MEMO AND SUMMARY
concerning the study tour in Switzerland entitled
“Experience of elderly employment in Switzerland”.
Duration of the study tour: 25–29 November 2013
Venues of the study tour: Bern, Olten, Sion and Schafhausen in Switzerland
Memo prepared by: Mária Vanicsek, 02 December 2013
Contact person in Switzerland:
Membre du bureau exécutif
Phone: 031 370 21 11
Fax: 031 370 21 09
Person in charge of international affairs at MOSZ:
Members of the delegation:
National Federation of Workers’ Councils (MOSZ):
National Association of Entrepreneurs and Employers (VOSZ)
Péter Vida, Head of the Human Resource Section at VOSZ
Meeting and discussion with the heads and programme officers of Travail.Suisse
Martin Flügel, the president of Travail.Suisse, a confederation of trade unions, welcomed the delegation and presented the structure, main goals and ambitions of the confederation in Switzerland. The confederation was established in 2003 and comprises 10 trade unions with approximately 150,000 members in total. Out of the two trade union confederations currently operating in Switzerland, Travail.Suisse is the smaller one. According to Mr Flügel, the organisation is an influential one. They undertake classic lobbying activity to influence political decisions. They are in direct contract with parliamentary committees in which they also have membership. They mentioned two recent major initiatives focusing on the issues of child care and increased paid leave. The latter one had already been put on referendum but the proposal to increase the number of days of paid leave from five to six was rejected.
The topic of the study tour, that is the issue of helping elderly people to find employment, is considered to be important by the trade union primarily due to the aging of the society. In the current situation, old persons are not dismissed in a discriminative way but if they lose their job they find it difficult to find a new one.
The situation of elderly employees in Switzerland
Facts, trends, challenges, recommendations and implemented good practices
- The employment rate of old persons (aged 55-64) is high (70.5% in 2010). The EU average is 49.7% with the highest value in Sweden (74.5%) and the lowest in Malta (31.6%).
- This rate increases with time. It was 67.3% in 2001, 65.1% in 2005 and 69.5% in 2011.
- The main underlying reasons: increased employment rate of women (51.3% in 2000, 69.6% in 2011),
- more jobs in the service sector,
- more part-time jobs: 39.2% compared to the former 33.2% (in the 25-54 years age group)
- increase of the retirement age for women from 62 to 64.
- The higher share of old persons within the active working age population:
15.2% in 2000 and 17.5% in 2010, while 20% is predicted for 2020 and 22% for 2025.
- More self-employed (necessity entrepreneurs)
The share of the self-employed rose to 21.1% from the former 11% (aged over 55).
- The issue of age varies from sector to sector.
The health care, education, public employment and energy production sectors are affected more than the average. The construction, catering and IT sectors remain below the average.
- Elderly employees and unemployment
Unemployment rate is low (below 3%) but when old people lose their job it is harder for them to find a new one.
- Expected retirement age
The rate of people eligible for early retirement was 17.1% in 2010 compared to the 17.55% in 2000. In this field there are large differences between sectors. The highest values are given by the financial and insurance sectors (45.8%), the lowest by the agricultural (6.9%) and tourism/catering sectors (10%).
Demographic aging and personal impoverishment
The discourse about demographic aging started more than a decade ago in Switzerland. By now the financial and social security aspects of this issue have become central topics of debates. Now that these debates affect the labour market, on its 2011 congress Travail.Suisse published a statement with the title “Ten arguments about demography – Proclamation for better work”.
In this context, Switzerland also announced an initiative which involved the social partners in the fight against impoverishment resulting from demographic aging. This initiative aims to take measures for optimising labour force utilisation. Two main groups were targeted: women and elderly workers.
- Controversial trends
Presently, we can witness controversial trends in the Swiss labour market and business sector in respect of the employment of elderly workers. On the one hand, the number of old employees has risen. This was partly the result of the above mentioned state initiative but trade unions and employer organisations also contributed to it, the former by improving the working conditions of old employees and extending the actual retirement age, the latter by sensitising the public about the issue. In some companies the management set a good example by trying to find the solution. But this is still the efforts of the minority.
On the other hand, however, resistance can be experienced and the situation regarding old employees has even worsened. Deteriorating trends appear in the following fields:
- further training in the framework of lifelong learning.
- Old employees are discriminated and prejudiced for their lower performance, however, their greater routine and experience is not taken into account.
- Unemployed elderly persons have difficulties finding a new job.
A study carried out in 2009-2010 with the involvement of 1000 persons in five companies showed that the worst connection is between old age and the chance of finding a new job: it is even worse than the connection between sexual affiliation or qualification level and finding employment.
