Incentives to extend working life

The European Commission is seeking to limit early retirement by offering incentives as part of a move to lengthen working life in relation to pension fund reforms. A report by the Commission’s economic policy committee also focuses on early retirement. Its findings will be discussed at the EU’s Spring Summit in Brussels this Friday. According to the report, the Stockholm objectives of increasing average employment in the 55-64 age group by 50 percent by 2010 will not be easy to achieve. There is also pessimism on reaching the goals set out during the Barcelona Summit concerning the prolongation of working life by at least five years for the middle-age group. The Commission has also admitted that while the majority of countries have taken specific measures, these do not seem to be producing results. There is an exceptionally large pool of potentially economically active workers who are in the older age group. The gap with the USA is massive. For example, in 2001, the employment rate in the 55-64 age group was 38.6 percent in the EU compared with 58 percent in the USA. Belgium, at 26.5 percent, had the lowest number in work, followed by Luxembourg with 26.7 percent, Italy with 28 percent, Austria with 28.6 percent and France with 31 percent. Sweden had the biggest percentage, with 66.5 percent of those in the 55-64 age group employed, followed by Denmark with 58 percent. These two countries, together with the UK and Portugal, are the only ones that have fulfilled the Stockholm goals. The proposed solutions do not seem to be working. Specifically, these include financial incentives for workers to continue working after 65 and cutbacks in the lowest pensions, which are not proportionate to the contributions made.

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