Sent: 19-05-2009 13:09:01
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Is it time to abolish compulsory retirement?
I recently discovered a piece on the BBC website by Mark Easton which raised a question I have often asked, namely, should we abolish compulsory retirement? Personally I have no problem with the idea but not all would agree I am sure.
As Easton says, the idea that workers should be forced to clear their desks and disappear, carriage clock under arm, on reaching the age of 65 is one that has its roots in a measure designed to reduce poverty and exploitation of older people. Readers of my missives will recall my pieces on the origins of the first pension system (Otto von Bismarck 1896 and all that, designed to aid those too ill or infirm to work).
It seems that a committee of MPs in England fears that forcing people to quit may be achieving exactly the opposite to what was intended. It could in fact be denying individuals the chance to top up inadequate retirement savings and unable to add to a meager state pension. I think similar comments can be made about Australia, in fact about many countries around the world including the US.
The Work and Pensions Select Committee published their report demanding that compulsory retirement be scrapped and recommended the removal of the regulation which permits employers to continue to compulsorily retire employees at the age of 65. They argued that the regulation contradicts wider social policy and labour market objectives to raise the average retirement age and allow people to continue to work and save for their retirement.
Hate to say it, but for once I agree with something uttered by politicians!
What they did not say was that mandatory retirement should be stopped on the grounds that it self-evidently discriminates against workers purely on the grounds of age which I think was a missed opportunity.
However, as Easton argues, there are more practical arguments put forward for its abolition. People who have heard me speak may recall a statistic I often use. Namely that several years ago Germany passed a demographic milestone, i.e. they found they had more people over 60 than under 16. Well it turns out Britain passed that milestone in 2007 as well. Australia by the way is likely to hit that mark somewhere around 2020 (probably sooner).
But, as Easton pointed out, the graph produced by the Office for National Statistics showing this cross over represents a stark challenge for Britain. As he notes, the gap between the two groups gets rapidly bigger, that means there are progressively more people over sixty combined with fewer & fewer people under 16, a fact that should terrify those who understand what it means. As he says, if we want to maintain standards of care for older people in the coming decades, something significant needs to change (where have I heard that before...). I would add, that not only do things need toi change, but they need to change SOON.
So what to do? One 'solution' would be to import young people to work and pay tax to support the elderly, but few are advocating substantial increases in immigration right now (can you imagine the reaction to such a move?).
There is always the option of encouraging young people to breed more, but that is unlikely to work (apart from the time factor involved). Could be an interesting marketing campaign though!
Of course, politicians could significantly increase taxes, often the approach from those left of the political divide, but it would need really significant increases to be effective and I somehow don't think that will go down particularly well with voters.
Here's a thought, why not encourage older people to continue working and contributing to the national wealth if they wish to!
As Easton says, it is not a complete answer, but it might help. I would be stronger and argue it would help as I seriously doubt it would hurt!
However, no-one is suggesting forcing those entitled to their aged pension to keep working. But for those who wish or need to keep earning, why not let them? After all, many people in their sixties are still pretty fit and able and often have significant intellectual property which would simply walk out the door.
Easton suggests that some will argue that firms will be less able to rejuvenate themselves, to bring in fresh blood. There is also the concern that career progression will be blocked by more experienced staff refusing to move on. Not only that some older people might feel pressurised to stay working.
But charities campaigning for older people will have none of it. Michelle Mitchell, charity director for Age Concern and Help the Aged, says that today's report from the MPs "should be seen by ministers as the final nail in the coffin for the national default retirement age."
"This outmoded practice flies in the face of public opinion, established Government policy and the needs of the economy," she argues. "Government should act fast to get rid of it once and for all."
Now for the reality check. As Easton notes, the employer most enthusiastically implementing compulsory retirement is, of course, government. In the UK Government Department for Business told Easton:
"A number of employers are removing retirement ages and allowing more flexible working. We are confident that this will continue to increase. We are monitoring the default retirement age and are committed to reviewing it in 2011. If the evidence shows it is no longer necessary then we will remove it."
No rush, take your time....
I have little doubt similar things happen in Canberra. Having said that, at least the Rudd Government has dipped its little toe in the water. Actually make that the tip of the toe nail because as Tony says "The minimum age pension age will increase to 67 years over a long period of time; to be honest I'm surprised it has taken Government so long to move on this and I'm equally surprised it's such a light touch increase over many years"
As I said, no rush, take your time.....
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