Influence on pension from labor market developments

In the Netherlands, efforts are being made to achieve a more inclusive labor market. Despite the economic growth of recent years and the shortage on the labor market, there is still a labor reserve (unused labor potential) of 1.1 million people. The Netherlands scores poorly internationally in terms of the employment rate of people with disabilities or a distance from the labor market. Nowhere in Europe is the difference between average participation, and that of people with disabilities as big as here. In order to increase the participation of the aforementioned group, the Participation Act was introduced in 2015. Employment subsidies, job coaches, a possible quota and fines for employers, should encourage employers to hire more people. At the same time, access to social employment was closed to new inflows. Recently, an evaluation by SCP (2019) showed that this approach has insufficient effect. Even before this evaluation, the political and social discussion raised the question of whether arrangements should not be possible (or mandatory) between participation in regular jobs on the one hand, characterized by increasingly higher training requirements, work pressure and flexibility and, on the other, a long benefit of social assistance. This ‘interim solution’ is described in terms of ‘basic jobs’ (WRR, 2020; CDA, 2018), ‘participation jobs’, ‘social jobs’ or work in the ‘parallel labor market’ (Wilthagen, 2019; Brouwer, Verhoeven and Wilthagen, 2018). These jobs should focus on individual and socially meaningful work (combating loneliness, promoting sustainability in cities, etc.), not displace existing work and providing benefits for the people involved (whether or not minimum wage level).

Various cities are experimenting with such arrangements, but there is no generally accepted scheme in the current system. The latter has to do with financing and organizational issues (who pays, how is it organized?), but also with divergent political-ideological insights and convictions. In our view, an inclusive labor market also means that people who work in any arrangement are entitled to a good old-age provision. Inclusion does not stop at the statutory retirement age. The old-age pension is a minimum provision, which, like many insiders on the labor market, is desirable to be supplemented by provisions from the second or third pillar or by another collective scheme. A good pension provision would make the arrangements described above more attractive to the participants, in addition to a reward that is higher than the benefit level (including supplements). If this cannot be offered and arranged, new ‘white spots’ will arise in the labor market and the pension system in the near future.

We will be investigating whether and how basic jobs or participation jobs can be included in a second or third pillar or other pension provision. How can this be arranged in an existing or new way and is that feasible?

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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