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The Swiss lesson

The Swiss labour market experience is based on three sources: the core material is the 2010 working paper by OECD ( Duell,N.,P.Tergeist, U.Bazant and S.Cimper (2010)”Activation Policies in Switzerland”, OECD Social Employment and Migration Working Papers, www.oecd.org/els/workingpapers), which is completed with the experience of a study tour of the project participants in Switzerland, the experience of the workshop in Budapest and with the recent changes as well.

1.Economic background

Switzerland is characterized by high employment rates, low unemployment rates and high wages. This good performance is due to the collective factors deriving from the high degree of labour market flexibility, the decentralised wage bargaining and the relatively low employment protection. There is a strong focus on active labour market policiesand employment services are characterised by the principles of mutual obligation.

The employment rate is 82%, which is 10 percentage points higher than the average of the EU15 countries (in case of female employment it is 13 percentage points). The reasons behind the high employment rate of women are the following: increasing female employment (in 2000: 51.3%, in 2011: 69.6%), more jobs in the third sector, high share of part-time work and the increase of female retirement age from 62 years to 64 years.

The immigrants play a significant role in the population growth as their number reached a total of 1.7million in 2008. Two-thirds of immigrants come from EU countries. The skill levels of foreigners arriving in Switzerland have continuously been improving since 1990. Foreigners have lower wages and higher unemployment rates than the Swiss workers. The number of immigrants with permanent residence permits is increasing.

2. The characteristics of employment of older workers

The number of older people in the active population is growing: in 2000: 15.2%, in 2010: 17.5%, in 2020: 20%, in 2025: 22%. The employment rate of older workers (55-64) is high (70.5% in 2010). The EU average is 49.7%, Sweden: 74.5%, Malta 31.6%. This rate is growing with the time as it was 67.3% in 2001, 65.1% in 2005 and 69.5% in 2011.

The question of age is different in different sectors.The sectors of health care, education, power generation and the public sector are more affected than the average while the construction industry, the hotel industry and the IT sector are below the average. The rate of unemployment is low (less than 3%), but when older workers are unemployed, they find it harder to find work again.

There are more part-time jobsandmoreself-employed.Part-time work: 39.2% compared to 33.2% onthepreviousyear(25-54 years old). Self-employed: 21.1% compared with theprevious11%(over 55 years).

Expected retirement age

The rate of pre-retired people was 17.1% in 2010, and 17.55% in 2000. There is a large difference between the sectors; the highest rate was in financial and insurance sector (45.8%), the lowest was in agriculture (6.9%) and in the hotel and catering sector (10%).

The global economic downturn reached Switzerland as well: GDP declined by 1.5% in 2009 and the unemployment rate was 4.4% in 2010.

Swiss labour market and social policy have to face several challenges. First of all, although the public employment service, which was established 15 years ago, plays an important role in the labour market, it works with wide variation of performance both within and across cantons. Decentralisation of responsibility has caused the differences in the effectiveness of labour institutions. Today one of the main tasks is to even the operational differences between the institutions of labour market.

Unemployment affects foreigners and the low-skilled more than the average.There are three times as many unemployed foreigners and twice as many low skilled unemployed as the average. At the same time, Switzerland has a high share of long term unemployed (30% in 2009).

Social welfare spending has risen more than the expenditure on other categories in the national budget and it risks becoming untenable in the medium term. Invalidity benefit in particular has increased considerably since 1990. Today it is 5% of the working-age population.

Ageing population is a great burden on the Swiss economy and labour market. Life expectancy in Switzerland is 80 years for men, and 84 years for women, but fertility rate has declined since the 1970s. The number of births now exceeds the number of deaths so far, but it is due to the resident foreign population.

More than a decade ago Switzerland started a discussion on demographic ageing. Today the focal points of the discussion are the financial questions and questions concerning social security of demographic ageing. The discussion has reached the labour market by now and in its conference in 2011 Travail Suisse made a declaration titled ’Ten theses about demography-Manifest for better jobs’.

Switzerland has also launched an initiative involving social partners in the fight against poverty due to demographic ageing. The objective is implementing measures in order to optimize the use of labour force.Two target groups are set: women and older workers.

