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Transition from Work to Retirement in the Czech Republic and Slovakia

The present Policy Brief reports differences in the participation of the elderly in the labour markets of two new Member States of the European Union – the Czech Republic and Slovakia.

The comparative analysis is all the more interesting because after the division of Czechoslovakia in 1993, the evolution of elderly employment and the choice of measures have been different in these countries.

Participation rates as well as employment rates of older workers are lower in Slovakia than in the Czech Republic, but these rates have risen after 2001 in both republics. In the Czech Republic, the unemployment in age group 50-54 is greater than unemployment in age group 55- 64. In Slovakia, unemployment of the elderly (especially women) is high but at a lower level than the unemployment of younger age groups (where the total rate of unemployment is one of the highest in Europe). In the Czech Republic we see a stronger support for elderly unemployed as for the rest of the unemployed population. In Slovakia, longer-lasting support for elderly unemployed has been recorded only before 2003. From 2004 – as a consequence of the ALMP reform – we find noticeable changes in Slovakia: instead of publicly or socially purposeful jobs, subsidies support activation activities (back-to-work training programme or performance of minor community works).

The comparison involves also the development of pension reforms in both countries. Whereas in the Czech Republic, the reform of the Pay-as-You-Go system was done in 1995 (starting year 1996), Slovakia prepared and introduced the reform of the Pay-as-You-Go system from the year 2004 onwards. The common mark of both reforms is the rising pension age as a beneficial factor of the increase in elderly employment. But the shape of the rising pension age was different in both countries. In the Czech Republic, the same system (favouring women with children) remained in place, but Slovakia changed it (with the gradually rising pension age for both men and women up to the same level). As a consequence, we find a higher pension age for men in the Czech Republic than in Slovakia (63 vs. 62 years), but a lower pension age for women. From 2005, Slovakia has continued its pension reform by building a funded pillar.

Generally, the Slovak pension reform is less solidarity-oriented than the Czech one, but shows more generosity for people with higher contributions. The impact on elderly employment (also due to a higher unemployment rate in Slovakia) is the same, i.e. positive.

Annette Hexelschneider | alfa
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