End of Early Retirement System in Belgium Marks a Significant Shift
As of Tuesday, Belgium officially dismantled its central early retirement system, impacting both older workers seeking to exit the workforce and companies seeking budget-friendly ways to downsize. This controversial measure, which offered additional unemployment benefits to laid-off older employees, has been a topic of significant debate since its inception in 1974 during the oil crisis.
The scheme was originally designed to benefit older workers—typically those aged 50 and above—by providing them with unemployment allowances supplemented by employers and social security. The rationale was that the economy was saturated with workers, and allowing older employees to retire early would open opportunities for younger job seekers.
However, contemporary economists criticize this approach, arguing that employment is not a zero-sum game, and that increased employment leads to economic growth. While this perspective applies at the macroeconomic level, the realities within individual companies often tell a different story.
The early retirement option became a convenient strategy for companies to manage their workforce without facing significant backlash from employees. It enabled layoffs of older workers without inciting strikes, as the financial burden was partially absorbed by social security systems.
For decades, the Belgian government has attempted to restrict early retirement practices, emphasizing their detrimental impact on public finances and the economy. Despite these efforts, resistance from both workers and employers made meaningful reform a slow process. Over the years, the minimum retirement age has been raised, and eligibility conditions have tightened significantly. Currently, early retirees must actively seek new employment, a requirement that was not previously enforced.
Shifts in economic and societal dynamics have also influenced attitudes toward retirement. With a current labor shortage, many older employees are now more inclined to remain in the workforce, motivated by job satisfaction and the necessity of full salaries.
Today, people in early retirement are still required to look for a new job, whereas in the past, nobody cared.
According to Geert Vermeir from the HR services provider SD Worx, these changes are reflected in the statistics. At the peak of the early retirement system over twenty years ago, approximately 120,000 workers were receiving benefits. Today, that number has dwindled to around 10,000, with only about 2,000 new entrants each year. Recently, some companies have initiated restructuring plans to utilize the system before its closure.
Is early retirement completely eliminated from the workforce as of Tuesday? Not entirely, asserts Manou Doutrepont from the HR consultancy Social Dialogue Network. The complexities of Belgium’s labor laws and agreements still leave room for limited exceptions. A small number of older unemployed individuals may still receive additional allowances on top of standard unemployment benefits, albeit nowhere near the previous figures.
Trade unions have historically defended the early retirement system but now face a changing landscape as the policy officially concludes. This initiative marks a notable transition in the Belgian labor market, with implications for both older workers and the companies that have relied on this system for workforce management.
Reports 24brussels.
