A 'better way' to solve the pension problem
by Chris Ball
The proportion of people of working age is shrinking - governments must take a new approach to this issue, writes Chris Ball
The OECD last week issued a new report in the tradition of its seminal series 'Live Longer, Work Longer', which highlighted the necessity for policies to extend working lives in line with population changes across the developed world. 'Pensions at a Glance 2011' highlights the growing gap between our pension provision and life expectancy.
It is a timely contribution. By 2050 the average pensionable age in OECD countries will reach 65 for both sexes – an increase of about 1.5 years for men and 2.5 years for women – while life expectancy is rising faster, outstripping the increase in pension ages by about two years for men and 1.5 years for women. This means that in all but five OECD countries time spent in retirement will continue to grow.
With the proportion of people of working age in the EU 27 shrinking while the relative number of those retired is expanding, the share of older people in the total population will increase significantly in the coming decades. Moreover, a greater proportion of the post-war baby boom generation is approaching retirement and this will lead to an increased burden on those of working age to provide for the social expenditure required by the ageing population.
The idea of increased participation in the labour market by people older than 65 is central to the prosperity of the developed nations. A number of points need to be emphasised for public policy across Europe. First, it was wrong-headed in the past for governments to reduce retirement ages in the hope that younger workers would benefit. My organisation, The Age and Employment Network, has been stressing precisely this point in the face of mounting pressure from otherwise responsible journalists and others.
Secondly, governments must do more to combat age discrimination and help older workers learn new skills whilst linking retirement ages to increased longevity. I have been saying to the point of tedium that employers, workers and government must urgently consider how to make work sustainable and a practical reality for people entering their 60s.
There is an urgent need to equip public authority HR departments with knowledge of local labour market conditions and the job search strategies that will be most successful by the older job seeker. In the next few days, TAEN will be running a pilot seminar for the HR specialists in an authority in the south of England. Too often in the past, public and private sector employers, have simply thrown money at older workers to leave their jobs, having regard for the consequences of neither individuals nor their local economies.
The European Social Fund Age Network is an EU supported network launched with a kick off meeting earlier this year in Maastricht Holland, comprising the ESF Managing Authorities of, so far, 14 European regions and countries. Its aim is to examine a range of good practices in age management and put together certain products – a learning curriculum and a travel guide type publication that will make them more accessible.
The absence of widespread flexible retirement opportunities is one example of where the problems lie. Older workers should be able to combine working part time withdrawing their pensions from the same employer to avoid so-called cliff edge retirement.
A more aware approach is needed by governments throughout the EU. Few employers deliberately look in the older people's talent pool and older job seekers hunt for work for many months without success. The ESF Age Network hopes to be the catalyst for many more funded projects to promote the extension of working lives by helping people back into work and sustaining those who are already in work.
One example will suffice. What are we going to say to people in physically demanding jobs who just cannot manage to work longer? Companies should try to design the job and the working environment more with the worker in mind. The BMW designed car plant in Germany, with its ergonomic work stations and special adaptations to engage and employ older workers, is a good model to follow.
We must realise that there is a better way and that even faced with daunting financial pressures, HR managers must not run for cover, but show commitment and leadership in preventing the squandering of future working lives that can run for many years yet.
Chris Ball is the Chief Executive of The Age and Employment Network
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