On the level of Swiss labour market and companies controversial trends can be seen concerning the employment of older workers. On one hand the number of older workers has risen due to the aforementioned initiatives by Swiss state; the trade unions, which have improved working conditions for older workers and have made the real age of retirement deferred; the employers’ organizations, which made the public sensitive about the issue in different platforms and networks. In some companies the leaders showed a good example in solving the problem, but they are only in minority.

On the other hand resistance can be experienced and the situation concerning older workers has even worsened:

  • in case of lifelong learning

  • discrimination and prejudice against low productivity of older workers (but experience is not concerned considerably at the same time)

  • older workers take up new employment harder

3. The institutional framework of labour market policies

Labour market organizations are responsible for implementing labour market policies formed by the social consensus. The effective operation or some of its dysfunctional elements have an impact on the effectiveness of labour market policies including the employment of older workers.

Federalism is the cornerstone of the Swiss political system. Policy decision making is decentralized and cantons hold the power. Labour market policies and measures are, however, under the scope of the national laws to some extent, such as the Unemployment Insurance Act and the Job Placement Act.

The Swiss Labour Market Authority at federal level is SECO (Directorate of Labour of the State Secretariat for Economic Affairs) at the Ministry of Economics. Seco sets the basic parameters of labour market policy and it is responsible for financing and administrating the active labour market programmes, but it also gives advice and supervises the cantonal employment services.

The cantons constitute the main level of public employment and administration. The cantonal labour offices implement the federal laws and supervise the unemployment funds. They are responsible for establishing and supervising local employment offices and the logistical centres for planning and estimating the needs.

The autonomy of cantons and the relative lack of coordination raise the question whether more regional synergies could not reduce the costs of administration. If the effectiveness of active labour market policy (ALMPs) could be increased, Seco could strengthen its role as a coordinator.

Local employment offices carry out placements to the clients and monitor job-search, with a special focus on activation strategies. They are supervised and co-ordinated by the cantons, but financed in accordance with the regulations of the federal unemployment-insurance scheme.All cantons manage a public unemployment fund, and there are also privately organised funds, from which employers and employees are free to choose.

The effectiveness of the labour market institutions depends on finding a balance between fast and proper placement. The effectiveness of the local employment services is measured with a system of benchmarking the performance and it is aggregated on cantonal levelandthe evaluation is yearly published by SECO. There was a rating system earlier with financial rewards or penalties, but it has been dropped.

Employment service is measured by means of four indicators: 1. the speed of reintegration of the unemployed into the labour market (50%), 2. prevention of long-term unemployment (20%), 3. prevention of benefit exhaustion (20%), 4. prevention of repeated registration for benefit (10%).

By publishing the results, the public employment offices are motivated to improve their performance.

Switzerland is one of the few countries where labour market policies nearly automatically respond to the level of unemployment. In order to reduce unemployment-insurance expenditure, SECO introduced a new degressive financing system for the implementation of active labour market measures,where cantons with low unemployment rates receive more money per jobseeker. SECO states that the maintenance of local employment offices and the implementation of active labour market measures mean fixed costs, which decrease with a higher number of jobseekers. It should be considered, however, that in difficult labour market conditions the risk of long-term unemployment increases and the jobseekers need stronger support. In this way degressive financing does not motivate the cantons to keep their unemployment low. It is also true that in times of rising unemployment the federal government can decide on temporary employment policy measures besides the unemployment insurance fund, as it has happened in the recent economic downturn.

Financing and operation of employment offices. Different funding of the offices, staff fluctuation and the maintenance of the necessary staff are important issues. The general rule is that in employment offices one counsellor aims to have 100 jobseekers (in 2008 this number varied from 82 to 125 across cantons). In times of rising unemployment,cantons receive additional funds to employ new staff, while in times of declining unemployment they have to make staff redundant. As newly hired staff have to complete public employment service training, it may take half a year for the new staff to become fully efficient. The delay in staff adjustment to varying unemployment causes temporary changes in the staff/client effectiveness.

