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Ebb and Flow of Early Retirement: Pension Reform and Labor Market Participation of Older Workers in Spain

Abstract

Generally perceived as a symptom of economic and social progress, early retirement in Spain has long been supported by all relevant actors. However, in recent years—and especially since the great recession—it is widely seen as a problematic phenomenon in need of reversal. To promote active aging and cope with growing social security outlays, the institutional framework has significantly changed in the last decade, including an increase in the statutory pension age from 65 to 67 years and the introduction of a sustainability factor. Still, strong pull factors exist in special agreements in the case of firm downsizing and casuistic legislation affecting specific collectives of workers. Increased use of disability pensions since the onset of the crisis is also evident.

Keywords

  • Labor Market
  • Disability Pension
  • Early Retirement
  • Pension System
  • Permanent Disability

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Fig. 6.1
Fig. 6.2
Fig. 6.3

Notes

  1. 1.

    Employment-to-population ratios are attained by dividing all type of workers (employees, self-employed, and employers) within a group by the whole population of the same group.

  2. 2.

    When we refer to “Spanish people” or “Spaniards,” we mean only Spanish citizens born in Spain. This excludes all immigrants (included the high number of those who have obtained Spanish citizenship) in order to control for immigration. It is well known that Spain is the European country that has received the highest number of immigrants during the last two decades, particularly between 2000 and 2007.

  3. 3.

    As of this point, we use the term “workers” to refer to people having worked some time in their lives according to the LFS.

  4. 4.

    Whereas public health care and social services are regulated by the 17 autonomous communities (regional governments) forming the political–administrative structure of the highly decentralized Spanish state, social security is a centrally governed institution.

  5. 5.

    As regards civil servants, those working in municipalities, autonomous communities, and specific public entities are integrated into the social security general regime. Civil servants in the national administration hired before 2011 are ascribed to different public mutualities, whereas those hired as of that year are integrated in social security.

  6. 6.

    Salary bases are split into 11 groups according to professional categories: For 2015, the maximum salary base for employed workers affiliated to the general regime was set at 3,606 euros per month and the minimum at 753 euros.

  7. 7.

    There are three types of private pensions: personal, occupational, and associative. Occupational pension plans are less developed than personal pension plans, the latter being nearly three times higher in terms of participants, but only twice higher in terms of total assets. Associative plans are marginal.

  8. 8.

    Early retirement for workers under 60 years was possible only in case of specific unhealthy and dangerous jobs (for instance, sailors and miners) or industrial restructuring regulated by special legislation. Government employees needed only 30 years of contributions to be pensioned off with full benefits, whereas military staff were allowed to retire after 20 years of service.

  9. 9.

    According to the press release of the Spanish government, published on January 21, 2014.

  10. 10.

    The contributory unemployment benefit includes payment by the state of contributions to social security. The noncontributory unemployment subsidy does not include these contributions.

  11. 11.

    The scheme (officially denominated Plan Social—Expediente Regulación de Empleo —Telefónica de España, S.A.U. 2011–2013) was signed by the company and the workers’ representatives on July 7, 2011 and approved one week later by the Ministry of Labor and Immigration. The scheme envisaged the severance of a maximum of 6,500 workers through different arrangements. The information about the implications of this collective redundancy scheme for older workers has been extracted from the document published by the trade union Comisiones Obreras (2014).

  12. 12.

    As in other countries, spouses plan their retirement transitions together in Spain (Radl and Himmelreicher 2015).

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Chuliá, E., Garrido, L., Radl, J. (2016). Ebb and Flow of Early Retirement: Pension Reform and Labor Market Participation of Older Workers in Spain. In: Hofäcker, D., Hess, M., König, S. (eds) Delaying Retirement. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-56697-3_6

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  • DOI: https://doi.org/10.1057/978-1-137-56697-3_6

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