Annual Report 2002

The review below is a summary of the Annual Report 2002.

Review of the Director General

Jorma Rantanen, Director General

Pension reforms, occupational health and work ability

In autumn 2002, the Cabinet gave the Parliament its proposal to amend the pension legislation of private sector employees. The proposal includes a reform that is probably the most significant one after the employee pension scheme was established over 40 years ago. The effects of the reform are far-reaching and include aspects, such as the coefficient of life expectancy, which continuously change the pension security.

In brief, the reformed earnings-related pension scheme will bring more flexibility to the retirement age, prolong the pension accrual time, raise the pension accrual rate sharply after 63 years of age, and base the pension income on the earnings during the entire employment history. On the other hand, unemployment pension and the possibility for early retirement pension will no longer be pension options. Furthermore, the employee's right to rehabilitation will become statutory. Another interesting detail in the reform is the right to continue working until the age of 68.

The reform that now covers private sector earnings-related pensions will in all probability be extended to the pension scheme of public sector employees in the near future. It is to be expected that the justification for and content of the reform will be in line with the decisions made in the private sector. Consequently, the pension policy of the entire labor force will be increasingly harmonized.

The aim of the pension reform has been to prepare for the growth in pension costs as the work force is aging rapidly. A more equitable distribution of pensions, the facilitation of individual retirement plans, and the harmonization and simplification of the pension legislation are other objectives of the Act. The increasing life expectancy and improved health of the population also underlie the reform.

The economic consequences of the pension policy are significant not only from the viewpoint of the 1.2 million Finnish pensioners, but also from the viewpoint of the national economy as a whole. The total statutory pension costs amounted to some 15 billion euros, i.e. over 11% of the GNP in 2002. Of this amount, the share of earnings-related pensions was about 7 billion euros and the share of disability pensions was about 2.6 billion euros.

A Committee which investigated the development of social welfare expenses and the securing of financing for them in the long run (the SOMERA Committee), considered that the biggest challenge to social welfare was the increasing economic dependency ratio due to the aging of the population. According to the Committee, sustainable social welfare would be best ensured by increasing participation in work life, preventing unemployment, and encouraging continuation in work life. The proposed pension reform is in line with the objectives of the SOMERA Committee.

The discussion of the pension policy and sustainable social welfare has focussed on developing the material prerequisites for encouraging active participation and continuation in work life. This approach is based on the presumption that economic factors determine the choices of individuals when deciding whether or not to participate in work life. Also other crucial material prerequisites governing people's decisions to participate in work life include wage, amount of pension, work-related social security, and other earnings-related benefits.
In addition to the material factors, also other factors have been shown to have an impact on the decisions of people to continue at work. The nature, organization and content of the work, the healthiness and safety of the work environment, the quality of the work community and the work atmosphere, the supervisor's support, as well as the employee's professional competence and overall mastery of the work increase the attractiveness of work. In contrast, negative features, including also unreasonable workload, haste and age discrimination decrease the attractiveness of work.

Due to the nature of the pension legislation, the reforms have focussed almost exclusively on providing material benefits. Although these reforms are without doubt well-founded, there is reason to believe that the goals set for the pension reform cannot be met only by means of material incentives. As mentioned above, several non-material incentives play a major role in the decisions that people make concerning their participation in work life or retiring from it.

A worker who is unhealthy, unable to work, or lacks the competence to tackle the demands of his or her work can hardly meet the requirements inherent in the pension reform. The decision to continue to work should be conditional to the fulfilment of the essential basic conditions necessary for good working. Without these qualitative conditions, individual financial incentives will hardly lead to the desired goals.

Since the early 1990s, the maintenance of the employees' work ability that has been of increasing importance in Finland. It has been incorporated in the amended Occupational Health Service Act as one of its central goals. The activities to maintain work ability are mainly carried out by occupational health services, but also by other actors involved in the development of working conditions. At its best, the maintenance of work ability can enhance the employees' participation and continuation in work life by improving the non-material prerequisites underlying the decision to continue to work longer.
More effective measures to promote the maintenance of work ability should be brought alongside the pension reform. This can be best achieved by developing further occupational health services and extending the services to such groups of workers who do not yet have access to these services.

The statutory right to rehabilitation ensured in the pension reform is an important but not necessarily a sufficiently early measure to resolve disability problems. There is evidence that factors leading to a person's future disability start to exert their influence already at a very early stage of the work career. The measures to maintain work ability should therefore be targeted at all age groups well before the risk of disability is imminent.

The strategy of the Finnish Institute of Occupational Health is aimed at promoting and securing safe and healthy working conditions and good work ability of all employees throughout their work career by means of research, development work, services, training and dissemination of information. In this way it is possible to support the goals of the pension reform and pursue the development of sustainable production and social policy.

The year 2002 at the Institute    

The action year 2002 at the Finnish Institute of Occupational Health was carried through as planned. The strategic goals set in the agreement with the Ministry of Social Affairs and Health as well as the Institute's own objectives were mainly attained. Also the economic situation of the Institute remained stable during the year, and although the volume of the activity was slightly smaller than planned, the economy was in balance.

The rapid work pace prevalent in Finnish work life was also reflected on the daily activity of the Institute. Over 40 significant events, initiatives or activities can be mentioned when evaluating the cost-effectiveness of the Institute's year. The strategic goals set down in the agreement with the Ministry were the most central ones among them.

