Dutch must raise retirement age, curb jobless benefits: OECD

16th June 2010, Comments 0 comments

The Netherlands should raise its official retirement age and curb unemployment benefits among steps to boost fiscal stability, the OECD club of wealthy nations said in a report Wednesday.

"The government should pursue the plans to increase the official retirement age by two years to 67 years -- an important measure to address fiscal sustainability," it said in a statement, adding that age-related spending was a "particular challenge" to Dutch public finances.

"Moreover, life expectancy is likely to increase further, so the retirement age will also need to be adjusted in the future."

Raising the pension age was a hot topic in last week's parliamentary elections in a country with a greying population.

The biggest party, the centre-right liberal VVD, wants to raise the retirement age to 67, while the third-placed, the anti-Muslim Party for Freedom, a possible governing coalition partner, wants it to stay at 65.

In its latest economic survey of the Netherlands, the Organisation for Economic Cooperation and Development said the financial crisis and increased longevity were threatening the solvency of the Dutch pension system.

It also said that unemployment benefits in the Netherlands were "generous" and of "long maximum duration" (38 months).

"The long duration should be reduced; the initial generosity should be maintained but should decline over time to create dynamic search incentives," it said.

In the wake of the global economic crisis, Dutch public finances switched sharply into a deficit of 5.3 percent of Gross Domestic Product last year from a surplus in 2008 -- partly as a result of government assistance of 37 billion euros (45.5 billion dollars) to the financial sector.

Total, accumulated public debt is expected to rise from 45.5 percent of GDP in 2007 to 68.9 percent in 2011, with unemployment rising to 5.9 percent in the period February-April from a low 3.9 percent in 2008.

Many countries face similar problems to the Dutch and have announced austerity packages in recent months. On Wednesday, France said it would raise its legal retirement age to 62 from 60.

© 2010 AFP

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