- Challenges and recommendations
For Travail.Suisse, better integration of elderly employees into the labour market is important because of the deterioration in living standards as a result of demographic aging. This makes it necessary to develop working conditions and to fight against discrimination. Travail.Suisse does not believe that increased immigration would be a solution for Switzerland.
The challenge should be tackled by increasing the presence of elderly employees in the labour market, and to this end labour market, social security and training policy measures must be taken.
4.1 Training policy
Presently, elderly employees are excluded from legal regulations governing training. They are not mentioned in laws regulating vocational training or continuous further training. Most training programmes lack any reference to elderly training.
The Federal Council and Parliament ratified the basic principles of elderly employment. The Federal Council has to review what training policy would be appropriate to minimise the risk of discriminating elderly employees. Travail.Suisse backed this basic principle.
4.2 Labour force policy
Approximately one third of elderly people (aged 55-64) have left the labour market. Half of them due to health problems or early (involuntary) retirement, the other half due to voluntary decision. This potentially means 420,000 full-time elderly employees. That is, if 20% of them were reintegrated into the labour market, it would increase the total employment rate in Switzerland by 8%.
The responsibility of increasing the employment rate of old persons stays with employers. This requires special labour force policy which respects the needs of older employees in terms of their working and health conditions. Extending the option of part-time employment would also improve the situation.
Unemployment benefit (aid) should be applied to the more difficult situation of elderly workers. Its duration should be increased as reintegration support. The financial support provided to older workers should be extended.
4.3 Social security
Reform of the pension system
The current pension age: 64/65 years. The government intends to raise the retirement age for women to over 65 years. Employers’ organisations fight for further increase. Studies show that currently the labour market cannot take up more elderly employees. Instead of increasing the retirement age, the confederation of trade unions recommend that employees currently aged 55-65 should be better managed. The general increase of the retirement age would not be endorsed by the public.
- The pension system currently rests on three pillars in Switzerland.
- The first pillar is the state pension (compulsory) with 50-50% contribution from the employers and the employees.
- The second pillar is the corporate insurance (compulsory for wages over CHF 20,000), the contribution rate is also 50-50%.
- The third pillar is the voluntary pension insurance (optional).
- Increase of the premium which allows old people to retire earlier. Early retirement was a way to escape for workers during the economic crisis. In recent years it is really difficult to get early retirement. (This was later discussed in detail.)
- The chance of early retirement is 8% in the age group between 50-54,
- 12% in the age group of 55-59,
- and 15% for women, 18% for men in the age group of 60+.
Visit to Seco, the Swiss state’s office responsible for economic, labour market and training issues
In Switzerland (as well as in Austria) unemployment is traditionally low, presenting accounting for 4.2%. This rate is higher, around 10-12% even in more developed European economies, though, Germany managed to reduce its unemployment rate after 2009 to the present 5.5%. Unemployment in Switzerland (and Austria) is more stable than the group of state suffering from high unemployment. The employment rate of elderly people is high, accounting for 78%. Of the 25 EU member states, only Sweden and Iceland supersede this rate. Labour market participation of men aged 55-64 was 85% in 1993, then it slightly decreased by 2013 (to 82%), mainly due to the option of early retirement. In the case of women these rates are 48% and 67%, respectively. This population group benefited more from the incentives directed at retention in the labour market.
Explanation of the positive results:
- Good economic and market situation, favourable growth rate.
- High level of professional qualification even in older age.
- Less health-related problems in the workplace.
- Early retirement is not supported.
- Relatively strong insurance rules in the pension system.
- Democratic control of the first pillar.
- The second pillar is controlled by the social partners.
- The third pillar provides flexible pension opportunities.
- Efficient support of unemployed re-employment by Swiss labour market institutions (labour market service providers).
- Adequate legal regulation of the labour market.
Limits of re-employability of elderly people. Between 2009 and 2011 the number old persons among the permanently unemployed increased to 34.5% by 2011, but this rate dropped to 28% in 2012.
Risks posed by permanent unemployment
- Typical risk factors
- Lower level of qualification.
- Company-specific labour force loses value during the years of unemployment.
- Health problems
- Quitting employment without due consideration.
- Employer limits
- Prejudice against elderly employees.
- Old employees present higher cost in certain cases.
Unemployment insurance (aid). The maximum duration and the amount of re-employment aid are determined by two factors in conjunction: the period of time during which the contribution was paid and the number of dependent children. Depending on these factors, the aid period may last from 9.2 to 24 months. The chance of re-employment is 70% on average and 80% for persons with children. The guaranteed maximum wage is CHF 10,500 per month.
Incentives from the state labour service are also considered important. Here the main aim is to find long-term job quickly.
