Working to the death

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Should we accept George Osborne’s claim that the UK’s state pension scheme faces collapse unless we increase the retirement age? In a new book released this month, LSE Visiting Professor John Macnicol challenges this view.

How many times have we heard the ominous prediction that the world is facing a ‘ticking time bomb’ in relation to an ageing population? That governments will need to implement drastic measures to curb the escalating financial burden of a baby boomer exit from the workforce? 

The solution, policy experts say, is to raise the retirement age and keep people in work for longer. But the arguments that support this policy are spurious, to say the least, according to a new book published this month by LSE Professor John Macnicol.

Professor Macnicol, who is considered one of Europe’s leading academic analysts when it comes to retirement and ageing, is mystified by the public’s willingness to accept the government line.

“The arguments used by policy makers to justify an increase in the eligibility age of the state pension are riddled with uncertainties,” he writes in his book Neoliberalising Old Age.

“They are based on very vague predictions regarding future fertility, mortality, health, labour supply, the strength of economies, and so on. Nowhere have I seen an unequivocal case for raising state pension ages.”

Yet there has been very little critical analysis of the government’s pension reforms in either academic or political circles, Professor Macnicol argues.

“This is despite a recent poll in which 77% of UK citizens believe it is unfair to increase the state pension age and two thirds think the policy will hit the poorest pensioners hardest.”

It is likely that state pension ages for men and women in the UK will be raised to 70 by the middle of this century – and possibly 2030 – if there is little opposition, Professor Macnicol says.

But there are a myriad of obstacles that governments are not addressing, he says, when it comes to extending working lives.

The first – and most pressing – is where will all these new jobs come from?

He estimates that based on current numbers of people aged 50-69 in the UK (14.7 million), of which 7.9 million are employed, around 2.4 million new jobs will need to be created if the current retirement age is increased by four years to 69.

“Current unemployment figures in the UK stand at 1.8 million, but with the ‘hidden unemployed' (de facto jobless and under-employed), the total could be as much as 5 million or more. Given those statistics, what strategy is the government planning to suddenly create new jobs? They have been curiously reticent on this,” he adds.

A second obstacle is the growing debate around ‘intergenerational equity’ – whether today’s retirees have monopolised resources at the expense and detriment of younger people. Extending the retirement age will only exacerbate the argument that older people are taking jobs from the Y and Z generation, Professor Macnicol says.

Those who fall into the 50-65 year age bracket are often termed the ‘sandwich generation’, saddled with caring responsibilities for both children and elderly parents. A 2012 survey by Carers UK identified 2.4 million British people – predominantly women – who fall into this category. Any extension to the retirement age would just add to the financial burdens of these carers who are already forced to give up work, or cut down on their working hours, to fulfil these responsibilities.

“Neither has the government taken into account marked regional inequalities, particularly in chronically deindustrialised areas where jobs for older workers are thin on the ground as it is, Professor Macnicol says.

He cites ‘class unfairness’ as another factor lying in the path of pension reform.

“Those who retire earliest usually do so because they are forced to, are working class, have fewer skills and the worst health, lowest savings and poorest pension provisions.  Given the seven year difference in life expectancy between the top and bottom social classes, if the state pension age is raised, more working class people will not even live long enough to enjoy their retirement.”

Professor Macnicol argues that instead of raising the pension age, governments should be looking at alternative, less punitive options for older workers. These could include flexible working hours, job sharing, reskilling, phased retirement, allowing for caring responsibilities, and sabbaticals, to name a few.

“The problem is, these solutions to not stimulate new jobs, which is the crucial factor here. To this end, governments could consider investing in projects to boost blue-collar employment and there could be more state help for carers. More radically, age-based employment quotas could be introduced along with subsidies to encourage companies to employ older people.

“In summary, we should be encouraging and assisting people who want to work later in life, while at the same time protecting retirement as a social right for those who have paid taxes all their working lives.”

Ends

Additional notes

Neoliberalising Old Age by Professor John Macnicol is published by Cambridge University Press. John Macnicol is a Visiting Professor of Social Policy at the London School of Economics and Political Science. His research interests include ageing and social policy, age discrimination, the history of retirement and the rise of neoliberalism and its influence on social policy.

Image courtesy of www.stockmonkeys.com

November 2015

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