As in most OECD countries, in Switzerland as well, social assistance is the most decentralised of the three main working-age benefit systems (unemployment, disability and social assistance). Social assistance is exclusively based on cantonal legislation and there are large differences of operation in different municipalities. There are, however, guidelines for social assistance, but these are not binding and the final say is left to local authorities. Nevertheless, cantons try to find similar structures in order to avoid the so-called welfare tourism, which is the migration between cantons for higher benefits. The guidelines recommend employment reintegration measures and the larger municipalities mainly run counselling and placement services, which provide social assistance, counselling and placement as well as organize active labour market measures. The most efficient scheme seems to be the Zurich Chancenmodell, in which there is an obligation for applicants to take part in an employment programme.

In Switzerland the system of invalidity insurance is a separate system regulated by the federal law. Each canton has an invalidity insurance office, which is supervised by the federal Social Insurance Office and independent from cantonal administration. The financing system via insurance contributions is far from sufficient. The offices have the responsibility to assess the degree of disability –this function has been strengthened by the latest reforms – to monitor the eligibility for benefits, to assess the degree of disability and future employment or rehabilitation prospects. Recent revision of the law has also emphasized the placement services of the invalidity insurance offices and has provided staff for this task.

Regional medical services were created in 2005 under a revision of the law. These services put an emphasis on employability and future rehabilitation. In order to fulfil this task efficiently, staff needs to have the necessary qualification in rehabilitation matters. There are large differences in regional medical services across cantons, but there is no canton where the GP is exclusively in charge with this task. Further reform can increase the role of the regional medical services by increasing the number of doctors or by increasing the scope of authority to assess eligibility for benefits.

In case of invalidity there are separate employment structures, where the main aim is early recognition and early intervention. People on long-term sick leave or disabled people need active support of invalidity offices in job-search and counselling in order to be re-integrated into the labour market. In case of people with health problems several factors should also be assessed: suitability of working conditions, work load, possible work re-organisation or physical workplace adaptation.

Today there is a certain competition between public employment offices and invalidity insurance offices in the placement of their clients. The invalidity insurance offices have developed efficient co-operation with socially sensitive companies, and thus they are often more successful here than public employment offices. The most effective result is, however, when invalidity insurance offices and public employment offices seek co-operation on each other’s strength.

Co-operation between the different institutions of the social security net is of fundamental importance as a lot of long-term unemployed have multiple handicaps and a certain number of clients move from one system to the other. Recently inter-institutional co-operation has been formalised. One of these models is MAMAC (Cooperation interinstitutionnelle) which has been developed by SECO, OFAS and cantonal contributors for people with multiple problems. The objective is to provide integrated placement support and to combine benefit payment in order to achieve effective reintegration.

Placement and activation measures in the local employment offices. The local employment offices provide several job-broking tasks, job-search counselling, handling vacancies reported by employers and referring them to suitable candidates. The employment offices play a significant role in supervising the participation in job search, employment programmes and training programmes. The registered unemployed should be ready for placement, should take steps to shorten the duration of unemployment, should be ready and apt to take up work and to take part in re-integration as well as being supervised from time to time.The proper attitude is forced with benefit sanctions. Benefit sanctions in Switzerland are among the highest in the OECD. However, employment offices encompass only a small part of the employment market and placement, due to the historically strong role of private placement agencies.

The main clients of the employment offices are the unemployment benefit recipients, but they also provide active labour market measures (ALMPs) in case of social assistance recipients and help them find employment, although large municipalities here organise their reintegration programmes. Office procedures and institutional structures differ across cantons in association with the decentralised employment service. Some cantons, for instance, have decided on establishing local units to handle employment contact and vacancies.

The employment office in Schaffhausen has 20 employees and institutionally it belongs to SECO. On average one employee deals with 120 clients per month. Their tasks are: issuing residence permit, running an organization against black market work, job protection. Apart from paying out the unemployment benefit (which is paid by the insurance company) all the matters concerning employment are dealt with here.

They have different programmes of their own such as Horizon +45, which helps the well-qualified; PTA, which is an educational organization; BENEVOL, the voluntary organization; SBAW, etc. Special programmes are based on the fact that different groups of people also have different needs, for instance in HORIZON programme there are workshops. There is the so-called Tandem programme, where volunteers are mentors and give personalised help, there is the so-called freiwilling, which is the place for further training.

