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Experts: Over-55s hold biggest employment potential

Labour experts recommend more flexibility to take up part-time work and incentives for employers who hire workers older than 55.

Yli 60-vuotias hitsaaja.
Image: Jari Kovalainen / Yle

Two labour market experts are calling on the new government to focus on getting jobseekers over 55 years of age into work as the administration aims for a 75-percent employment rate by the end of its term in 2023.

Reaching that target will mean getting 30,000 people into jobs by next autumn, or better yet, next spring.

According to Katarina Murto, director for collective bargaining and representation with the white collar union confederation STTK, and Helsinki University labour professor Vesa Vihriälä, government should concentrate its efforts on employing the over-55 demographic.

"It's essential to consider all possible sources of labour broadly. Numerically, the greatest potential lies with the over-55-year-olds, if you compare Finland with other Nordic countries," Vihriälä said.

Murto, who has been a member of government's employment working group, said little attention has been paid to this demographic.

"We need more effective employment services for the elderly," she pointed out.

"Compared to Sweden, we have significantly lower employment among over-55s. It's a wonder that this has not been more strongly raised in the employment working group, for example," she added.

University economist: Time to end unemployment-to-pension path

The two economists differ in their approaches to boosting employment among middle-aged jobseekers. Vihriälä said he would terminate the option whereby an unemployed person over the age of 55 could ease straight into retirement.

"Experience has shown that when you raise the age limit (for retirement), employment has always improved and unemployment has declined," he argued.

Last summer government came to a settlement with labour market organisations to raise the age limit of the so-called direct path from unemployment to retirement. Currently, older unemployed persons can be paid an unemployment allowance for an additional period and seek a pension once the extended allowance ends.

The tripartite agreement meant that the age limit for the additional allowance increased by one year, a measure that will take effect from 1 January. The Finnish Centre for Pensions has estimated that the higher age limit for the direct route from unemployment benefit to pensions will put 6,000 people in jobs by the year 2025.

"Now we are raising it (the age limit) by another year. I think it should be eliminated altogether," Vihriälä commented.

He proposed rapid action to eliminate the unemployment-to-pension path if the government is to meet its employment goal.

"This should be reviewed very soon if we are aiming for 75 percent employment by the end of this government's term," he remarked.

Straight to part-time work, carrots for employers

STTK's Murto did not warm to the university professor's proposal. She said she would give older jobseekers greater latitude to take on part-time work, a measure that would require legislative reform.

"There are thousands of people who are willing and able to do part-time work," Murto estimated.

However she said she would beef up employment and health services for this group.

"Unfortunately it is difficult to find work and to stay employed as older people's working capacity declines. Now it is easy for older people with compromised working capacity to drop out of the workforce entirely," she noted.

Another confederation strategy would be to incentivise employers to hire over-55s. Murto suggested that employers could be allowed to pay lower statutory contributions for older workers for a fixed period.

Helsinki University's Vihriälä agreed that introducing incentives for part-time hires could be one plank of an employment strategy for middle-aged jobseekers.

The experts pointed to Sweden, where part-time work is one reason that there is a higher employment rate for older workers than in Finland. In Sweden, workers aged 55 to 60 as well as retirement age people engage in more part-time work than in Finland, where there is greater resistance to the idea among both employees and employers.

Foreign workers needed

Labour markets organisations have floated the idea of different tiers of earnings-based unemployment benefits as a form of incentive. In a model developed by the union confederation for professional workers Akava, jobseekers would get a bonus when they find work.

On the other hand, there would be no additional benefit for people already in work or out of a job. However labour minister Tuula Haatainen has rejected the idea, saying she does not want any cuts to unemployment benefits.

One paradox facing the government is the fact that unemployment has fallen to rather low levels in recent years (currently 5.9 percent according to Statistics Finland), so simply reducing unemployment will hardly help it reach its 75-percent employment target.

According to Vihriälä, work-based immigration would be required to increase the labour force. Depending on who's counting, the number of people not in the labour force or "hidden unemployed" ranges from tens of thousands to as many as 200,000.

Vihriälä said that the labour shortage creates a vicious cycle which also feeds unemployment.

"One important factor is work-based immigration, because there are many professions in Finland for which we don't have the required workforce. And if the workforce doesn't exist, it could be difficult to employ domestic unemployed people," he concluded.

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