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Atypical employment relationships and employment interruptions are more common among today’s youth in EU countries than among older generations. According to a recent international study, current pension systems do not fully consider these non-continuous and atypical careers.

This unique study offers in-depth evidence on how labour market insecurities and career breaks affect the pension adequacy of today’s youth in Europe in the long run. Conducted within the EU Cost Action YOUNG-IN network, this edited volume involved 15 researchers from different countries. The Finnish Centre for Pensions participated in the network as part of its international research collaboration.  

Atypical employment relationships and unemployment are considerably more common among the young of today than previous generations, as stated in this research publication. At the same time, pension reforms carried out in recent decades in several countries lead to less generous pension benefits in the future. The reforms have strengthened the link between earnings accrued during long, continuous employments and adequate old-age income. 

According to the study, the earnings of the young may remain low due to atypical employment relationships and unemployment. At worst, this may lead to an inadequate income in retirement.  

“In many countries, pension reforms increasingly shift the responsibility for old-age income to the individual. At the same time, the ability of the young to accrue pensions and save for their retirement has weakened”, says Senior Researcher Kati Kuitto (Finnish Centre for Pensions), co-editor of the book. 

Periods of unemployment and new work forms partly ignored in pension systems

All in all, there are gaps in pension accrual in Europe, particularly during periods of unemployment. Part-time and fixed-term employment is fairly well taken into account in pension systems, but new work forms, such as solo self-employment and zero-hour contracts, may be overlooked. 

According to Kuitto, the findings of the book showthat the labour market position and attachment of the young should be continuously monitored to allow for timely adaptations of pension policies. Social security coverage during career breaks should also be reviewed. All pension reforms should carefully assess how the changes made affect the position of the young.  

“It’s not only about the pensions of the youth but about their income and wellbeing throughout their life course. A strong start to working life is required, and education plays a key role. In addition, we need to support the health and working ability of the young in different ways”, Kuitto assesses the results from the perspective of EU countries.  

A research webinar on the subject will be arranged by the Finnish Centre for Pensions on 8 May 2023.

Research publication
Dirk Hofäcker & Kati Kuitto (eds.), 2023. Youth Employment Insecurity and Pension Adequacy. Cheltenham: Edward Elgar. 

EU COST Action YOUNG-IN network  

Finnish Centre for Pensions – Central body of and expert on statutory earnings-related pensions