Finland's five-party government is adamant it will push through a 2 billion euro ($2.65 billion) long-term pension reform even if trade unions and employers are unable to agree on the details, a minister said on Thursday. The government last year put forward a plan to lift the effective retirement age in the country to 62.4 by 2025 from a current 60.9, looking to cut long-term costs in the face of a slower economy and ageing population.
However, the details are being negotiated by organisations representing various parts of the labour market and with one trade union planning a strike, the government wants to resolve the issue once and for all. "I am confident they (representative organisations) will reach a solution, and I expect it to be ready by next week as the government gathers to discuss next year's budget," Laura Raty, the minister of social affairs and health, told Reuters. "I have no reason to doubt it, I assume a solution will be found. But the government is responsible, and if a solution is not found, we are of course ready to act," she said.
Lifting the retirement age has been a sensitive subject in the Nordic country in recent years. The country's previous coalition in 2009 backed off such a plan after resistance from unions and leftist parties like the Social Democrats. The pension reform is intended to cover about a quarter of a calculated long-term fiscal gap of 4.5 percent of gross domestic product, around 9 billion euros, according to the country's finance ministry.
Other plans for bridging that gap include healthcare and local government reforms, and cutting certain social benefits. Finland is one of Europe's few remaining triple-A rated countries, but a combination of slower growth and the rising costs of caring for an aging population will start weighing on its finances. Credit rating agencies are keeping a close eye on the country's reforms.