WHY KEEP MANDATORY RETIREMENT AGES?
February 28, 2011 3 Comments
As most developed countries seem to keep increasing the mandatory retirement age as pension costs spiral and life expectancies keep increasing (see “Living Forever” posted January 19, 2011), it does beg the question as to why we would bother keeping mandatory retirement ages at all?
The baby boomers are currently hitting their supposed working use-by dates and increasingly the developed nations are starting to find that there are significant skills shortages, driven in no small part by declining birth rates over the last 50 years. Whilst birth rates in African nations average about 4 or more per 100 of population (Niger, Mali, Uganda are at about 5), in the developed world this is closer to 1 per 100 (Germany, Canada, UK are at about 1, Australia, NZ, US, France are at about 1.4).
This leaves developed nations only 2 workable options for access to the needed skills. Either increase the outsourcing of areas of shortage to the developing world or keep increasing the retirement age. We have already outsourced most of our manufacturing to China, but at a birth rate of 1.4 per 100 even they are not an infinite option, and unless we can seriously boost the education levels in the developing world, they will not be able to meet our skill needs of the future. This means that we have no real option other than finding a way to keep people working well beyond what we currently set as being the acceptable age limit.
There are also a number of external forces that are coming together that should enable us to get rid of mandatory retirement age completely.
Faced with increasing life expectancies and diminishing work forces, governments too have only a small number of choices in their attempts to be able to afford to continue to fund retirement. They can increase taxes, cut pensions or keep increasing the retirement age. A survey carried out recently for the HSBC in 10 countries that together make up more than half the world’s population, found that over 80% of the 11,000 people surveyed felt that people should be able to keep working for as long as they wanted to, and as long as they were capable of doing so. They didn’t particularly want to work full time in their later years, but they wanted to replace full retirement and rest with a mix of work, learning and leisure.
Increasing taxes on an ever diminishing work-force and cutting pensions both had little support from those surveyed.
As well, many people are realising that they will actually not be able to afford their retirement without augmenting their income beyond that provided by their pension. The financial disasters of the last few years have depleted both public and private pension funds, and ever rising costs have resulted in many people having significantly less available financially for retirement than originally planned. Most of those surveyed did not equate their “retirement” with stopping to work for pay in some form or other.
Except in France where most people would prefer retirement to start on graduation from university (see “Vive L’Avantage” posted September 27, 2010), most sexagenarians I know are still working either part-time in their previous roles, working as business consultants, practising medicine, making wine, teaching, selling real estate and so on, and most feel that they will continue to work as septuagenarians if given the opportunity to do so, though I imagine that driving heavy machinery or performing microsurgery may need to be excluded.
In the last decade I have come across many European companies who struggle to recruit against a global war for talent in areas that are pivotal to their business success, but who continue to push people out the door as they reach some arbitrarily set retirement age, based more on how their government tries to balance the books rather than whether the people have passed their value point for the organisation.
Companies who will survive know that having the needed skills is critical for business success, and that this has less to do with actual physical age than with mental agility.
As Pablo Picasso said “Youth has no age”.