Joblessness pushes thousands of older people into early retirement

Several thousand people in Estonia have taken retirement before reaching the old-age pension age because they could no longer find suitable work, ERR reported. The Unemployment Insurance Fund says employers are often reluctant to offer part-time positions.

Flexible retirement has been available since 2021. During that time, it has been granted to nearly 9,000 people, 85 percent of whom used the option to retire earlier, said Kadri Tomingas, head of the external benefits field at the Social Insurance Board.

“People’s life circumstances may lead them to choose early retirement. For example, someone who is up to five years, perhaps slightly less, from reaching the old-age pension age may lose their job and be unable to find a new one for a long time,” Tomingas said.

She said flexible retirement can provide a solution by giving people health insurance and a monthly income. The Social Insurance Board’s data show that flexible retirement is most commonly chosen three to four years before the pension age.

However, choosing flexible retirement does not necessarily mean that people stop looking for work. Up to 36 percent of those who have chosen flexible retirement continue working, Tomingas said. If a pensioner finds a suitable job, payments can be suspended while they work and their employer pays social tax. This allows them to build additional pension rights and resume receiving the pension if the job ends.

About one in 10 unemployed people registered with the Unemployment Insurance Fund is aged 60 or older. There were nearly 40,000 unemployed people registered with the fund in August, including approximately 4,000 people aged 60 and above, said Ulla Saar, a member of the fund’s management board. About half, or slightly more, of the older people who leave the register do so because they have found a new job.

The fund’s data show that health is the main reason it takes older workers longer to find new employment. If they can no longer continue in their previous occupation, they may need time and retraining to move into a new field, Saar said.

She cited the example of a person who took a Photoshop course through the fund, also attended photography courses independently and started a new career as a photographer at the age of 60.

Saar acknowledged that age discrimination exists in Estonia. Studies by the Unemployment Insurance Fund show that employers prefer younger workers. Older jobseekers most often find work in the service sector, including in shops.

More older jobseekers are becoming willing to retrain. Saar advised employers facing labour shortages to consider more flexible working arrangements, noting that many people aged over 60, as well as people in other age groups, have caregiving responsibilities and may need the option of part-time work.