The UK Default Retirement Age of 65 is to be phased out this year. After the end of September, no employer will be able to enforce retirement on grounds of age alone.
I have mixed feelings about this. There are both advantages and disadvantages for individuals. In some cases people will be delighted to be able to carry on working. They enjoy their jobs, perhaps because they are very skilled and knowledgeable and therefore valued by their employer and colleagues, or perhaps for the social contact, or the money – or all these reasons. Others might be happy to go, but would like to work shorter hours in less demanding employment. Working can provide autonomy and self-respect, which is why the transition to retirement can be difficult.
However, not everyone is in this position. People with physically or mentally demanding jobs may be past their best by the mid-sixties, and in some cases such as firefighters or police they will have been forced to retire earlier in any case (and a compulsory retirement age may still be operated in occupations if it can be justified). Others may have been looking forward to having more time for life outside work: spending more time on voluntary work or a hobby, and having more space in their lives for friends and family. They may feel obliged to work for longer if the opportunity is there, for example for financial reasons, but it would not have been their choice.
Employers obviously gain if they can hang onto good staff. But they have expressed concern about how, to be blunt, they might get rid of people who are no longer up to the job. The government’s response has been surprisingly robust, with the Employment Relations Minister telling them to use the capability procedure and that ‘the evidence that performance and effectiveness decline after 65 is just not there’. That may be so in the aggregate, but what about individual cases? As an ex-local government worker, I know how lengthy and complicated capability proceedings can be, and my experience was that incompetent people (of any age) were worked around rather than confronted.
The government agenda is clear. No doubt politicians hope that encouraging us to work for longer will soften the blow of the rising state pension age. In future, it may become politically feasible to reduce the flat rate pension and increase reliance on a means tested element. It’s been interesting to hear the Minister’s claims today that tax payments by older workers increase tax revenue, which implies that the numbers employed will increase as a result of this measure. Although in good times that may be so, I doubt that at present the public or private sector are taking on or keeping extra workers because some of them are over 65. It’s far more likely that younger people will be kept out of jobs in the short term, or in the longer term if the economy doesn’t pick up.
But most importantly, this measure increases the size of the labour pool, thus making it possible to drive down wages and conditions. Rising unemployment and increased economic activity means more competition for every job. That can only be to capitalism’s advantage.