Retiring too early, too high a share of part-time workers. Economic experts are ringing the alarm bells when it comes to our pension system. Model student Scandinavia shows how it could work.
Pensions also represent the largest chunk in the ailing budget in the future government negotiations (see politics) between the ÖVP, SPÖ and a possible third partner. That is why all the country’s experts are asking themselves a particularly important question: what is the future for the Austrian pension system?
In fact, the issue of the future of pensions is one of the most pressing and should be at the top of everyone’s agenda, regardless of who forms a government. Even if the word “pension reform” seems taboo for the ÖVP and SPÖ, there will be no way to reform the system.
We retire much earlier than our neighbors
“If we do not take countermeasures quickly, we will drive our pension system against the wall,” says the chairman of the Upper Austrian Chamber of Commerce, Doris Hummer, firmly. The cohorts with the lowest birth rates can no longer absorb the decline of the baby boom generation, she says. The labor participation of 55 to 64 year olds is also a concern for the economy. In Austria it is 57.3 percent – one of the lowest values in the entire EU, with an average of 63.9.
Sweden is considered a model student with 78 percent, and the Netherlands and Germany also have a much higher labor participation rate of the older generation, with values well above 70 percent. The reason for this low percentage is the numerous early retirements in the country.
On average, men still retire at 61.6 years (instead of the statutory retirement age of 65), women at 60.9 years. According to Doris Hummer, it would save 200 million in costs if it were possible to increase the starting age for men and women by just one month.
Part-time quotas too high for long-term stabilization
Economists see another reason for the problems in compensating for the departure of older people in the part-time quota (see also the graph above). The trend towards this – partly due to the relatively good pay compared to a full-time job – continues. They benefit from 30 percent, with the gap between men and women being noticeable. 9.3 percent of men work part-time, while 28.4 percent of childless women (25 to 49 years old) are not entitled to a full-time job. However, it is not surprising that 57.3 percent of women with children can only work part-time.
Pension subsidies increase through taxes
It is clear that all this puts pressure on our budget. Pension subsidies through taxes will increase from a quarter to almost a third of the state budget between 2022 and 2026. Currently, 29.5 billion euros flows into pensions and 35.23 billion euros is expected in 2027. This is at the expense of important areas. In 2027, there should be “only” 9.97 billion for families, 12.43 billion for education and 7.17 billion for science. Together not even as much as is spent on pensions.
“This cannot happen,” Hummer urgently warns. What is therefore needed is early retirement only in the case of illness-related disabilities and numerous rehabilitation measures to keep people working longer.
Source: Krone
I am Wallace Jones, an experienced journalist. I specialize in writing for the world section of Today Times Live. With over a decade of experience, I have developed an eye for detail when it comes to reporting on local and global stories. My passion lies in uncovering the truth through my investigative skills and creating thought-provoking content that resonates with readers worldwide.
