Retirement on grounds of ill health

Today, most modern welfare states face the challenge of an aging population and decreasing rates of labour force participation among older people. Despite increased life expectancy, improved living conditions, and better health status, the average time people spend in paid work is decreasing in most European countries.^1–3 This rather paradoxical development is partly due to a delay of young people entering the labour market; however, even more important is that older workers are exiting the labour market in greater numbers. In most countries, the average age of permanent departure from paid labour is well below the statutory pension age. This development, the “early exit trend”, has been called “one of the most profound structural changes in the past 25 years”,¹ a trend that is hardly sustainable because of growing financial pressure on governments. This trend is incompatible with anticipated labour shortages in the near future. Consequently, researchers and policy makers all over Europe are involved in studies and debates to find ways to “shift the vicious circle of early exit to the virtuous circle of active aging”.⁴

Leaving the labour market before old age pension requires alternative sources of income. Across Europe, there are many ways to bridge the time between early exit and old age pension. Depending on the configuration, availability, and generosity of such pathways, countries use different strategies of externalisation and integration of older and/or disabled workers. Integration strategies support employment among these groups, whereas externalisation strategies transfer the risk of old or sick employees to the social security system. Because of generous entering conditions in different social security programmes, many countries have adopted such an externalisation strategy. As a result, the number of premature labour market withdrawals has increased dramatically.

To a very high degree, this also applies to the social security …