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Pension Reform: let's live now.

These are difficult times for unions in Belgium. The government has (finally) decided to go ahead with a pension reform and is doing so with an unprecedented speed. The political agreement and the deadline for its implementation, leaves little room for dialogue between the social partners and the government. It is generally accepted by the public that pension reform is needed so the time seems to be right. But this is not how the unions see it. They see three problems:

  1. They have not sufficiently been involved in the debate about the pension reform (“erosion of social dialogue”);
  2. They see individual rights threatened (“broken promisses”) not only in terms of pension rights but also in terms of unemployment protection;
  3. They see the rights of entrepreneurs and companies broadly untouched (“injustice through unfairness”).

The first problem might be the most important one. Belgium has a strong tradition of social dialogue and a high trade union density. Unions owe it to themselves to react. That explains the harsh language and the announced strikes. Unions do what they do and the rituals are needed to get through this without loss of face. In the past these actions have always led to compromises. But today something peculiar is going on. The minister responsible for pension reform – Vincent Van Quickenborne – announces that he will go through with it, even when this means he will never get re-elected. This is unheard and a new political courage. The socialist party – who has provided the prime minister – confirms that these reforms will go through. The unions are not at ease with this fait accompli and this determinationI can imagine that they are getting nervous.
Union leaders claim now that they have tried their best to keep things calm so far, but they can no longer guarantee that emotions will not lead to wild strikes. They have called for a national strike end of January to channel those emotions (to be honest, the strike was pre-emptive as it was announced before the government was formed). The strike comes after the deadline that the government has given itself. Unions are taken by surprise by the speed in which the reform will be presented to Parliament. They are surprised by the no-way-back and there-is-no-alternative (a style that they know very well themselves). So the national strike might come too late.
Even when unions have a point when they say that the tradition of social dialogue has not been maintained, unions are not informing their members correctly. So let’s put forward some elements.

  1. Belgium has one of the lowest activity rates for elderly people. There are other countries that combine later retirement with low unemployment, and high quality of labour with high employment. We need to look at other countries like the Netherlands or the Scandinavian countries to see that it’s possible. So why not in Belgium?
  2. The pension system as we know it, is underfinanced and future generations will not be able to support the retired if nothing happens. There are no reserves. The real pension age has been too low for decades through systems of early retirement. Subsidized systems of work time reduction or sabbaticals have become so popular that not only they are costly but they have also contributed to the deficit of the system. All this in combination with the increased life expectancy has undermined the financial stability of the pension system.
  3. The economic crisis has created a budget deficiency, which requires budgetary action. This is most probably the main cause for the wrath of unions, but saying that the banks should pay instead of the workers is populism. A pension reform was needed also before 2008, when the financial and economic crisis started.
  4. Belgium is one of the last countries in Western Europe to go ahead with a pension reform. It’s a matter of competitiveness and of image.
  5. The pension reform cannot be a surprise. The debate has been going on for years and there was a modest prelude in 2005. That year the generation pact has been voted. The effect of this generation pact has been modest not to say insufficient.
  6. Social Expenditure in general in Belgium has gone up. This is an indication that there is no erosion of social protection. (see a recent publication of the social security agencyhttp://www.socialsecurity.fgov.be/nl/nieuws-publicaties/nieuwsoverzicht/2011/12.htm#151211). We need to heed the efficiency of the system (but working costs have not gone up dramatically) and it’s a sign of good governance that a government wants to prevent a derailment of the system. There should be no doubt about that.
  7. All in all, the reforms are even not that dramatic. The legal age for retirement has not increased. Compared to our neighbouring countries many things have been kept intact. This probably means that the reforms will not be sufficient and more reforms will be needed. It took Germany 15 years to reform their pension scheme. In the coming reforms we need to make sure that people acquire during their working life sufficient reserves to maintain the quality of life after retirement.

A different way of thinking is needed
The elements above are of a technical nature. What we need to do is to change the way we look at work. Work is not something that prevents us from living. It’s a part of our life and it gives life a purpose. It’s a pity to value retirement as the ultimate reward of work, as the main deferred benefit. Let’s live now.


