Swedes should be prepared to work until they are 75 and to change careers in the middle of their work life if they are to keep the welfare standards they expect, Swedish Prime Minister Fredrik Reinfeldt said.
The retirement age is being debated in the Swedish parliament ahead of an expected pension reform package in April.
In its proposal, the government wants to give people the right to remain at work until 69 instead of the current 67 cut-off age. Meanwhile, the right to early retirement would be delayed by two years, to 63.
However, Reinfeldt said in several interviews over the weekend that Sweden must consider taking the step even further by raising the retirement age to 75.
"This is a time of changes in the global world economy. The nations we meet in open competitions don't have our welfare ambitions. They don't put taxes on production to finance the pension system or welfare solutions. Therefore the question remains, is our equation correct?" Reinfeldt said in an interview with the newspaper Dagens Nyheter.
Reinfeldt, who leads a centre-right government, also said half of today's children in Sweden can expect to become 100 years old and there has to be a change in the way the Swedes view their work life.
“Therefore, Sweden must as a society ask ourselves the question: are we ready to meet these changes? The changes are basically positive. But if we want good pensions and welfare then we need to start discussing what our work lives should look like,” the prime minister said in a radio interview.
The left-wing parties in Sweden and the trade union organisation LO are critical of the government's reform ideas. The Social Democrats’ pensions spokesperson Thomas Eneroth said he is "astonished" by the prime minister's proposal.
“For some it is already possible to work longer today, but for a lot of people it’s difficult to even work until they are 65,” Eneroth said.
To be able to work until the age of 75, the Swedish prime minister says he envisions at least one career change during a person's work life as the job one may have as a young person could become too tough or stressful later on.
Reinfeldt acknowledges that this will require a huge change of mindset among the Swedish population.
"It's a very challenging idea. Our whole life is affected by the fact that we speak to a career counselor, make a decision, and then think we will work with the same things for the rest of our lives," the prime minister stated.
“The left’s view is that when the work becomes too tough then it’s time for early retirement or some other kind of benefit. But I’d rather say when the work becomes too tough then I’ll get the right to work with something else,” Reinfeldt said in an interview with Dagens Nyheter.
One option to get people to change their career mid-life would be to make it easier to get a student loan after the age of 54, Reinfeldt said. That is now difficult under Swedish law.
“If Reinfeldt would like people to leave their careers and go back to school while in mid-life, then there are some rules that should be reviewed. Today there is no incitement to do so as it’s only long work hours that count,” said Carina Lindfeldt, responsible for employer questions at the business group Swedish Enterprise.
Lindfeldt added she would doubt anyone would want leave a full-time employment position in order to become a student and later on again become part of the workforce.
The Swedish trade union organisation LO is critical of the proposal, saying it could increase the disparity between richer and poorer pensioners.
”At the moment there are many blue collar workers who don’t manage to work until pension age – because of bad working conditions and physically demanding jobs. If you’re going to make this kind of change then you need to extend the social security net. Otherwise there’s a danger of creating new injustices, and increasing even further the income gap between pensioners,” LO chief economist Ola Pettersson told Swedish Radio.
Europeans are living longer and, together with low birth rates, Europe's population is ageing rapidly.
The European Commission presented proposals on pensions in February 2012, linking it to life expectancy, while restricting access to early retirement.
Even though pension systems are largely the competence of EU member states, Brussels has some say as national reforms are evaluated within the Europe 2020 strategy and the semester of economic policy coordination.
In 2011, 16 member states received country-specific recommendations concerning pensions and a further five signed up to pension reforms as part of their economic reform agenda.
- April 2013: New pension reform package due in Sweden.
- Press release: EU sets out plans for adequate, safe and sustainable pensions [FR] (16 Feb. 2012)
- White Paper: An agenda for adequate, safe and sustainable pensions [FR] (16 Feb. 2012)
- Age and Employment: Report