Development of the legislation

The new Occupational Health Service Act that came into force at the beginning of 2002 was the result of extensive cooperation both with the government and labour market organizations, as well as professionals and specialists in the field of occupational health. Guidebooks and manuals for the practical needs of occupational health services were prepared, the personnel in the field were trained, and the Institute took part in the preparation of a ‘Guidelines on occupational health services in Finland’. Special preparations were made to extend occupational health services to enterprises and worker groups that do not yet have access to these services, for instance in the building and transportation sectors.

The amendment of the Occupational Safety Act was also completed in 2002 and the Act came into effect on 1 January 2003. The enforcement of the Act requires numerous development projects particularly as regards the activities of the labour safety authorities.

New action programs

The Finnish Institute of Occupational Health strengthened its collaboration with the labour safety authorities by preparing an action program on ‘Support for Occupational Safety and Health Activities’. Its purpose was to support public administration and to improve the training of the officials. The other new action program was ‘Youth and Work’ which promotes the successful transition of young people from school to work life and emphasizes the health and safety aspects of work life. The program got a good start as an International Symposium on Youth and Work was organized in March 2002. The participants, coming from nearly 30 countries, showed an active interest in the research on the entrance of young people into work life.

The changes in social and health work have led to attempts to support the health care employees' coping at work and improving of their working conditions. In addition, a new action program on ‘Change, flexibility and well-being at work’ was prepared in 2002.

International cooperation

Also the international cooperation progressed positively both within the EU and in a broader international context. The Institute took an active part in the EU projects of the Fifth Framework Programme and in the preparation of the Sixth Framework Programme. The Finnish Institute of Occupational Health brought to a close the Finnish-Estonian Twinning Project financed by the EU/PHARE program. The project aimed at developing the Estonian occupational health and safety administration, the occupational heath service system, training of experts, dissemination of information and networking. The project was successful and paved the way for a new Twinning project to be launched in 2003. The EU Topic Centre on Good Occupational Safety Practice started to operate on a large scale at the beginning of 2002. In this connection, the Finnish Institute of Occupational Health coordinates the cooperation carried out with the institutions of several other countries.

The network collaboration with the World Health Organization (WHO) was continued within the frameworks of both the global and European occupational health programs, and the Institute took part in the practical collaboration, e.g. by producing occupational health and safety profiles. The publication of occupational health and safety newsletters was continued in collaboration with the International Labour Office (ILO), and the Institute also contributed to the program of the World Occupational Health Congress. The Institute engaged in the work of the International Commission on Occupational Health (ICOH) both in the Board and the Scientific Committees. These cooperative functions become more and more important for the development of Finnish work life as the work life and economy become increasingly globalized.

Cooperation in Finland

The training called for by the legislative reforms mentioned earlier, and the active networking with other administrative sectors and research organizations constituted the major part of the cooperation in Finland. The cooperation with the Finnish Ministry of Social Affairs and Health and its subordinate agencies and institutions was especially active.

The inauguration of the new laboratory building and the completion of the renovation of the old premises, and the open-house day organized for the Institute's personnel and hundreds of guests were recorded as important events in the improvement of the Institute. Both the personnel and the guests – including Prime Minister Paavo Lipponen who gave the inaugural speech – seemed to be pleased with what they saw and were convinced of the significance of these projects to the needs of the rapidly changing work life. Hence, this important building project was brought to completion just before the construction work of the new clinic building was started.

Research

The research activity continued to be lively, and the number of research outputs as well as of scientific peer-reviewed publications remained at the level of the previous year. According to the impact factor used to measure the quality of scientific peer-reviewed articles, the quality of the research was excellent and exceeded clearly that of the previous year. This was particularly due to the research articles on the health effects of work stress, and on the working conditions in the municipal sector, which were published in very prestigious journals.

Services

The services were improved further by introducing quality systems and accrediting selected services. Similarly, data-processing systems for various services were developed, for instance by starting projects extending the application of the PALVE-LIMS system. Economically, the services developed favorably regardless of the downward trend in production.

Development of training and information services

Another major structural change was the founding of the Training Centre on Occupational Health at the beginning of May 2002. The Centre focuses its activity on the training challenge arising from the generation change-over and the legislative reforms in occupational health services and labour protection.
An important step to develop the web services and e-communication of the Institute was taken when the www-centre started its activities. The departments have produced electronic informative material and controlled the quality of the contents. The Internet pages on aging workers and on the workers' health promotion, prepared together with the Finnish Ministry of Social Affairs and Health, were opened in March as a first step to offer new web services. The web service of the Finnish Institute of Occupational Health will be a new important service form on various aspects of Finnish work life.

Development of the Institute

In the spring of 2002, the Executive Committee of the Institute took on the job of analyzing the job and work descriptions of the whole personnel and correcting the distortions that had been created over time. Some structural changes were carried out in the mid-year, and some were also implemented at the beginning of the following year. The renewal of the personnel strategy was also started in connection with the structure analysis. The administrative and supporting services were assessed by an external evaluator, and several development projects were started on the basis of the evaluation.

The changes in work life are continuing at a rapid pace. In order to carry out its basic tasks successfully, the Finnish Institute of Occupational Health must be prepared to lead the changes rather than follow them. This requires active and continuous analysis of the environment, the forming of well functioning contacts to key developers in the field, and careful selection of research areas and spheres of operation. All in all, the Institute succeeded well in its objectives in 2002, thanks to the Institute's own personnel and numerous partners in Finland, the neighboring countries, the EU, in international organizations and all over the world.