Greedom or Freed (about Greed and Freedom)

The smell of Revolution

The smell of revolution is hanging in the air. The so-called Indignados are taking to the streets to protest against a system that they see as disruptive but that is apparently kept alive by massive financial injections. People are on the streets in Brussels, Madrid, New York and other cities in protest. So are they just rabble, anarchists, a minority, melancholic communists? Are these people protesting because they are unable to integrate in a societal system that is omnipresent and has been so since the times of industrialisation?
Or is there something more to it? Are people rejecting the system?
Naomi Klein asks the question why it took so long before people took to the streets. The answer is simple: it took so long because people indeed have benefitted from the system. The system appeals to one of the main drivers of human behaviour : greed. She describes the current system in her latest book on the shock doctrine (2007).

Greed

Three psychological mechanisms are behind greed. The first mechanism is adaptation. We adapt to new situations. So if we reach a new and higher level of comfort we adapt to it and more we do not appreciate it. Once there, we assume that this level is acquired for ever. A second mechanism is social comparison. People compare their situation with the situation of relevant others. Those relevant others are usually people that are perceived to be better off. The third mechanism is the mechanism of choice. We can choose whom we compare with. We can choose to aspire other things. We can choose what to do and what not to do.
John Whitmore (1997) describes three choices: you can live in a state of need, a state of greed or a state of freedom. These three levels are also called dependence, independence and interdependence. When we make choices based on dependence, we are not taking any responsibility for what happens to us. If we base our choices on independence we are focussing on personal interest and personal interest only. Finally in interdependence we try to reconcile both the personal interests and the the interests of the other. Few people are on the third level, in spite of the fact that we know that people who can function on that level usually experience a high level of meaningfulness and happiness in life.
Zizek (2011) describes the four drivers behind the fact that the current system is no longer sustainable: (1) the worldwide ecological crisis, (2) imbalances within the economic system, (3) the biogenetic revolution and (4) exploding social divisions and ruptures. Drivers 1, 2 and 4 are clear in the protests.

Freedom

A couple of months ago I was in Barcelona and walked through the Catalunya Square where thousands of indignati were gathered and I noticed the multitude of themes they were addressing (see an earlier blog, Spanish Revolution). Indeed, people have a feeling of Unbehagen about the world they live in, even though that the spark that ignites the protests is often unemployment and lack of personal perspectives.
So is this an issue of Zeitgeist, a late fin-de-siècle, an apocalyptic feeling? Well let’s face the brutal facts and then we can only be worried. Putting your head in the sand and ignoring the signs will not get us anywhere.
But solving the problem is not simple if people reside in states of dependence or independence. As long as we derive our identity from what we have and consume and not from what and who we really are (e.g. defined by the trace we leave on the planet, our legacy). It will not work if we cling onto personal objectives. It will not work if we think that earning more, consuming more, … is a definition of success. Leaving all that behind is difficult, because we have been brought up that way. Nomadz.nu proves that it is possible. Their motto is “don’t be rich, live rich”. (http://www.slideshare.net/nomadznu/nomadznu4).

Let’s not be passive

We should not be passive about what is happening around us. If there are changes ahead we should shape them. Today there is protest, but we need real action.
And all of the solutions are available, at least in theory. On a personal level one could strive to be content with what is and not discontent with what is not. Suppressing greed is an act of balance. One could decide to compare oneself with those who are worse off than oneself and look at that other one with compassion instead of judgment. You could design your life based on health and sustainability.
Companies could work actively to install systems of justice based on fairness (cfr Rawls’ Theory of Justice) and reducing the gap between the highest and lowest incomes. Companies could strive for policies that are based on the principle of freedom and interdependence. Shareholders could postpone immediate profit and invest in sustainable operations.
Unions could stop focussing on purchasing power increases and work on sustainable progress. They could focus on employability instead of on income in those countries and companies where decent work is a given. Producers could refrain from exploiting labour forces in other continents.
Governments could regulate and discourage speculations that are in the interest of a few but against general interest. They can build systems that decrease the span between the highest and the lowest incomes. The redistributive function of taxation could be stressed. This requires courageous politicians that are willing and able to take the necessary action. The question is whether or not these politicians will get elected.
Freedom
On different levels, many issues are possible. But to be honest, I am quite pessimistic that this change is likely to occur. People define the current state as freedom, but it is “greedom“. Our current feeling of being free is a false one. We are very much depending on a system that seems to be facing a meltdown and which is addictive. Current solutions are old school and departing from the current system. Billions of Euros and Dollars are pumped into a leaking system, and it’s not bringing any change about.
I’m sure if someone reads this blog, he or she might think this is a radical leftist opinion. It’s not. I ask not to judge on any ideological system, but to look for answers to the huge problems of ecology, economy and society. Let’s put individual responsibility in the center of collective action. Let’s work towards a state of “freed” instead of “greedom”, that’s what those people on the streets want and that’s what people would benefit from. And that’s what our children en their children would benefit from.
And even if there are now only a couple of thousands of them, there will be more. There should be more.
==================================================
Klein, N. (2007). The Shock Doctrine, the rise of disaster capitalism. Alfred Knopf Editors.
Rawls, J. (1999). A Theory of Justice. Oxford, Oxford University Press.
Whitmore, J. (1997). Need, Greed or Freedom: Business Changes and Personal Choices. London, Element Books, pp. 224

