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Elderly face growing risk of poverty, warns OECD

Germans face a growing risk of living out their old age in poverty as low-earners fail to set aside enough for their retirement, the Organisation for Economic Cooperation and Development has warned.

Elderly face growing risk of poverty, warns OECD
Photo: DPA

“Germany is right at the back internationally in terms of retirement security for low-earners,” said Monika Queisser, head of the OECD’s section on social policy in an interview with Die Welt newspaper.

“The strict connection between contributions and service, results in people who have worked for their whole lives and have only had a low income being in danger of poverty in their old age.”

She said those people who had gaps in their working lives due to unemployment or due to raising a family were particularly at risk of ending up poor when they got old. A further problem was the limited number of people paying into pension schemes – in Germany only those with jobs are included, leaving many self-employed people either insufficiently covered or without any pension plan at all.

“Old-age poverty is not yet so widespread, but it will increase markedly if one does not take precautions now,” she said. She praised the fact that discussions are planned for this week, involving Labour Minister Ursula von der Leyen, trades unions and associations as well as social policy experts. A conference is set to start on Wednesday.

Yet Die Welt reported that von der Leyen does not intend to offer much change – the paper said on Tuesday that she had already completed her concept for a small pensions reform, which would not involve significant increases to low pensions.

Only those who have made at least 45 years of pensions contributions and yet still do not have enough income to clear a basic level, would be granted a top-up payment.

Other tweaks should make things slightly more comfortable in the light of the statutory retirement age being raised to 67, but the cost of the changes has been capped to €2 billion, said von der Leyen.

Opposition politicians have accused her of not taking the dangers seriously.

Other countries such as Denmark and Holland shared around pension provision much more than Germany, said Queisser, while New Zealand guarantees all pensioners a state-funded payment of 40 percent of the average wage, which is granted to everyone, regardless of other income.

She said Germany could manage to improve its situation, praising the fact that over the last few years private options have been made more attractive to those on lower wages.

The Local/hc

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ECONOMY

Pension reform, investment, new jobs – Macron unveils France’s post-Covid recovery plan

French President Emmanuel Macron has announced a series of economic measures, looking beyond the pandemic, although the much-anticipated pensions reform will be delayed until Covid is "under control".

Pension reform, investment, new jobs - Macron unveils France's post-Covid recovery plan
A nurse watches Macron's TV address on Monday. Photo: JEAN-FRANCOIS MONIER / AFP.

Obligatory vaccines and the extension of the health pass made the headlines following Macron’s live TV address on Monday evening, but the President also sketched out his vision for France’s post-Covid economy.

Some of the measures he announced represent a return to the priorities he set at the beginning of his tenure, while others have been shaped by the pandemic.

Pension reform

There had been much speculation about a return of controversial plans to reform France’s retirement system, which were shelved at the start of the pandemic.

Macron confirmed that he planned to raise the retirement age – most people can currently retire at 62, but a number of ministers have been pushing to raise the legal minimum to 64.

READ ALSO France to tackle fourth Covid wave with stricter border controls, health passports and compulsory vaccines

“Because we are living longer, we will have to work longer, and retire later,” Macron said. “Not tomorrow, not brutally, and not in a uniform way because we will take the difficulty of a job into consideration.”

The government will begin consultations with workers and employers in September, but “will not undertake the reform so long as the epidemic is not under control and the recovery guaranteed,” Macron said.

This could mean his plans are not implemented before the presidential election in April 2022.

Macron also returned to a controversial point from the 2019 reform plan which lead to widespread protests: the abolition of the country’s 42 different pension regimes, which currently mean many public-sector workers can retire early. Under the new plans, these special regimes will be abolished for new employees, but people currently employed can keep the generous exceptions.

EXPLAINED: What are France’s special pension regimes?

The plan also includes a minimum pension of €1,000 per month after a full career. “A life of work must offer a dignified pension,” Macron said.

Unemployment reform

Changes to unemployment benefits will be “fully implemented” on October 1st. The reform was supposed to come into effect on July 1st, but in June, France’s Council of State decided to suspend certain elements regarding the way benefits are calculated.

“Uncertainties around the economic situation do not allow for implementing, at this moment, these new rules which are meant to support job stability by making benefits less attractive for workers alternating between short contracts and inactivity,” that decision stated.

“In France, you must earn a better living by working than by staying at home, which is currently not always the case,” Macron said on Tuesday.

From September, the government will also launch “a massive plan for the training and retraining of the long-term unemployed”.

“We have seen during this crisis the strength of our social model,” Macron said. “It’s a jewel we need to preserve. This social model rests on one foundation: work.”

Investment plan

During his address, Macron also emphasised the importance of economic sovereignty, and said an investment plan would be unveiled in the autumn following consultations this summer. The objective is “to build the France of 2030”, and to “reindustrialise, reconcile growth with ecological production”.

“We saw during this crisis the consequences of dependence,” Macron said, calling for French and European independence with regards to technology and primary resources.

Last month, the President announced a series of measures designed to stimulate French innovation in healthcare technology.

Support for young and old

Finally, Macron announced additional support for those who have been hardest hit by the pandemic – young people “who sacrificed so much even though there was little risk for themselves”, and elderly people “who more than others feared for their lives”.

In September, the government will unveil a new revenu d’engagement (commitment-based income) for young people not in education, employment or training. This “will be founded on rights and responsibilities”. This could resemble the garantie jeunes, a monthly benefit for 16 to 25-year-olds not in employment or training, created under François Hollande’s government.

For the older generation, Macron avoided specifics. “We owe them a great humanist ambition for independence, strengthened home care, modernised retirement homes,” he said.

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