Unemployment still a major risk for elderly workforce

Although more than half of the Finnish and Dutch population who work in their mid-fifties manage to reach their retirement age, there are many trajectories out of the labour market. Reforms in the 2000s have contributed to longer working lives in both countries, but elderly women and low-educated workers continue to run a greater risk of unemployment and inactivity.

According to a fresh doctoral dissertation, retirement is a long-term process rather than a single event. A comparison between Finland and the Netherlands by Senior Researcher Aart-Jan Riekhoff shows that retirement includes multiple transitions that take place over several years.

“Many people get some other type of pension or benefit before they retire on an old-age pension. For example, both in the Netherlands and Finland, unemployment or sickness often result in an early, permanent exit from the labour market. The risks tend to add up over the life course for people with a low education, insecure jobs and low earnings. As a result, their pensions are quite small. We need interventions at an early stage if we want our older workers to stay in the labour market longer,” Riekhoff says.

One out of ten retire from unemployment

In his doctoral dissertation, Riekhoff has followed the employment lives of Finnish and Dutch workers from their mid-fifties until retirement. Welfare and pension systems are similar in many regards in Finland and the Netherlands. In both countries, it is possible to retire early or late, and many people also retire after longer spells of sickness, disability and unemployment.

“Looking at the factors that contribute to each of the trajectories, it is clear that a higher education reduces the risk of involuntary early exit in both countries. The relation of socioeconomic status with the trajectories differs in both countries, especially for farmers and blue-collar workers,” Riekhoff explains.

In Finland, one out of ten retire from unemployment. Other differences are the much higher labour force participation of older women in Finland and the high incidence of part-time employment among women in the Netherlands.

Risk for unemployment higher for women and workers with a lower education

In both Finland and the Netherlands, the trend to work longer is prevalent. Benefit and pension system reforms have played an important role in this development. Riekhoff’s dissertation also examines how the reforms might have affected the stability of late careers.

“Following the reforms, elderly workers in Finland tend to stay in employment longer and are less likely to become unemployed. As a result, they have slightly more stable working lives overall, with fewer labour market transitions. However, it would seem that men and workers with a higher education have benefitted more from greater job mobility while the risk for unemployment and inactivity has continued to be higher for women and low-educated workers.”

The research is based on two population datasets for both countries. The first dataset for the Netherlands included 2,277 persons born between 1943 and 1945. The other included 12,843 people born between 1940 and 1946. The first population dataset for Finland included 56,000 persons born in 1948. The other dataset included 238,099 persons born between 1937 and 1948.

Doctoral defence at the University of Tampere on 21 September

Aart-Jan Riekhoff (M.Sc.) will defend his doctoral dissertation Retirement Trajectories in the Netherlands and Finland: Institutional Change, Inequalities, De-standardisation and Destabilisation at the University of Tampere on Friday, 21 September 2018 at 12 noon (University of Tampere, Linna Building Auditorium K103, Kalevantie 5, Tampere). Opponent: Prof. Joakim Palme, Uppsala University. The defence will be in English.

Riekhoff’s thesis is also published by the Finnish Centre for Pensions (Studies 05/2018)

Photo: iStock

More information

Aart-Jan Riekhoff, Senior Researcher, phone +358 29 411 2361, arie.riekhoff(at)etk.fi