Zizek, S. (2010). Living in the end Times. London, Verso. 

Other Blogs

Youth Unemployment: The Spanish Revolution


Youth Unemployment: The Spanish revolution

On Friday may 27 2011, I witnessed how the Spanish Police in battle-dress evacuated the Plaça Catalunya in Barcelona. Youngsters had gathered on this famous square – probably inspired by the events in the Middle East and Northern Africa – to protest against the skyrocketing youth unemployment and the apparent lack of remedy. The atmosphere was that of a political rally mixed with a musical festival. Young people were debating about many topics, but most discussions were dealing with their future, given the high unemployment rate.
Youth unemployment in Spain was at 42,8% at the end of 2010. For the sake of comparison: Morocco was at 18,8%, Portugal had 23% and Greece was at 36,9%. (Source www.ilo.org).
The (weak) economic recovery seems to create jobs, also for youngsters. But the ILO warns that youngsters could get discouraged and stop participating to the labour market. This could be the case in those countries where statistics are not a high priority for governments and where registration as unemployed is no obligation , where there is hidden unemployment or subsidized employment, where there is no unemployment allowance, where participation of women in the labour market is low, … They stay at home or even end up in criminal activity, …
In Spain people talk about the lost generation. Unemployed young people cannot start with their lives; they cannot afford living on their own let alone buying a house. They are confronted with a grim future. Many of them have studied and realize they cannot find decent work. They end up in precarious employment situations, low paying jobs.
According to the ILO we need a government approach that generates sustainable job recovery and sufficient high quality jobs for youngsters. Having a meaningful job is of the greatest importance for people as it is a basis for mental wellbeing. A job generates income; it provides meaningfulness to one’s existence. One can make a difference, contribute, and acquire societal status through employment. Research shows that the lack of a job or losing it has a negative impact on mental health. For someone at the start of his or her career it means a very uncertain future.

What can we do about youth unemployment?

There is no miracle cure. But this is what governments should do:

  1. Make youth unemployment a priority;
  2. Make sure having a job is worthwhile. Reduce fiscal pressure on income through labour.
  3. Provide early work experiences for youngsters by combining education and work. Review your educational system to maximize these experiences.
  4. Make sure that people leave school with a degree and provide ways for catching up for those without degree.
  5. Make sure that companies are open for diversity and look at potential instead of at degrees or the match with rigid job-demands.
  6. Encourage companies to hire people that have no professional experience, even though they are less productive at the start or you risk losing them after a short time. Companies should consider this as a way of corporate social responsibility. Governments can give incentives.
  7. Provide early guidance towards the labour market for youngsters, starting at school. This should cover study choice, curriculum building, internship management, …
  8. If you have no opportunities for your young generation, then help them to emigrate and hope that they will return tou your country once things are getting better. They might remember that you’ve helped them. But deal with your brain drain.

<h3>Back to Spain</h3>
The Plaça Catalunya has been evacuated because there was a soccer match between Barça and Manchester United. It’s cynical that a soccer game – the fear for riots – comes before the protesting youngsters. Barça won and I think that the crowd on the square would have celebrated together with the fans. The square was empty at 8h30 but was filled again with young angry people by noon. People I talked to – both with and without a job – disapproved the approach of the government.
But the situation is indeed cumbersome. The government led by Zapatero has no miracle cure and is faced with many challenges. What is then left for the current generation of the PIGS-countries? Do they have the choice between unemployment and emigration? Will Spain sacrifice this generation and focus on the budgetary deficit. Will Spain create a future for its future generation? A social emergency plan is needed.
David Ducheyne
Read also : ILO, Global Employment Trends 2011: The challenge of a jobs recovery


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