Registration and interview procedure. The unemployed jobseekers register at the municipality offices in most places before they see the employment offices. This registration procedure, which both involves municipality offices and employment offices are quite unusual internationally. The delayed meeting with the employment counsellor might result in certain delays for the applicants, or in starting their job-search before applying for the benefit. A better approach would be if the first registrations were started at the local employment offices rather than at the municipality offices.

At the first interview the basic personal details are registered, such as work type and work history, and these are entered into the jobseeker database; jobseekers need to submit written proof of the vacancies they have applied for. There is no national profiling system, where the characteristics of the jobseekers could be used in order to estimate the chances of finding employment.

Vacancy handling.Nowadays more and more employers decide on publishing vacancies in advertisements or on the Internet. Some Swiss employers, however, prefer to ask local employment offices to make a pre-selection of the candidates. Vacancies are registered in an anonymous way into the database, so applicants should ask for the details from the local employment office counsellor. The advantage of this method is that the counsellor could refer to the most appropriate applicants. However, this method raises the work-intensity of the employment counsellors.

If the choice is to focus on direct referral,the efficiency of the referral system is of key importance and present practice shows that some improvements could still be made in this field. One third of the employers who received a candidate by the employment office did not know that there had been a pre-selection, and half of the applicants did not meet the job requirements. Moreover, counsellors sometimes seem to be inadequately informed about the labour market situation.

Switzerland is one of the OECD countries which has the strongest job-search requirements. This starts with the initial registration for placement as the Swiss jobseekers are liable to sanctioned if they could not prove their job search activities. During the monthly personal meetings, jobseekers have to present proof of their job applications. They still have to continue job search – though to a more limited extend – if they take part in active measures. These relatively rigid rules may result in too many pro forma job applications or pressure on jobseekers to accept such jobs which do not match their personal skills.

The Swiss labour market institutions have several measures to intervene in the unemployment period such as the counselling interviews, direct control and job-search monitoring. The intensity of such interventions highly depends on the number of counsellors and clients. The law requires counsellors to hold one meeting with a client every month. In recent years all the employment offices could meet this requirement. The number of monthly meetings varies among cantons, ranging from 0.8 and 1.6. The frequency of meeting has declined due to the rising unemployment during the crisis.

Quantitative analysis of job-broking activities of the employment offices.SECO collects and monthly publishes the changes in vacancies and job-search. The data shows that Switzerland is among the lower-performing countries regarding the vacancies and placements handled by the employment offices. In a typical year only one third of the vacancies is filled by the applicants sent by the employment offices. In order to increase the market share of the employment offices, the quality of the service should be improved in the long run.

The role of private actors.In Switzerland private actors play an important role in activation and placement. The private actors and the temporary work agencies have remarkable freedom in providing their services; they have to report annually to the employment offices. Private agencies deal with several times more applicants than the employment offices. Larger part of active measures is implemented mainly by the private (public non-profit) agencies. These services are commissioned by the cantonal labour offices, but they also provide disability insurance and welfare tasks.

The placements of jobseekers can be outsourced to private placement agencies. There are areas where there has been a strong tradition of co-operation between private agencies and employment services, Switzerland could be more active in this field. Although the law allows the employment offices to do so, they outsource only 1 jobseeker out of 130-150 to private agencies. Australia, The Netherlands and the United Kingdom have gone further in this direction. In the Netherlands since the beginning of the 2000s unemployment benefit and social assistance recipients who are not expected to find employment within six months are contracted out to private agencies. In Germany, also, the unemployed after six months are placed to private agencies. Although in Switzerland private placement agencies have traditionally had a strong role, their monitoring activity in benefit eligibility and sanctioning can be problematic, and this might be the reason for the limited interest in outsourcing jobseekers to private agencies.

Apart from private placement agencies, there are voluntary counselling and placement agencies as well. One of these is VETS, which is an organization in Schaffhausen formed by the local initiation of the trade unions with the aim to help the unemployed. VETS provides counselling and help for jobseekers 1500 times annually. Help can have many forms such as teaching the method of job search on the Internet, preparing the appropriate CV, preparation for a job interview. A Hungarian interpreter was called for the conversation, who also mentioned that the organization also helped her in her job search. The number of the older jobseekers is high, reaching 30-40%. The organization also organizes trainings for the jobseekers, and vocational trainings are free for the participants. Language teaching is one of the most important trainings as the two-thirds of the applicants are immigrants. The office is run by 5 voluntary workers.

