Scrapping compulsory retire is good, right?

Thursday, 13th January 2011 at 14:45 UTC 1 comment

The abolition of the Default Retirement Age seems to be a happening very quietly. For some it will come as a relief, and in the simplest terms, it isn’t exactly the fairest arrangement to have an arbitrary age at which an employer can “dump” you. But the drawbacks might well cause a problem in future years, and could end up hurting people at both ends of the age scale.

The end of the “Age of Retirement” has been predicted for a long time, as pension funds have looked increasingly likely to fail at any moment. The effects will include both positives and negatives, reaching far beyond the simple question of an employers right to set an arbitrary age for retirement.

First, there’s effect on the rising generation. In a steady state economy with a steady population base and job-for-life culture, the only way for 18 or 21 year olds to get a job is for someone to retire. Yes, today we tend to move around from job to job ever more, but young people lack the experience to compete with the older generations still in employment. When it comes to “our turn” to take over, what if no one budges? What will we do then? This is not just the case for transitory, early years type jobs, but long term careers.

It could be argued that this will hamper business – older people may be more than adequate to keep going, but what about the innovation we’re supposed to endlessly pursue? This seems at odds with the push for continuous renewal in the workplace.

The longer term out working of this is that not only will we cease to see something like 1 in 45 positions come vacant each year through retirement, we will see the pool of people chasing the same number of positions continue to rise. First, this will make recovery from redundancy, something that is arguably hardest amongst older generations, very difficult for everyone – it won’t be that less people are retiring (this situation will not last indefinitely) but instead that more people are available to fill each position going.

Indeed, alongside other factors, this could very easily result in a decrease in wages, especially for those on low-skilled jobs. It can be viewed as something of a certainty that many within the Tory party would see removal of the National Minimum Wage legislation as a feather in their cap – it is certainly the flagship result of the Labour administration’s 13 years in office. With more people chasing jobs, and the opening of international competition in every area of life, labour supply will exceed demand, allowing wages to decrease, and most critically reducing not only the cost of products, but more significantly the amount each of us has to spend on them. We’ve run out of fresh cheap labour in Asia, now it’s our turn to pay the price for a consumer-driven world. With lower wages, retirement will be out of the question for many.

Then there are the wider societal implications. As well as reducing innovation in business, as fresh blood gives way to older voices, less people will have the money with which to retire, or the spare time with which to enjoy it; more importantly, the less time people will have to put into volunteering – so much for the Big Society.

In turn, there’s the issue of generational fairness: every person who stands to gain from this relaxation of the laws of employment will have gained from it in the past. Just as everyone should be prepared to contribute what they can in life, everyone must ultimately accept that others must take over. Aside from the power-structure problems of immovable leadership, future generations will lose out from lack of opportunities.

I would not recommend French-style rioting, but I should be amongst the first to recommend young people take notice of what is going on, and bring the issue to the attentions of their friends. This policy, fair on the simplistic levels so loved by the right, is actually a backdoor route to despair for an entire generation, and rather than giving us the option of working longer in life, threatens to enforce longer years by reducing what we earn as we go. If the Labour party want to claim they are representing a new generation, they’d do very well to take heed, and speak out.

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Entry filed under: Conservatives, Economics, News, Politics, Workers, Youth.

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1 Comment Add your own

  • 1. Nate  |  Thursday, 13th January 2011 at 16:10 UTC

    Bearing in mind that the best off usually retire well before 65 or are the boss so they can’t be told to retire…

    It’s the low and middle earners who will not have sufficient pension yet that this helps, so the don’t have to go and get a paper round (really stealing jobs from the young) or struggle on insufficient pension.

    You seem to be turning the least controversial of the age related changes into part of a generation war, and the less well off older o’toole will be the ones caught in the cross-fire.

    Reply

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