nine - Adapting pension systems to labour market changes in western Europe
Published online by Cambridge University Press: 20 January 2022
Summary
Introduction
During the post-war years, all western European countries have seen the construction and the consolidation of comprehensive pension systems. The pre-war rudimentary schemes that offered modest coverage to some sections of the population only were expanded, combined with minimum guarantees, and with supplementary pensions. The result was that by the late 1970s, virtually every country in western Europe could provide reasonably good pension coverage to the whole resident population.
These pension systems were clearly designed to serve the typical male career profile of that period. In other words, the sort of coverage they offer is optimal for someone who has worked without interruptions, full time and from an early age. Today's labour markets, however, contain a much wider variety of career profiles. To a large extent, this has been the result of the gradual but massive entry of women into labour markets since the 1960s. Very often, women's career profiles are characterised by relatively long interruptions and by part-time employment. In addition, the end of full employment means that today's workers are more exposed to the risk of both cyclical and long-term unemployment than was the case for previous generations. Finally, the knowledge-based economies that are emerging across OECD countries require constant skill updating from workers who do not want to be left behind: an activity that may result in career interruptions.
In most countries the career profiles induced by the events described above will generate pension entitlements below the optimum level. Over the last few years, however, pension systems have been adapting to these new patterns of labour market participation. Even though coverage for the so-called ‘atypical’ workers remains suboptimal, many countries have over the last few years, adopted improvements in the provision for non-standard workers.
In this chapter, we review the reforms adopted in eight western European countries in order to deal with this issue. Our argument is that the measures adopted depend on the institutional structure of the pension system that countries have inherited from the post-war years, and before. In particular, what seems to be crucial is the initial choice between a social insurance and a multi-pillar system.
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- Social Policy Review 15UK and International Perspectives, pp. 175 - 196Publisher: Bristol University PressPrint publication year: 2003