The role of benefits Although in Switzerland unemployment benefits are generous, there is a high sanction rate in order to force job search and job or training refusals are also sanctioned. These factors jointly result in the fact that there is little use of unemployment benefit as a form of early retirement for the older unemployed.The fourth revision of the recent Unemployment Insurance Act has been created to establish a financial equilibrium via higher contribution rates and reductions in spending.

The duration of the unemployment benefit depends on the age and the length of the contribution period:

  • The unemployed having contributed for at least 12 months are eligible for the benefit for 18 months. The reform in 2010 reduced this duration to 12 months. This affects mainly workers with temporary contracts in a disadvantageous way. It speeds up the job search process and increases the number of those people who are no longer eligible for unemployment benefits, are not registered with the employment offices but still could not find employment.

  • Under certain conditions, jobseekers can be eligible for the benefit for the maximum duration of 2 years. The reform has not changed this. This kind of benefit prolongation can be given to the older unemployed workers who face great difficulties in finding a new job. Besides the benefit an intensive job search should be continued.

  • The duration of the unemployment benefit is usually 12 months. The reform has reduced this to 4 months for people without recent contribution. For people with university degree, there is a waiting period of 120 days introduced. This change reduces benefit dependency.

  • Cantons can request an extension of duration to 2 years, if their unemployment rate is high; and as a side-effect they can save on social assistance expenditure.

Better follow-up of benefit exhaustees is needed.Cantons have different solutions for this problem. Some of them implement an unemployment assistant scheme, other cantons the benefit exhaustees need to claim social assistance. Only few benefit exhaustees remain registrated in the employment offices, despite the fact that they could be given other placement services here. The intensive activation and follow-up activities would be particularly important for the long-term unemployed.

An important element of the unemployment insurance law is that after participating in a publicly-funded employment programme the eligibility for the benefit cannot be renewed. Although it is reasonable to stop the carousel effects, this might increase the load on the social assistance system and also the number of benefit exhaustees, who need continuous employment services.

A high incidence of benefit sanctions. Switzerland has a relatively high incidence of benefit sanctions. In 2008 a quarter of all benefit claimants received a sanction, on average two and a half weeks of benefit suspension mainly for insufficient job search or job or programme refusal. Although it helps to abide by the unemployment act, it is also a fact that the threat of the sanctions negatively affects the quality of the jobs accepted. There should be a change from rapid placement to placement in a job that matches the applicants’ qualification.

Unlike in other countries, the rules of suitable jobs do not change with the unemployment spell. There is a so-called occupational protection, which means the unemployed person should be offered a job that corresponds to the previous activity. Unemployed persons can refuse the job offer if it pays less than 70% of previous salary.

Issues in disability insurance. After 1990 the inflow into the invalidity-pension system was among the highest in OECD countries. Since 2003 it has remarkably decreased. The newly-introduced early-notification requirement has a preventive mechanism and it will probably strengthen the labour market integration to disability pension and also increase the frequency of vocational rehabilitation measures including the cases of people with mental disabilities. One remaining weakness of the early notification system is that it is based on voluntary notification and employers may tend to notify disabilities only for their core work force.

From a legal point of view, it might be more difficult to reduce the large number of invalidity pensioners than it is to reduce the inflow of new pensioners. The government plans to implement new rules concerning the reassessment of eligibility tests. At least in the initial pension period, re-testing at regular intervals should be applied and thus a so-called temporary pension scheme couldbe introduced. The Dutch experience shows that the re-testing of invalidity pensioners below 45 is successful in the sense that it results in higher employment rate.

Other recommendations relating to Swiss invalidity policy are the following:

  • Employers who employ invalid workers in large numbers should set up disability management plans in co-operation with invalidity offices and medical services, and should follow up personal reintegration plans.

  • In order to reduce invalidity expenditure,pensioners should be allowed to return to work without the fear that their benefits will automatically becancelled.

  • Like monitoring the employment offices, invalidity offices should be monitored in terms of reintegration success as well.