This is measured by the following:
- Time spent until finding a job.
- Avoiding permanent unemployment.
- Avoiding the expiry of the aid period.
- Percentage of re-registration.
- Free choice of labour market instruments by regional offices.
- Burden placed on the canton’s budget by the increasing number of job-seekers.
Separate measures to support job-seekers over 50 years of age.
- Employer benefit for hiring job-seekers (AIT).
- for job-seekers at risk of becoming permanently unemployed,
- provided to the employer,
- AIT for 12 months if job-seeker aged 50+ is employed (otherwise this period is 6 months),
- 50% of the old employee’s wage is subsidized (this rate is otherwise 40%).
Sustainability of the old-age pension system
The aging of the society makes it necessary to change these rules:
- with higher pension contribution?
- with longer term of employment?
- with lower pension level?
In Switzerland the rate of foreign workers is high, amounting to 1% of the country’s population. They are mostly represented among highly qualified professionals, but many of them work in the trade and service sector too.
The past 10-20 years witnessed a massive influx of highly qualified labour force. The question is how domestic labour force potential can be utilised more efficiently. One component of this potential is elderly employees.
The fourth pillar is the “Swiss training strategy”
- Higher level of qualification in line with economic challenges.
- Response to the lack of qualification.
- Work–life balance
- Providing suitable conditions for those who work until or beyond the official retirement age.
Labour market questions of the employment of elderly people:
- How can labour market institutions achieve a high participation rate of old employees in the labour market?
- How can they train workers and guarantee their long-term health?
- How can obstacles in the way to elderly employment be overcome?
- What is the appropriate representation share of employees and employers in labour market institutions?
Elements of the training strategy
- Training policies are directed at providing the usual business and labour market training.
- At canton level, trainings concentrate on skills development.
- The confederation of trade unions may play a role in facilitating and coordinating the flow of information by disseminating good practices, taking the initiative (financing pilot programmes) and through communication (making key actors more sensible)
Visit to the office of the association of Swiss employers’ in Bern
According to the employers, the labour market situation in its present condition is satisfactory but it is expected to deteriorate in the next years, primarily due to the demographic trends. After World War II Switzerland, like Hungary, experienced a sudden rise in the birth rate. The members of this baby boom generation are now in their 50-65 years and though they are still working, they will leave the labour market soon. Labour is expected to be increasingly scarce, so a strategy must be drawn now to tackle this problem in the future. Our guide told us about the lost generations, that is the young people who graduate from university today but the economy will need their knowledge only in five years, but by then their knowledge will have become obsolete.
According to him, the most important point is to make the public more sensible to this problem so that solutions can be worked out in time. This was the first time that our guide mentioned the campaign which was presented several times later on and which was largely contributed to by trade unions. A woman and a man in their mid-50s can be seen in a newspaper, next to them are large numbers saying 26 and 32 years, and in small print that they have this amount of work experience. The article describes how they lost their job. The campaign is aimed at raising awareness of the importance of old employees.
A new office has been create in the labour market for tackling the problems of people over 45 years of age. Priority issues dealt with here include immigrants, women (specifically in part-time employment) and old employees.
Visit to the logistics centre of Swiss Post
We visited the Bern-based logistics centre of the Swiss Post and learned about the social system implemented within the organisation. Swiss Post is a 100% state-owned company limited by shares. Its 62,000 employees represent 140 nationalities. They own several other organisations linked the Post, including Post Bus, Post Financial Institution and Post Pension Fund. The logistics centre in Bern gives work to 55 employees, one third of which consists of older workers. IT was mentioned that the organisation could not be operated without immigrants. By the way, it was frequently pointed out that immigrants are the foundation of economic growth in Switzerland.
The company operation and the increased attention to elderly employees was presented by the director of the logistics system. They try to adapt working conditions and working time to the needs of the elderly employees who are given flexible working schedule and can stay in work even after reaching the pension age.
Visit to the Institute of Human Resource Development at the University of Applied Sciences (FHNW) in Olten.
Olten is an industrial centre, mainly focused on steel production. Due to the dominance of heavy industry, trade unions are quite influential in the city, which has a population of around 30,000 people. The city has a new university which (as its name suggests) mainly focuses on applied sciences.
In the Human Resource Development of the university, Noemi Swoboda researcher presented us two projects in detail. The first one was the “Prime Time” project which analysed labour market trends between 2005 and 2007. Among the many important findings, it showed the surprising fact that companies are not aware of demographic changes. Even their own vision fails to consider the number and qualification of their employees about to retire and the impact it will have on maintaining their labour force.
