Government backs down on plans to raise retirement age

Pension dispute negotiated in secret at PM’s residence

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The government and labour market organisations have reached agreement on the dispute about a proposed increase in the age at which pensions can be taken. The government has withdrawn its earlier plans to raise the pension-age in stages from 63 to 65 from 2011 onwards.
      Rather than the original proposal to be put before Parliament by the government of Prime Minister Matti Vanhanen (Centre Party), all three parties - labour unions, employers and the government - have committed themselves to raising the average age at which people leave working life - currently 59.4 years - by three years between now and 2025.
      The more specific details of this change will be prepared by the end of this year in a working party chaired by Jukka Rantala, the Managing Director of the Finnish Centre for Pensions.
     
The parties to the festering dispute met on Tuesday evening, when the matter was decided in practice.
      The meeting was attended by Vanhanen, the Minister of Finance Jyrki Katainen (National Coalition Party), and the leaders of three labour union confederations - Lauri Ihalainen of the Central Organisation of Finnish Trade Unions (SAK) , Mikko Mäenpää of the Finnish Confederation of Salaried Employees (STTK) and Matti Viljanen of Confederation of the Unions for Professional and Managerial Staff (AKAVA).
     
On Wednesday morning, Vanhanen did not admit to having suffered a reverse or a defeat in having to climb down on the original plans. He described the new plan as a win for all concerned.
      Ihalainen said he preferred not to look for winners and losers in the case, but added while the government's decision to scrap its pension-age increase was a positive development, the entire "episode" between government and unions had been completely unnecessary.
      The deal worked out will not affect the so-called social collective bargaining agreement over the financing of social welfare and unemployment benefits, worked out in January by unions and EK (the Confederation of Finnish Industry).
     
The labour union groups had been thoroughly angered at the government's unilateral decision in February, as they felt that such issues should be discussed - as has been the case before - in tripartite talks involving the labour union organisations, the employers, and the government.
      There had even been threats of a general strike if the government did not back down on the matter. The government, meanwhile, feels that a higher retirement age will be needed because Finland is becoming increasingly indebted as a result of the ongoing recession.
      Without a greater labour input in the years when the economy begins to grow again, recovery will inevitably be slow and painful, and Finland will see many of its baby-boomer generation heading into retirement at just the moment when their contribution would be needed.
     
The negotiators were originally to have approached the matter on Wednesday morning, but they decided that they wanted to hold the talks out of the public eye and they met at the PM's residence.
      Already on Tuesday, Prime Minister Vanhanen had a more conciliatory tone in his public statements on the issue, and he also indicated that at least the SAK was more amenable to cooperation on the matter than before.
      This afternoon, the government will respond to an opposition Parliamentary interpellation on the pension issue.
     


Previously in HS International Edition:
  Gallup: Two in three Finns demand cancelling government decision on old-age pensions (9.3.2008)
  Dispute over retirement age unresolved after talks between PM and union federations (5.3.2009)
  Organised labour angered by government decision on old-age pensions (26.2.2009)

See also:
  Working party to seek solution to dispute over retirement age (10.3.2009)
  NEWS ANALYSIS: Credit rating fears outweigh need to keep the voters happy (3.3.2009)

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