Participation incentives for social assistance recipients. Five years after unemployment benefit exhaustion, four out of ten benefit exhaustees are still not in employment and about a quarter of them receive social assistance. The activation of social assistance recipients is of key importance. In order to motivate them to return to work or to take part in active labour market programmes, The Swiss Conference for Social Assistance has adopted a set of guidelines for earnings disregards and activation supplement. The majority of the cantons have implemented these guidelines and provide earnings disregards of CHF 400-600.

Work incentives have also been introduced in the social assistance scheme. Like earnings disregards the implementation of this support is motivated by the principle that social assistance recipients should take up work – even low-paid or part-time work. Large municipalities have set up their own job-creation programmes or send social assistance recipients to the local employment offices, where cantons co-finance ALMPs for them. However, the activation of this group is not high priority for the local employment offices. There is no doubt about the prerogatives of the cantons in social assistance, but common elements, activation strategies and financial incentives would be desirable.

The effectiveness of active labour market programmes (ALMPs)

ALMP expenditure

In 2008 ALMP expenditure constituted nearly the half of total labour market expenditure. This ratio, which is well above the European and OECD averages, emphasizes the importance of these programmes,especially because thenumber of jobseekers is relatively low. In Switzerland in 2008 about the quarter of all jobseekers participated in one active (usually short-duration) measure. The cycle of ALMP expenditure highly depends on the business cycles.

The largest ALMP expenditure type is supported employment and rehabilitation, which is followed by training and employment incentives. Subsidised employment (via the temporary employment scheme) is also emphasized and some larger municipalities apply direct job creation under a ’work-first’ approach.

In-work benefits and temporary employment programmes

In-work benefit schemes are important measures for both unemployment insurance and social assistance. This pay scheme for unemployment benefit recipients (a subsidy paid to registered unemployed if their income froma new job is lower than their unemployment benefit) guarantees the income in work is in all cases above the previous benefit level. This employment scheme shows positive effects especially in case of the low-skilled unemployment. This is probably due to the fact that it affects their motivation to work. Jobseekers stay in contact with the labour market, expand their personal network and work in a ’real’ environment. Furthermore, participants work less than half-time on average and have more time for job search.

Participation of social assistance recipients in active programmes is less transparent. Some of the cantons and municipalities have set up employment programmes for people who are not, or no longer eligible to receive unemployment benefit, but data on these measures are not aggregated and there is a lack of knowledge at national level about the employment level for social assistance recipients. SECO should assign a high priority to publishing the data.

Temporary employment programmes organised by the employment offices usually belong to the area of public administration, welfare facilities and environmental protection, and they are designed in a way to avoid competition with the private sector. The assessment of these programmes is mixed, which is probably due to the stigma effect and to an insufficient effect on employability. Results of the direct job-creation programmes of local authorities are more positive (such as in Zurich). International literature shows that temporary work scheme can be successful in motivating hard-to-place participants, but when participation renews benefit entitlements, there will be a carousel effect, or if repeated participation is allowed, participants can be ’locked in’ the system. SECO investigates how to improve the effectiveness of these measures by a closer follow-up of hard-to-place people and by motivating providers to get clients into work.

Training measures. Training measures are mainly associated with collective measures and are set up for registered jobseekers. Individual measures are often more flexible in timing and might fulfil special training requirements better. Although collective training measures are of primary importance for jobseekers, individual training courses might be important as well when the waiting periods for participation in collective courses are too long.

Participation in training courses shows contradictory results. The reason might be the different target groups, the different duration and different sectors. The average duration of the courses is relatively short (five weeks per year). International evaluation suggests that the employment effects of longer training measures with formal qualification can be higher than those of short training courses; but this rule is not valid for Swiss-language courses for foreigners or courses aimed at improving computer literacy.

Job-insertion subsidies and business start-ups. Job-insertion subsidies are paid to employers to compensate the expected productivity loss due to employing older workers, disadvantaged workers or workers without sufficient vocational knowledge. This measure works well. The employment offices ask employers to set up a job-insertion plan, which may contribute to the success of the programme. As long as this type of programme is not run on a large scale and is targeted on individuals with lower productivity,its effect is weak as well. Its extension would be desirable especially in case of high unemployment. Obviously it should be well-regulated and strictly supervised for companies.

