Author: Dirk Hofaecker
Co-Authors ⁄ Presenters: Sina Schadow, Janika Kletzing
Young people and pension savings in times of increasing employment uncertainty: A comparison of seven European welfare systems
Faced with the foreseeable prospect of demographic ageing, in recent decades, many international organizations, such as the World Bank, the OECD or the European Union, have advocated the establishment of multi-pillar pension systems – combining components of public, occupational and private pensions – to ensure the sustainability of pensions. Many countries have introduced such pillars and young cohorts entering the labor market now are often expected to invest in to multiple sources of old age income.
At the same time, the labor market situation of youth has worsened dramatically. Young people increasingly have difficulties to enter the labor market and thus often end up in (long-term) unemployment. They are also disproportionately represented in atypical work form such as fixed-term ´´employment, low paid work or (false self-employment). The uncertainty associated with these employment instabilities often hinders young people to make appropriate savings for old age.
Given these conflicting trends, the old age security of today’s young generations – i.e. the future generation of pensioners –is at stake. Our paper will analyze evidence from seven selected country cases representing different types of welfare regimes –Sweden (social-democratic), the United Kingdom (liberal), Germany (conservative), Italy (Southern European), Poland, Estonia and Ukraine (post-socialist) – top investigate what consequences employment uncertainties today have for young people’s future pensions and to what degree country-specific policies mediate their possibly detrimental effect.
To that end, the paper utilizes findings from comparative institutional analyses of public pension systems. In additions, given the scarcity of cross-nationally comparable quantitative data, expert interviews with economic and political scientists as well as with administrators from financial institutions were conducted to similarly assess the effect of employment uncertainties on private and occupational pension plans. The paper synthesizes the findings from these analyses and derives recommendations for pension and labor market policies to ensure sustainable pensions for future generations.