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Mon, Jul 02, 2007 - Page 11 News List

Finland seduces its older employees to work longer

AFP , HELSINKI

Finland, the European country with the most rapidly aging population, has succeeded in convincing its workers to delay retirement, setting an example for the rest of Europe.

Often called the "Japan of Europe" because its population is aging so fast, Finland introduced a pension reform in 2005 that initially appeared to be a bitter pill to swallow but that has in fact gone down easily.

Workers are encouraged to work longer in order to earn more, thereby easing pressure on the state pension system to support the growing number of retired people.

Last year 16 percent of Finns were aged 65 or older, a figure that is expected to soar to 26 percent by 2030.

Since the reform was introduced the average retirement age has increased by six months, from 60.1 years in 2004 to 60.7 years last year. The employment rate for workers aged 55 to 64 is now more than 50 percent, 10 points higher than the European average.

"We're on the right track," said Ismo Suksi, project manager at Finland's Social Affairs Ministry.

According to a poll published last month, 65 percent of people aged 50 years and older are in favor of the reform.

Up until 2005, the legal retirement age was set at 65 but early retirement was popular since the financial ramifications were minimal, with a significant part of a worker's pension based on the salary earned during the last 10 years of employment.

Finns can now take full retirement any time between the ages of 63 and 68, and early retirement is penalized with lower pensions.

Work-related pensions are based on contributions from both the employer and the employee, with the former contributing about 20 percent and the latter about 80 percent.

The Central Organization of Finnish Trade Unions said the reform has been well-accepted for the most part, though some compromises were necessary to get the bill passed including more flexible work schedules and work conditions for the oldest seniors.

At lock company Abloy, employees older than 55 are entitled to exercise on work time in the company gym. They can also choose to work part-time and enjoy extra paid vacation, starting with six days a year at age 58 and 20 days a year after the age of 63.

Oras, a plumbing fixtures manufacturer, is a forerunner when it comes to elderly workers.

"Experiences have been good and we have raised the average retirement age from approximately 59 to 63" since 2001, said Merja Helkelae, the head of Oras' human resources department.

Mobile phone maker Nokia has no special program for seniors but the company offers them special working conditions if they do choose to stay on.

"Part-time pension is an option, and employees can also, when possible, work in two shifts instead of three if they have health reasons," spokeswoman Paeivyt Tallqvist said.

Unions are quick to point out that not all Finnish companies have adopted special programs and senior citizens are the first to suffer when there are cutbacks in the social welfare system.

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