Promoting Employment among Ageing Workers: Lessons from Successful Policy Changes in Finland

Abstract

Among EU15 countries Finland has witnessed the largest increase in the employment of ageing workers since the late 1990s. In these years there was a rapid change from the policy of promoting early retirement to the policy of promoting staying at work. Furthermore, this rapid shift to a restrictive early exit policy took place in a situation that was especially demanding due to exceptionally high unemployment among elderly employees. This paper considers why and how the Finnish policy has been successful earlier than other EU countries in encouraging ageing workers to stay on at work. We argue that the positive change in employment is an outcome of the interplay between favourable economic trends and wide-scale work promotion measures. These work promotion measures include the restrictive changes in early retirement schemes. A severe recession in the early 1990s is an important background factor both for the increased need for reforms in the early retirement schemes and also for making the reforms politically more acceptable.