The coronavirus epidemic could stymie to efforts to keep older workers on payrolls until retirement and to get jobless seniors into the workforce.
According to Jari Kannisto, a development manager at the Finnish Centre for Pensions, the crisis has already led to a rise in the number of pension applications, particularly attempts to go on partial early retirement.
Workers at the end of their careers are also more likely to be cut from the payroll as firms try to ride out the storm, he noted. Kannisto said that by contrast, the 2008 global financial crisis only caused a small dip in employment among older workers.
Prior to the coronavirus outbreak, there had been a steady increase in the number of pensioners at work. According to Kannisto, every year between 100,000 and 150,000 pensioners on average were in the workforce.
"Good economic conditions allowing, their importance is quite great," Kannisto commented.
Few work until formal retirement age
Most people in Finland stop working before they reach retirement age at 65. As a result, various governments have aimed to defer the retirement age in Finland. The current target is to raise the average retirement age to 62.4 years.
The reasoning is that the longer an individual's working career, they more they can contribute to footing the cost of caring for an ageing population. There have been some successes: the employment rate among 55 -- 59 year-olds has risen to 79.1 percent, compared to the overall rate of 72.6 percent. One reason for that has been government policies that hiked the age at which people can transition from unemployment to pension benefits.
Additionally, the Juha Sipilä administration implemented pension reforms that saw an incremental rise in the retirement age, a policy that began in 2017. It means that people born in 1962 will reach the full pension age of 65 in 2027.
The new pension scheme allows for a partial old-age pension at 61, at which time they will be able to take out 25 or 50 percent of the pension they’ve earned, however their benefit will be docked by 0.4 percent reduction for each early month.
However, employment figures do not look as promising for older age groups in Finland, especially compared to other Nordic countries where older workers are more common.
Senior workers likely won't save the economy
There are many so-called "hidden unemployed" people among the ranks of the retired. This group includes people who are willing and able to work, but do not actively seek employment opportunities, mainly because they don't think they'll find jobs.
According to Statistics Finland, in the early months of this year, 4.5 percent of the hidden unemployed were in the 65-70-year age group, while they comprised 2.6 percent of all working age people. Based on these numbers, some 30,000 pensioners would like to find work.
That number happens to correspond with the number of jobs that the government committed to create in budget talks last year, in order to meet its employment target of 75 percent.
However the coronavirus crisis has upended the government's calculations, while employment options for older folk are narrowing. According to Kannisto, getting more older workers into jobs will not solve Finland's economic problems.
"The future of the national economy will rest on the employment rate among working age people, in other words, the active age group," he explained.