Dissertation_Paula Aleksandrowicz_12 ... - Jacobs University

With regard to the legal and collectively agreed protection against dismissals, the
assessment is equivocal: The OECD (2005a: 116) sees it as impediment to a more flexible
recruitment policy (see also Eichhorst 2006a: 107-8 in the same vein). Some scholars argue
that job protection increases costs related to laying-off older workers and without this
protection, older workers already on the job would run a higher risk to lose it, while the job
promotion effects would be negligible (Aust/Kremer 2007: 119-120; Naegele 1992: 379).
The dismissal protection also fosters human capital investment (Bosch/Knuth 2003: 137;
Eichhorst 2006a: 107), as it raises the probability that the workers will utilise the new
qualifications in the same firm.
3.2.3. Impact of Institutional and Structural Changes on Retirement
Transitions and Employment
The analytical model depicted in Figure 3 asserts an impact of institutional regulations
which bring about a specific pension and labour market policy on the one hand, and a
specific system of industrial relations on the other hand, on firm behaviour. The agency of
firms – the way they translate institutional regulations into company practice – is a ´black
box´ so far, and will be elucidated on concrete firm examples in chapters 4.2.-4.4. In this
section, I will present and discuss the final result of that ´translation´ mechanism –
aggregate statistical indicators on the timing of exit and labour force participation. At the
end of this section, hypothesis 4 will be tested.
Pension reforms (as depicted in section 3.2.1.) have shaped exit preferences of workers
which, in combination, set opportunities and restrictions for firms to regulate the exit of
older workers. The introduction of the flexible retirement age in 1972 with the purpose of
´humanisation of working life´ initiated the trend towards early retirement. The acceptance
of a lower age of exit by workers gave rise to firms´ interest in that option for solving labour
market problems, as they could rely on a collusion of interests.
Table 4 below depicts how the average age of pension take-up has developed in the last
decades. The table shows that the average retirement age declined by 1.7 years between
1970 and 2000 and has risen afterwards. The downward trend in the disability pension
scheme was steepest, and still continues.
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