Unions protest erosion of pensions

The protest comes in the middle of the parliamentary session, and a month before the election Keystone

Trade unions are organising a mass rally dubbed “hands off our pensions” in the Swiss capital, Bern, on Saturday.

This content was published on September 19, 2003 - 21:00

Thousands are expected to take to the streets against government proposals to cut state retirement benefits.

Along with the economic downturn and unemployment, the future of social benefits is one of the most debated topics in Switzerland ahead of October’s general elections.

One of the issues causing the most concern is cutting pensions, which is causing unions to mobilise against what they call a coup against the welfare state.

Smaller protests have already taken place over plans to reduce state pensions. A suggestion by the interior minister, Pascal Couchepin, that the retirement age be raised to 67 has also caused outrage.

Saturday’s protest, expected to attract some 30,000 people, is aimed at the government’s planned spending cuts, which would do away with the so-called “mixed index”.

This is a formula used to calculate pensions and is based on a mix of inflation rates and salary levels.

“We are fighting against the suspension of the mixed index, a little-known instrument, which has a great effect on pensions,” said Rolf Zimmermann, from the Swiss Federation of Trade Unions.

Abandoned

“If the mixed index was abandoned the government could save about SFr70 million a year,” added Zimmermann. “But this would affect pensions to the tune of about SFr450 million, to the detriment of future and present pensioners.”

The Swiss parliament is currently debating the spending cuts, but the first decisions are not expected before the winter session in December.

Zimmermann believes the political parties will view with scepticism government suggestions that doing away with the mixed index would save money.

Others want the proposed cuts to the state pension scheme removed from the government’s savings package altogether.

They maintain that pensions are such an emotive issue that they risk derailing the entire savings plan, which would cut spending across every government department.

Not convinced

Correspondents say plans to cut the mixed index have little chance of making it through the House of Representatives, and that even the employers are not convinced.

“We are still discussing it,” said Hans Reis, spokesman for the Swiss Employers' Association.

The government’s planned cuts are but one bone of contention in the wider debate about pensions. Passions have been running high since the interior minister suggested raising the retirement age last spring.

And the government’s recent decision to cut by one per cent the rate of return on occupational pensions has also been greeted with anger. The cut, from January 1, 2004, will be the second in a year.

The government blames the weak economy and says the rate could go up again once growth improves.

Provocation

“The political provocation by the Swiss president, Pascal Couchepin, to increase the retirement age to 67 will also be put on the table on Saturday,” said Zimmermann.

“This proposal is not only an idea but a clear goal of Couchepin,” he added.

Reis at the employers’ federation disagrees. He says Couchepin’s proposal is a step in the right direction, but he admits it needs to be handled carefully. “Those who want to carry on working, should be able to,” said Reis.

The divisions boil down to a simple disagreement over whether the current pension system is affordable.

Those on the Right say no, and insist cuts are needed if the system is to survive – Couchepin presented his suggestion to raise the retirement age as a way to “save” the state pension.

The unions fear reform will kill the system, and say they are in any case unnecessary. They agree pensions are being squeezed at the moment because of the weak economy, but say the pressure will ease once growth improves.

“All those fears are speculative in the long and medium term. Those scenarios do not rely on an economic upswing, which [has] offset the demographic development since the old-age pension scheme was introduced in 1948,” Zimmermann said.

swissinfo, Alexander Künzle, Marzio Pescia

In brief

The government’s planned cuts are only one bone of contention in the wider debate about pensions.

Passions have been running high since the interior minister suggested raising the retirement age last spring.

The centre-right says no and insists cuts are needed if the system is to survive.

The unions fear reform will kill the system, and say they are in any case unnecessary.

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