Early retirement for arduous work: OECD needs to do reality check

In its new report Pensions at a glance 2023, the OECD strongly advocates  limiting  workers’ rights to early retirement for arduous work.

The report argues that “being unable to continue working in the same occupation […] should not imply permanently retiring from the labour market” and concludes that “for those who do have work-related health problems, support should be provided primarily through work injury, sickness and disability insurance rather than old-age pension schemes”.

The report goes on to identify 15 countries that provide special “pension provisions for hazardous or arduous jobs for a large number of jobs”: Austria, Belgium, Chile, Colombia, Estonia, Finland, France, Greece, Italy, Norway, Poland, the Slovak Republic, Slovenia, Spain, and Türkiye.

The OECD report  concedes “there might be a rationale to continue to offer early retirement options, such as in public security and safety services like the military, police, firefighters”, and “in cases of health conditions that develop as a consequence of difficult working conditions, such as night shifts”, but it promotes  “age-management policies” as a viable alternative to early retirement for many hazardous or arduous jobs. It claims “Reskilling policies should facilitate career transitions well before older ages. The permanent withdrawal from the labour market in countries where special pension schemes exist, sometimes at very early ages, is an inefficient solution.”

“Early retirement is not intended to address work injuries or permanent disabilities. It is a recognition of the fact that decades of arduous jobs result in lower-than-average life expectancy” said Veronica Nilsson, General Secretary of TUAC.

TUAC warns that the OECD’s report may encourage some governments to scrap early retirement schemes believing that reskilling or age-management policies will offer viable alternatives. While this might sound reasonable, workers in reality face considerable obstacles in changing occupation that go well beyond upskilling.

“The same opportunities simply do not exist for older, lower educated or otherwise vulnerable workers trapped in arduous work than they do for better educated and qualified workers,” said Veronica Nilsson. “The reality of denying them early retirement will in most cases be unemployment.”

“The OECD’s recent Skills Outlook showed that participation in adult learning is low, particularly among those likely to be most in need of training.’’

Changing occupation is easier for highly educated workers with transferable skills and the means and opportunities to find a different job.   But many workers in arduous jobs are less educated and face numerous obstacles to career opportunity.