A decade has now passed since Belgium replaced its early retirement system – the so-called "bridge" pension – with a system that aimed to keep older workers in the labour market rather than pushed towards redundancy. But after analysing the measure, a study has found that so far the new system – which provides generous benefits – has failed to prove more cost-effective.
The System of Unemployment with Company Benefits (SWT) succeeded the "bridge" pension system in Belgium in 2012. It means that if an employee is laid off when they are 62 or older and have a career of at least 40 years (39 years for women), they are given the status of a job-seeking unemployed person, meaning they must "remain available for the labour market." They then receive an additional supplement on top of unemployment benefits.
However, by February 2022 less than 1% of those who ended up in SWT had ended up going back to work, researchers from UGent found. This is despite the fact that the system means that "SWT workers" are obliged to apply for suitable vacancies forwarded by employment services. Yet of the over 6,000 people entered onto the system, fewer than 50 each year make their way back to work within a year.
Stigma not the problem
The low return of SWTs to work is not a result of unfair treatment by employers during the application process – researchers found that SWT job applicants were just as likely to be interviewed or hired as other candidates.
Among those who have been unemployed for two years or more, there is even a significantly higher chance of being hired when they are in SWT, the study showed.
"Employers seem to be more lenient towards those who apply for jobs despite additional income support within SWT," said doctoral researcher Axana Dalle. The study noted that unemployed SWTs are perceived as being more flexible, easier to hire and more satisfying to previous employers.
The reasons for the low re-employment rates, therefore, seem to be more along employee lines. "The higher benefit allows SWTs to better maintain their standard of living, which may in fact lead to fewer job applications," Dalle noted.
Mental barriers
While the SWT may not be seen as a pension, it appears to be so in practice. This was confirmed by the Flanders employment agency VDAB, which noted that its staff have considerable difficulty in getting SWT candidates back into employment. "People are often barely aware that they are supposed to go back to work, let alone open to it," spokesperson Joke Van Bommel said.
The agency argued that there is a lack of opportunities, contrary to what the study found. It added that health problems are a major barrier for this group to re-enter the labour market. "In 40% of cases this makes returning to a job too big a step. There is also a mental barrier. If in your mind you are already on early retirement, it is very difficult for our mediators to get someone still motivated to apply enthusiastically."
At a time when the end-of-career debate is at the centre of Belgian politics and it is likely people will have to stay at work until 67 by 2030, VDAB questions whether the SWT is the answer. "We are trying to keep people in work longer, the SWT system does not help us do that," it argued.
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VDAB argues that getting SWTs to work is a shared responsibility: employers should give over-60s as many opportunities as possible in the form of jobs offering "workable work," and called on policymakers for "a legal framework that encourages work as much as possible."
Stijn Baert, professor of labour economics at UGent who supervised the study, has simply called on the government to abolish SWT. "The signal you send with this tangle of systems is that we don't mean for people to work that long. For me, the SWT should have long been sent to the Museum of Bad Belgian Policy."
