The retirement practices of firms caught between labour market and retirement policy interests
Abstract
"The particularly large decrease in the labour force participation of older workers since the mid-70s in the Federal Republic of Germany is primarily due to institutional policy factors. To contract the current problems of mass unemployment, legislators demanded policies for reducing the overall economic supply of labour. Regulations for 'externalising', i.e. shedding older workers through laws such as the 'Retirement Pensions for the Unemployed' or the 'Law on Early Retirement played an essential role here. However, the cost burdens on the statutory pension schemes resulting from these early retirement policies and the expected demographic development have more recently led legislators to enact measures in the opposite direction, in other words, to extend working life. The 'Pension Reform Act of 1992', including amongst other things a new regulation of the additional earnings limit through the introduction of partial pensions, has led to a competitive situation in the legal regulations, which is geared either to labour market policy needs or to retirement policy standpoints. This paper studies how the existing retirement schemes can be used at the micro-level by individual firms. The most important results from the social sciences literature were first compiled. Then the results from two of our own exploratory surveys on the staff reduction policies and the employment policies of insurance firms were included. The studies show that older workers are being shed early on a large scale by the firms - irregardless of the situation of individual firms, their specific sector or the qualification structure of their workforce. An extension of working life, on the other hand, plays no role at the moment. Acommon basis is found in the shedding of older employees both from the point of view of the firm as well as of the employee: The point of staff reduction for employers is to create a 'younger' workforce. Anumber of the older employees is happy to leave the firms 'treadmill', others succumb to social pressure from their younger colleagues and the members of the works' council to accept the alternative status of the financially very secure 'early pensioner' and hence contribute to the preservation of jobs for younger colleagues. The partial pension as a means of extending working life has played no role up to now in the insurance firms studied, because it is financially unattractive and the requirements for claiming it are too high. Instead, the workforce is 'relieved' through early retirement by a financially much more attractively structured early retirement agreement. The firm's management is in favour of retiring older workers early in order to improve their qualification structure by hiring younger workers. Who will suffer most from these policies of shedding workers cannot be calculated by the desicion- makers in the firms. They use the existing legal instruments for the needs of their res-pective firms, which are not (yet) directed toward preserving the labour force potential. As a consequence, measures for prolonging working life are not likely to be applied in firms, as long as employment policy pressures can yield to management policies of shedding workers, because financially more attractively structured instruments are available from the legislators (through the Employment Promotion Act) or from management and labour representatives (through early retirement agreements)." (Author's abstract, IAB-Doku) ((en))
Cite article
Gatter, J. & Hartmann, B. (1995): Betriebliche Verrentungspraktiken zwischen arbeitsmarkt- und rentenpolitischen Interessen. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 28, No. 3, p. 412-424.