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Flexible retirement

Working issues in an aging society

Projections show that over the next few decades we will become an increasingly aging society. People born today can look forward to a lifespan of 80 to 100 years. The number of people in Europe age 65 or over will rise from 57 million in 1995 to 81 million in 2025, according to the OECD. A "demographic time bomb" as it's sometimes called.

With increasing life expectancy, a lower birth rate in recent years, and the bay-boomer generation heading for retirement, the prospect is of a greatly increased retired population being dependent on a reduced active workforce.

Policy debate in the UK has tended to revolve around pensions - how to save enough during working life to ensure financial security through maybe 30+ years of retired life.

Rethinking the finances, however, is only part of the solution. Addressing the workforce issues is also important. Two types of action are needed to address the "imbalance":

  • a coherent policy on economic immigration

  • adopting flexible approaches to retirement.

Import more workers!

The first of the options  - immigration - is largely beyond the scope of Flexibility. The debate currently focuses on "asylum seekers" and tends to be tinged with xenophobia and racism.  But the UK could benefit from a more flexible and targeted approach to economically motivated migration.

Pressures for immigration will not recede in the near future. Apart from looking at the numbers needed in the workforce to keep the economy going, policy makers need also to look at the skills required and relate it to our changing society  A larger retired population, generally more prosperous than previous generations, will generate new demands for services and the skills required to deliver them. 

The present and upcoming generations of retired people will be generally fit and active and will create demand in sectors such as retail, education, leisure and tourism, and transport. The economy needs to expand to meet the demand - will the workers be available to do this?

The main source of extra labour, however, should still be from the indigenous workforce.

Flexible retirement

A fixed retirement age and old age pension were fought for by working people as a right for all citizens. But with the changing nature of work, and increased prospects of being fit and active in later life, there is a strong argument for taking a less rigid approach to retirement.

A simplistic approach is to raise the retirement age. If popes, monarchs and judges can work till they drop, why not the rest of us? Management guru Peter Drucker calculated that 

"within the next 20 to 30 the retirement age in all developed countries will have to move up to around 79 or so - 79 being the age that, in terms of both life and health expectancies, corresponds to age 65 in 1936"
(Management Challenges for the 21st Century)

But for many, if not most of us, this would be a step backwards. The alternative is to create the conditions where:

  • gradual, or phased retirement is possible

  • it is possible to take on paid work during retirement without financial penalty. 

The Employers' Forum on Age (EFA)  favours the introduction of flexible retirement. A recent study by the EFA indicated that 

"flexible retirement could boost the economically active population by 3 million, which could raise [UK] GDP by 50 billion or more per year".

It is not only people over the official retirement age who become lost to the workforce. Increasingly people over 50 are taking early retirement, or become excluded from the workforce due to ageist attitudes on the part of employers. As an indicator of this growth in economic inactivity: in 1975 95% of men aged 55-65 were in work. In 1999 this was down to 60%.

Numbers aged 50-64 who are economically inactive

  1976 1999
Men 500,000
Women 2,500,000

For employers - especially those experiencing recruitment difficulties and skills shortages - the older workforce is a resource waiting to be tapped. But a key obstacle is the "all or nothing" mentality. 

Options which could suit many older workers - including those beyond official retirement age - include:

  • part-time working, including jobshare

  • short-term contract working, e.g. running or contributing to projects where their skills and experience are vital

  • flexible location working, e.g. doing some or all of former role from a home or local office: can be particularly valuable for smaller firms needing to retain skills of a worker who wants to edge towards retirement and avoid commuting

  • seasonal working, e.g. in leisure and catering industries where older workers provide experience and stability which can rub off on younger casual workers

The current disincentives to such options are:

  • inflexible attitudes in organisations to new ways of working

  • pension schemes based on final salary, which work against phased or early retirement

  • a taxation and benefits regime which penalises mixing or alternating work and not-work

  • unimaginative financial services products which tie one to a treadmill and treat retirement as a one-off immovable event.

Bill Gates, in his book "The Road Ahead" cheerfully asserts that we've all had those times in our working lives when we're so into it we bring our sleeping bags ito work and catch the odd hour of sleep under the desks. Taken with the appropriate pinch of salt, he has a point. Work can be intensive and enjoyable even when the hours are long. 

But on the other hand, there are times when we prefer to sleep at home. Possibly even in the middle of the day.

The point is that in life we are likely to go through many phases. Scaling down work activity is one of them. Employers and public policy need to adjust to take account of this.

Ageist attitudes - even where you don't expect them

Too often older people are seen as the problem in the demographic imbalance, rather than part of the solution. 

Here's an unexpected example of this. I attended a "work-life balance" conference recently, where older people were mentioned numerous times by speakers and from the floor. In every case these references were to dependent elderly relatives who created work-life issues for younger workers. 

Work-life balance, however, also has to be seen as an issue for older workers.  Leading up to retirement, it is important to be able to adjust the balance between home and work. It applies after retirement, too. But in this case balance may mean that an excess of home life needs to be leavened with a little work. 

This week cigarette manufacturer Philip Morris came up with a novel approach to limit the costs to society of aging - encourage smoking. 

They say early deaths caused by smoking saved the Czech Republic 147 million in 1997 by reducing health and housing costs for the elderly.

We, however, look at healthier and happier approaches to living and working in an aging society.









"Too often older people are seen as the problem in the demographic imbalance, rather than part of the solution"










"An excess of home life may need to be leavened with a little work"

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