INCREASE RETIREMENT AGE
If older people are to stay in the workplace, employers will have to
change their attitudes and practices.
For the past 30 or so years, something peculiar has been happening. Decade
by decade, life expectancy for older people has risen at unprecedented
Not before time, there has been a rude awakening. The message is coming
from pension providers: if you want to have a comfortable retirement then
you will have to work longer. Earlier this month, the Institute for Public
Policy Research, the UK government's favorite think-tank, advocated
raising the standard retirement age to 67.
Sheer common sense, you might think. But in practice there are three
hurdles. Are older workers (often defined as over 50) up to the job? Do
employers really want to hire and retain them? Do older people want to
Physical strength clearly declines with age. So, too, do some cognitive
abilities. Older workers perform worse than younger ones in tests of
working memory and the ability to process complex new information rapidly,
says Peter Warr of the Institute of Work Psychology at Sheffield
University. However, declines in such capabilities are not crucial for
most jobs, especially as physically strenuous ones become the exception in
a service-based economy. What matters in today's work place is the mix of
skills, experience and character that individuals bring to bear. "Older
workers are generally as good as younger workers," says Mr. Warr. And
older employees show less absenteeism, lower turnover, fewer accidents,
higher job satisfaction and more positive work values than younger
workers, adds Amanda Griffiths, an occupational psychologist at Nottingham
The main link between age and work may operate through physical and mental
health. Rises in life expectancy surely signal better health.
That raises the second question: do employers want older workers, whatever
their abilities? In the past 20 years they have often acted to the
contrary. Whenever, redundancies have been necessary, older workers have
been the most vulnerable group. There is a widespread suspicion that
employers do discriminate against people by age. The National Adult
Learning Survey found in 1997 that almost four-fifths of people in their
50s and 60s agreed that "even if an older person studies to get
qualifications, employers will usually choose a younger person". According
to Employers' Forum on Age, two-thirds of information technology workers
fear that they will be unable to get a job in IT once they pass 45.
In Britain, there are signs that employers' attitudes are changing.
Several now recognise that they were too hasty in winnowing out the ranks
of older workers who were the repository for much corporate memory and
wisdom. Nationwide Building Society, which has been pursuing a strategy of
age diversity, has found that this policy pays by reducing turnover rates
of staff. The saving in lower recruitment and training costs is $10m a
year, calculates Denise Walker, head of corporate personnel.
One reason why older industrial workers were vulnerable to layoffs in the
1980s and 1990s is that the skills they had learnt for their trades lost
value as the economy shifted away from industry to services. Because they
had had less opportunity for formal education, many lacked the foundations
in numeracy and literacy that would have allowed them to respond to the
new requirements of the jobs market. By contrast, post-war generations
which have benefited from more formal education should prove more
But will older people want to carry on working even if employers now want
them to? After all, it is quite rational for people to retire early, if
they can afford to do so. High returns in the financial markets led to a
rapid build-up in private pension wealth in the 1980s and 1990s. More and
more people in their 50s found that it made sense to draw down this wealth
earlier rather than later, argues Mr. Blundell.
However, the high returns on equities in the past two decades were
"exceptional and future returns are bound to be much lower," says Tim Bond
of Barclays Capital. After two terrible years, the pension-fund surpluses
that financed redundancies of older workers have eroded.
For these reasons, we believe that retirement age should be increased.
Even so, there is a lot to be done to make work more attractive for older
people (which should in turn help all workers). Top of the list are
demands for less stress, more flexibility in working arrangements
including part-time and temporary work, and greater autonomy. These are
more likely to be found in companies with flat, non-hierarchical
structures. Just as workers need to adapt to the idea of later retirement,
so too, do employers.
Adapted from The Economist - March 2002
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