BLOG 2:

Response to:

Moore, Tristana. “Guide to Europe's pension woes: Germany.” BBC News Web. 17 Aug. 2007. Retrieved 3 Apr. 2009 .

GERMANY - TRISTANA MOORE

Germany has one of the lowest birth rates in Europe, and at the same time, people are living longer. Recently, the pensions debate has become a political hot potato.
In March, the German parliament voted to raise the retirement age from 65 to 67 as part of a reform programme aimed at tackling rapid population ageing and spiralling pension costs.
The government is hoping that by keeping people in jobs longer, it will reduce the burden on the state pension fund.
But the decision has been heavily criticised by trade unions and groups representing Germany's 20 million pensioners.
Such was the level of public anger that many demonstrations were staged against the government's plans in Berlin and other German cities.
The head of the DGB trade union federation, Michael Sommer, said the new law was tantamount to lowering retirement benefits.
Opposition politicians argued that the changes would lead to higher unemployment and increased pensioner poverty.
Germany currently has one of the highest levels of public spending on pensions in the 30 countries of the OECD (Organisation for Economic Co-operation and Development).
The system provides a high level of cover, but it is widely believed to be unaffordable in the long term.
Most Germans stop working on average at the age of 63. Critics say it is still too easy for workers to take early retirement and they claim that many companies encourage early retirement schemes.
Given growing concerns over the demographic time-bomb, some pensioner groups have argued that those people retiring now are receiving state pension benefits which are around 10% less than they were in the past.
According to some surveys, one in three pensioners from 2030 will not be able to make ends meet if they rely on their normal pension scheme.



Believing:

I believe that the extending of the retirement age is a good solution to the problem of ageing in Europe. It is well-known that pensions partly originate from the taxes taken out of the salaries of employed. This is a sort of deposit young employed people make in order to secure themselves in older age. The current deposits are used for current pension payments, while the next ones – for future pensions. Since there are no younger people anymore, and the number of the elderly is increasing, there is a danger for the pension systems in the country because the government does not own enough funds to support older people. By the extending of the retirement age, the government could reduce the number of retired and pay out the pension. Moreover, for the retiring people, working in their old age could be seen as a small recompense for their physical and mental exhaustion. Extended working could be an opportunity for older people to stay active and integrated in a rewarding social environment.

Doubting:

However, this causes problems for those people who do not remain physically fit to meet the requirements of the workplace. This could be reflected on the quality of their performance. Furthermore, this reform raises issues for those companies who wish to stay competitive in today’s global business because older people are seen as less productive and more expensive. It is known that older people are not able to keep up with the continuously changing standards since they tend to be less mobile and less flexible than younger ones. Another problem can arise for young people who wish to enter the workforce. They will be limited in joining the working lives because there are enough employees over the age of 65. There will be no vacant places for young dynamic people which will limit the number of their applications and motivation because the older staff is still working.