The employment offices support business start-ups with benefits for up to 90 days. This scheme is different from the same schemes in other European countries as in Switzerland it provides support only in the preparation and planning phase. The programme is not particularly widespread and the selection of projects is tight. However, little is known about deadweight effects.

Programmes for foreigners. Foreigners are over-represented among ALMP participants as they face a higher risk of unemployment. They tend to participate in short-term trainings, such as language courses as well as in temporary employment programmes. Both types of trainings show lower employment effects than other measures. This fact might be related to the composition of the participants as immigrants usually tend to have lower qualifications than the Swiss participants.

However, employment offices should provide more up-skilling measures and should improve their methods. Job-insertion allowances could play an important role in compensating the vocational qualification of the foreigners.

Programmes for the young and older unemployed. Vocational programmes specially designed for young people can make the transition from school to work easy. One measure is, for instance, the ’motivation semester’ targeted at young drop-outs who did not find an apprenticeship. This measure is an effective tool to reduce the number of young people without qualification. Cantons may offer ’pre-motivation semester’ for disadvantaged young people; they also implement a pre-apprenticeship scheme for this target group, preparing them for their real apprenticeship. These measures should be strengthened at federal level in consideration of the importance of employment risks young people face.

The participation of older workers in ALMPs is widespread. The German-speaking cantons tend to focus on the participation of older workers in ALMPs more than the French- or Italian-speaking cantons do. The 2010 revision of the unemployment insurance act has expanded the duration of job-insertion allowances for older workers to 12 months and increased their wage subsidy over this period. The participation of older benefit exhaustees is also common. The reforms will mobilise older workers’ labour supply.

4. High priority of the employment policy is to raise the employment of the older workers.

In Switzerland the rate of the foreign employers is high, 1% of the population. Their highest rate is among the skilled labour force, but a fair number works in the trade and service sectors as well.

Immigration of skilled labour has been strong in the last 10-20 years. Today the question is how the national labour potential could be better used. The employment of older workers means one of the pillars of this labour potential.

Society as a whole agrees with necessities of higher employment of older workers but there is an open discussion about the most effective measures to reach this goal. The unemployment rate among older workers is a little under the average (3%) but older workers when jobless need more time to find a job again.

Typical risk factors for older workers

  • Lower educational level 

  • Devaluation of firm-specific human capital in case of job losses (necessity for wage adaption)  

  • Health problems

  • Insufficient mobility 

  • Barriers for employers

  • Prejudices against older workers

  • Sometimes: higher wage cost

Specific measures for older jobseekers (50+)

Supports: Allocation d’initiation au travail (AIT):

  • Temporary wage subsidy (AIT) for persons at risk of long term unemployment (lacking professional skills, older age). The AIT is paid to the employer

Jobseekers 50+: right for AIT for 12 months (others 6 months)

The AIT corresponds on average 50% of the salary for older workers (40% for other)

Pension system

On behalf of the sustainability of old age pension system and for reasons of the ageing of the population there is a need for reforms in the old age pension-system.

What should be the role of:

  • Higher contributions to the old age pension-system?

  • Longer working life?

  • Lower old age pension levels?

Training

4 Pillars of the «Swiss skills strategy»

  • Higher qualification corresponding to the demand of the economy.

  • Fostering innovation to alleviate skills shortages

  • Improving the reconciliation of work and family life

  • Set appropriate conditions for the people to work up to the official retirement age and beyond.

Related labour market questions for older workers

  • How should labour market-institutions be designed in order to reach a high lm-participation of older workers?

  • How do workers acquire new skills and stay healthy?

  • How can barriers to work for older persons be lowered?

  • What are the respective roles of employers, employees and labour market-institutions?

Instruments of the skills strategy

  • Skills policies are the usual business of education and labour market policy

  • Competencies are often at cantonal level

  • The Confederation can play a role in

-Information (indicators/statistics)

-Coordination (dispersion of good practices)

-Initialization (financing of pilot projects)

-Communication (sensibilisation of key players)

5. Travail.Suisse trade union association’s commitment about the major tasks of the labour market policy concerning to the older workers’ employment.

The challenge is to take the good measures to promote and to reinforce the integration of older people in the labour market and for this goal measures are needed principally in the fields of training policy, labour market policy and social security.

