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Work till you drop

The government has just started a consultation process with the view of scrapping the fixed retirement age from October 2011. This would mean that employers would no longer be able to ‘force’ workers to retire at age 65, as they can, and usually do, at the moment.

The bad news is that you have to have a job in the first place. Unlike the 2.47 million who are currently unemployed in the UK. We should also not forget the 1.08 million who have to take part-time work because they cannot find any full-time employment.

Charities and organisations that have been fighting against “age discrimination” are obviously delighted at the news, as are many older workers who don’t want to end up on the ‘scrap heap’ at age 65.

Although the government will be highlighting this “anti-discrimination” argument, it will have the underlying reason that this move makes economic sense. With a steadily ageing population the demands on the public finances are immense, for support, pensions and health care. With more people being able to work longer, and finance themselves more easily, there will be fewer costs to the exchequer.

Not only that, there will also be more people paying taxes at the same time as they are receiving their state pension, which will boost the economy as well as government finances. The ‘grey pound’ is already a growing part of consumer expenditure and is now set to become even more so.

On the down side, it could be argued that there will be fewer opportunities for younger people to obtain jobs if fewer people are retiring. Some employers feel that the change may add to their costs and that it will make workforce planning more difficult, not knowing the date at which older people will terminate their employment. Some also put the argument that older workers are less productive although there is no evidence to back this assertion. In fact some companies have been deliberately targeting older workers who they feel offer a better interface with customers, than those who are just out of school.

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Posted in Employment, labour markets, Population, Public Finances

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