RECOVERY SPECIAL: WORKING PAST 65
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As part of CXO’s Recovery Special, Ian Clover speaks with two employment experts for their thoughts on new British regulations that will scrap the default retirement age and asks: how can such a move help the economy, and what problems will it create for employers?
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he Europe-wide battle against recession is currently one of the greatest threats to the stability of the continent, and it is being fought on many fronts. The issue of reducing national deficit is high on the agenda for most countries, and throughout Europe the prolongation of working life is being touted as a necessary move that will help prop up tax receipts and thus lessen the burden on stretched pension funds. One inescapable fact is that the population of Europe is ageing. People are living much longer than before, but are still retiring in their early- or mid-60s. It is a situation that has become untenable, particularly in the current economic climate, where a contracted workforce is ill-equipped to steer the Continent’s various economies through the stormy waters of high youth unemployment and a top-heavy population of retirees drawing pensions, often for 20 years or more. The Organisation for Economic Co-operation and Development (OECD) estimates that just 39 percent of Europeans between the ages of 55 and 65 currently work. Th is age bracket is even larger than the 15-24 age group; a bracket that is also suffering from high unemployment – the Statistical Office of the European Commission (Eurostat) estimates that 21.4 percent of Europe’s under-25s are currently jobless. These figures place enormous pressure on Europe’s current working-age population. The lack of jobs for youngsters is a complex issue with few quick fi xes, but governments throughout Europe believe they can at least assuage the problems caused by a capacious and burdensome retired population. In an effort to aid economic recovery and ease the weight on an increasingly constricted workforce, the UK’s Department for Work and Pensions (DWP) has set plans in motion to scrap the country’s Default Retirement Age (DRA), which currently stands at 65 for men and 60 for women, by October 2011. The DRA was introduced by the Labour government in 2006 as part of a series of employment equality regulations that have allowed employers to force their staff to retire at 65 without any need to justify their decision. Th is ruling has been welcomed by some bodies, but is seen by other campaigners as a highly principled, rather than practical, move.
When i'm 65.indd 37
07/12/2010 13:49