The second programme was the Age Management Programme which dealt with actions to be made at organisational level. The organisation of career building is an important issue for elderly workers as well. This process should focus on the following:
- career planning,
- shift from production functions to service provision functions,
- making workforce mobile,
- creating a supportive working environment.
The demographic situation has to be considered even at national level, otherwise certain tasks will not be fulfilled. E.g. nuclear power plants will be unable to recruit new employees, since Switzerland stopped all related training courses after deciding to phase out nuclear power in the country. The country also ceased pilot training programmes which resulted in labour shortage in the aviation sector.
This presentation was followed by another one on the Demographic Networking Programme, which included the highly interesting field of practical career guidance focusing on personality and its needs. The institution provides corporate counselling services. Their annual forecast, the Demographic Barometer presents expected technological changes and the characteristics of anticipated knowledge transfer.
Visit to the employer association in Sion
We visited the regional organisation of employers (“Le bureau des métiers a Sion”) where we learned about the system of collective agreements. Collective agreements are concluded at regional sectoral level, rather than at company level. The collective agreement for the construction industry in Sion was presented as an example. This agreement is applicable to all professions in the construction sector (listed in the agreement), except for masonry. It is signed by two major employers’ organisations and two trade unions. Once signed, the agreement covers all companies within the given region. It consists of three parts: the normative part, the contractual provisions and the rules. It is effective for the 2011-2016 period but certain parts of it may be amended with the mutual agreement of the signatories. The collective agreement covers 10,000 employees. Administrative workers have no collective agreement.
To enforce the collective agreement, a controlling organisation has been created which may impose sanctions after the second warning. In some cantons sanctions are imposed right after the first infringements.
The collective agreement is presented in an official journal but is also disseminated on other forums.
Furthermore, we learned about social funds, more specifically about the operation of the early pension fund (RESOR). During the economic crisis in the early 1990s, unemployed people could only escape the situation by opting for early retirement. This is regulated by Section 39 of the collective agreement. Annex VI creates a fund for early retirement. This is a solidarity fund which finances the pension of workers choosing early retirement. Employees pay 0.9% of their salary to the early retirement fund, and employers also contribute with the same amount. Early retirement is subject to very strict conditions. One such condition is ten years of employment in the given sector, excluding all periods of unemployment and sick leave, but age is also an important factor. The amount of pension in the early retirement scheme is 80% of the average pay in the last three years, currently about CHF 3,800-4,800. Presently, much more people contribute to the fund than use it as beneficiary.
Visit to an unemployment organisation in Schafhausen
Schafhausen is the most northern canton of Switzerland, enclosed by Germany. The standard of living is high, higher than the national average. The unemployment rate is below 2%. The problems of the unemployed are continuously dealt with as a key issue, and there are many volunteers in this field too. We visited an organisation (VETS) which was established on the initiative of local trade unions to support the unemployed.
VETS gives advice and assistance to job-seekers around 1500 times a year. Such assistance extends to teaching the techniques of searching jobs online, creating appropriately formatted CVs and preparing candidates for job interviews. A Hungarian interpreter was involved at the meeting who told us that he also received help from them in finding his job. There are many elderly job-seekers, their number reaches 30-40%. The organisation also gives training courses to job-seekers. Professional training courses are free for the participants. Most importantly, such courses include language courses which are needed by two thirds of their clients, mostly immigrants. The office is operated by five volunteers.
We also visited the local employment agency where the head of the office talked about the operation of the agency and their relationship with VETS. The agency has 20 employees, one employee deals with the case of 120 clients on a monthly average. Their tasks include the issuance of residence permits, operation of a body which monitors illegal work, and the provision of health and safety presentations. Except for the payment of unemployment benefit (which is disbursed by the insurer), they take care of all duties falling within the scope of employment services.
They have different programmes built on the fact that different groups of people have different needs. E.g.: There is the Horizon Programme which offers further training or the Tandem Programme which provides personalised assistance through voluntary mentors.
Switzerland has done a lot to give a share of the wealth produced with diligent work to the less fortunate members of the society. Solidarity is working efficiently but not at all as unconditional charity. Everything has a price to pay. Old age pension is high but it is subject to tax and health contribution. Switzerland has an extensive system of employment organisations, and interest representation is based on consensus where opinions are mutually respected. They admit that a split society would impede the country’s economic and social development in the long run. They say: “if we live longer, we have to work longer”. However, instead of using coercive measures they try to incentivise people to this direction by creating preferential financial and social conditions. There has been much debate on the reform of the pension system. Everyone is given the floor to present his views, newer and newer plans are presented, and the whole society is sensible to the issue. Owing to this, when a final version is reached, it will be at least familiar for the majority of the society so that they can vote for or against it on a referendum.