />
pension system and of demographic change. This happened by the introduction of pension<br />
deductions and by lowering the target pension level. This was a decisive departure from the<br />
former de-activation and externalisation policy.<br />
A new risk awaiting oncoming generations of pensioners will be old-age poverty due to<br />
falling target pension levels and insufficient utilisation of additional sources of old-age<br />
income (FMoHSS 2005: 18-20). The recent reforms pose therefore a strong incentive to<br />
continued employment and additional saving. In time, the employment and retirement<br />
figures in Germany have started keeping up to the expectations of the legislator, as section<br />
3.2.3. will show. In the future, the falling replacement ratio from the main pension pillar will<br />
make private and occupational pensions more important as complementary income sources<br />
but not as separate exit pathways.<br />
The basic protection for needy older people and for the disabled established in 2002 may<br />
serve as a disincentive to prolong working life and to invest in private pensions, as it is<br />
subject to means-testing. Especially the utility function of low-income earners is thereby<br />
altered.<br />
The variety of pathways within the German social insurance systems are complemented<br />
with pathways set up in a public-private partnership between social partners, employers and<br />
the state. The costs for early exit are mainly shifted to the public purse, as the more frequent<br />
utilisation of the ´59 rule´ than of the pre-retirement scheme distinctly shows. The locus of<br />
control on part of the employers in case of the ´59 rule´ also plays a role here. In contrast,<br />
the part-time model of ATZ and the partial pension are unpopular; inter al. due to the dislike<br />
of both employers and employees for part-time work.<br />
51
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