Training policy

Older workers are currently missing in the legislation of education. Neither in the Vocational Education Act still in the Continuing Education Law, are they mentioned. Therefore, it lacks educational projects with the focus on "older employees".

The Federal Council and the Parliament have adopted a postulate about "older employees". The Federal Council has to review which education policy must be taken so that the risk of disqualification of older workers is minimized. Travail. Suisse has encouraged this postulate.

Labour market policy

Roughly one third of the older people (55-64 years) are not in the work process (anymore). Thereof one half due to health problems, dismissals or (forced) anticipated retirement and the other half due to voluntary decision. This potential means in total 420'000 fulltime workers. Meaning that the use of 20% of this potential equates to 8% of the total workforce of Switzerland.

The main responsibility to increase the employment rate of older workers rests with the employers. A specific HR-management is needed which takes into account the special needs of older workers concerning work conditions and health situation. The possibility of part-time work could better the situation.

The unemployment insurance must consider the difficult situation of unemployed older workers. The period of benefit must be longer as well as the support for reintegration. Financial support for employers of older workers must be extended.

Social security

Reforms of the Retirement provision 

Current Legal Retirement age: 64/65: The government wants to increase women’s retirement age to 65. A further increase is claimed by the employers’ association. However studies show that the labour market is at the moment not ready to employ older workers. Instead of increasing the retirement age, the potential of the 55-65 year old should be better capitalized. A general increase of the retirement age probably will not be accepted by the population.

Switzerland has a 3-pillar model concerning old age pensions:

  • First Pillar: AHV = state pension scheme (compulsory). Contributions of 50-50% by employers and employees.

  • It is a pay as you go system and the provisions for the pensioners are covered by the pension contributions paid by the active working members of the society, i.e. the people in working age support the elderly. This system has been functioning since 1948. A person is entitled to it after residing one year in Switzerland but the total amount of pension is only paid after 20 years of residence in Switzerland.

  • Second pillar. Company pension scheme (compulsory for all salaries above 20'000 Francs). Contributions 50:50. It is a founded pension system. Its base is the employment (40years).

  • Third pillar: private pension scheme (optional) It is a founded pension system.

Contributions in the company pension scheme increase with the age of the employee. The employer thus has to pay more social security contributions for older workers. The Reform wants to reduce the contribution differences between the different age groups. Travail.Suisse supports a change even if the contribution differences cannot explain all the difficulties of older workers to find a new job.

Increasing the contribution in early pension insurance scheme with the age of the employee

The pay office of the early pension insurance scheme is the RESOR. In the early 90 years the Early retirement-Insurance-path was used to get rid of older workers in situation of economic crisis. This is a solidarity foundation that of contribution finances the early pensioners today. The contribution rate is 0.9% of the wage for the employee and employer as well. Since a few years however, it is more difficult to get a support of this insurance. 10 years employment necessary in the same branch deducting the unemployment and absent through illness and consider the age too. The rate of the early pension the 80% of the 3 years average wage, today it is about CHF 3800-4000. Nowadays there is higher number of the depositors than the exigent.

The probability to make use of a support of the Early retirement-Scheme rises drastically with the age of workers:

  • Probability with 50 to 54 years: 8 percent

  • Probability with 55 to 59 years: 12 percent

  • Probability with 60+: 15 (women)/18 percent (men)

Summary

Switzerland considers it important to give somethingback to the less lucky people of the society from their welfare built up with hard work. Solidarity is working well, but it does not mean unconditioned donation. Everything has a price to pay. The level of the pension is high, but onehas to pay tax and health insurance after it as well. The institutional system of the labour market is extended and representations of interests operate on a consensual basis where listeningto and respecting the controversial statements are general. They have realised that pulling apart the society should interfere with the economic and social development in the long run. They say if we live longer, we have to work longer too but they rather tryto motivate people bycreating better financial and social conditions than force them. For a long time there have been discussions about the reform of the pension system and new and fresh variants periodicallyappear. The whole society is sensitive to this topic and by the time the final version emerges, it will be familiar for the majority of the society and they could make the decision according to rules of direct democracy.

14/12/2013

Mária Vanicsek, project expert

MOSZ 

1956 Katonai története
125 éves a Rerum novarum

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