An additional burden to old age

Unlike Hollywood’s “40 Year-Old Virgin,” the tragicomic figure of Kosovo in the 21st century should be called “The 40 year-old first-time employee.”

After 50 years of continuous labor, H.D. reached retirement age in 2015. Like all the other 65-year-olds in Kosovo, he could now benefit from the age pension distributed by the Ministry of Labor and Social Welfare. Additionally, for the nine years he worked during the 70s, he would benefit from a pension of 250 euros per month from the German state. Meanwhile, for the 13 years he worked in the state of Kosovo, he would get a pension of 150 euros per month, along with his savings from the The Kosovo Pension Savings Trust. For the majority of the years he spent working – the informal work he did in the 1990s after Kosovo Albanians had been fired en masse, and his previous job in the former-Yugoslav system in the 80s – he won’t receive any benefits.

Overall, in the first two years after he retired, H.D. received a good income from his pension. But, after 20 months, the income from the trust was exhausted. Also, the benefits from his German pension are expected to end in a few months. The only income he will have will be the age pension, a sort of social welfare, that is provided by the Kosovo state.

While H.D. was lucky that he had 13 years of job experience since the year 2000 and could benefit from the trust as well, many of his peers don’t have that opportunity. Because of the high level of unemployment from 1999 until now, and because of the loss of pension funds for employment in the former-Yugoslavia, most of those who turned 65 and those who will turn 65 soon will not benefit from anything but the age pension, in the amount of 150 euros per month.

H.D.’s case teaches us three important lessons: first, eight years of work during the 70s in Germany are more valuable than the 13 years of work in 21st century Kosovo; second, because of the low pay and the short period for which the pension savings system has worked, the income from the trust is low and only lasts for a few months; third, the burden on the budget from social pensions provided by the government is increasing, not decreasing.

Most contributors to the pension saving trust are like H.D. According to data from the Trust in 2016, the mean balance of the contributions was 2,795 euros, while for active contributors it was 3,979 euros. On average, contributors have less than 4,000 euros in their pension savings, or an income of 200 euros for 20 months after retirement. After 20 months they will all depend on the age pension that is provided by the government.

According to the Trust’s data, in 2015 there were 27,577 new contributors, or contributors who were paying pensions for the first time. Over 14 per cent of the new contributors were over the age of 40 when they were employed for the first time. A similar overview was given in 2014 as well. These employees who have started their pension contributions for the first time after the age of 40 – assuming that they are lucky enough to have a continuous job for the next 25 years, and assuming they have received an average salary – by the time they retire in 2042 won’t be better off than those who retire in 2017.

On the other hand, at end of 2015 there were 132,000 beneficiaries of the age pension, a significant increase compared to 2012, when there were around 113,000 beneficiaries. 69.2 million euros were spent for the age pension in 2012, while over 116 million euros will be spent in 2017. In addition to the increase of the number of beneficiaries, the current government has also increased the sum of benefits.

Despite the fact that Kosovo has the youngest population in Europe, according to projections from the Kosovo Agency of Statistics, the number of the population between 65 and 79 is expected to increase significantly in the upcoming years. While in 2011 the number of people in this age range was 105,157, in 2026 this number is expected to increase to 173,234, and in 2036 it is expected to reach 244,737. To put it in percentages:  while in 2011 people in this age range composed only 5.9 per cent of the general population, by 2036 they will represent 11.3 per cent of the general population. The average life expectancy for Kosovo women and men is at 76.7 years. According to this, on average the state pays 13 years of age pensions for every person.

Currently, Kosovo doesn’t have the problem of an aging population, but that of high unemployment and an inactive population in the job market. Around 67 per cent of the Kosovo population is of working age (15-64 years old), but 59.8 per cent of them are inactive in the job market.

For the Kosovo Agency of Statistics, the Prime Minister and the Minister of Labour and Social Welfare, “the inactive population means those who do not want to work,” while in reality these are individuals who are worn out from the job search and at some point stopped looking. But, no matter how one looks at it, one thing is for sure: all of these people will depend on the social benefits of the government.

Unlike Hollywood’s “40 Year-Old Virgin,” the tragicomic figure of Kosovo in the 21st century should be called “The 40 year-old first-time employee.”


06 February 2017 - 14:57

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