Switzerland

January 10, 2007

The government has rejected a proposal by Switzerland’s main union lobby (SGB) to lower the retirement age to 62 for middle-class workers, calling it unrealistic and too costly.

In recent weeks, the SGB has twice proposed that workers with annual incomes of up to CHF119,340 (€73,970) should be permitted to retire at 62. Currently, the legal retirement age is 65 for men and 64 for women.

“Our proposal aims to provide older workers with a dignified exit from the labour market. These workers are either not as robust as they were for health reasons or are no longer wanted in the labour market,” commented SGB general secretary Colette Nova. 

But, citing demographic trends, the Swiss interior ministry rejected Nova’s proposal. “People are actually reaching the legal retirement age in good health while the birth rate is declining. One consequence of this is that there are fewer workers supporting pensioners,” the ministry said.

Another demographics-related problem, the ministry said, was that if workers retired too early, the Swiss economy would lose qualified staff that could not be replaced quickly.

The interior ministry further said the proposal was unworkable as it would raise costs on the state pension scheme. The costs were put at around one billion Swiss francs annually.

The SGB acknowledged that its proposal would raise costs on the scheme, but said they were manageable. “The costs represent between 2.3% and 3.7% of revenue taken in by the scheme, so we’re not talking about an enormous sum,” Nova said.

The SGB also said it was hypocritical of the government to argue against its proposal for cost reasons but at the same time cut corporate taxes. The SGB estimates that the proposed tax cuts will cause a shortfall of several hundred million Swiss francs for the state pension scheme.