Ending The Default Retirement Age Will Create Jobs More For The Young – If We Force Older Workers Out, The Whole Economy Will Suffer
by Dr. Ros Altmann
(All material on this page is subject to copyright and must not be reproduced without the author’s permission.)
The Government’s decision to ban employers from being able to sack their staff just for being age 65 is brilliant news. This should have been done many years ago. As the first baby-boomer has reached 65 this year and as millions more will reach that age in the next few years, it is about time the labour market adjusts to reality. This does not mean forcing people to work longer, but it does mean facilitating later life working.
A recent Saga Survey of the over 50s showed that nearly half of those not yet retired want to work past the age of 65 and around 7% want to work into their 70s. By allowing them to do so – preferably part-time, we will be improving all our economic futures.
Most people are not old at 65 any more – they are not ready for the scrapheap, work-wise. So why would we want to waste their skills? Some argue that forcing older workers out will create more jobs for the young. This is a misguided argument.
As the baby boomers come up to 65, if they do not keep working, economic output will be hit and valuable skills and experience will be lost to our economy. We also know that many of those in their sixties do not have much pension to look forward to. Private pensions have not worked out as expected, annuity rates have fallen sharply and our state pension is wholly inadequate to provide a decent lifestyle for most people. Therefore, increasing numbers of older people will have much less money to spend unless they keep working. If they are forced to live on meagre pensions, then they will not be able to provide the spending needed to create jobs for younger people and everyone will lose out in the long-run.
The ideal is to facilitate far more part-time work in later life, with employers and workers having a mature discussion about the best way to retain workers’ skills as they reach their 60s. As more of the baby boomers reach this age, it will be beneficial to all of us to keep them in the labour force, producing and earning to support the economy and themselves. If we waste their skills and throw them out of work, without much money to live on, then an increasing proportion of the population will have less to spend and set in train economic decline. Evidence from other countries suggests clearly that ending the Default Retirement Age can increase economic output overall.
Employers will have to assess workers’ skills and abilities for the job, rather than retaining the easy option of just getting rid of them because of their age. Such age discrimination has no place in a modern economy. Human Resources managers must find ways to assess and prove whether a worker is not up to their job, rather than retaining the easy option of forcing them out arbitrarily.
Well done to the Government for finally introducing this much needed reform.