03:52am Tuesday 22 August 2017

Is early retirement history?

Professor Philip Taylor

Professor Philip Taylor

Policymakers are concerned about worsening dependency ratios in years ahead as the population ages and point to relatively low labour force participation rates among older workers. This new policy orientation appears to be partly based on the view that older people are a growing burden on society.

Somewhat ironically, in previous times older workers have also been viewed as a burden, this time in order to legitimise their social exclusion. From the late 1970s until the 1990s there was a remarkable social consensus concerning the need to remove them from the labour force in order to create jobs for a large cohort of younger jobseekers. This resulted in the growth of early retirement in most of the industrialised nations.

In recent times, early retirement has largely been rejected in international policy circles where a new consensus is emerging around the notion of ‘active ageing’, defined by the World Health Organisation as the process of optimising health, participation and security in order to promote quality of life as people age.

According to the Organisation for Economic Cooperation and Development this will necessitate an emphasis on prevention; making inexpensive policy interventions at earlier life stages, reducing the need for later remedial action; actions that are less fragmented and that are concentrated at critical transition points in life; and to also enable less constrained choices and greater responsibility at the level of individuals.

In contrast the Australian government perspective differs in that largely economic imperatives seem to be taking precedence over wider social ones. Thus, it has adopted a subtly different terminology, employing the narrower economic term ‘productive ageing’. This term has its origins in the USA where it has been defined as ‘any activity by an older individual that produces goods or services, or develops the capacity to produce them, whether they are to be paid for or not’. This is clearly rather different from the kind of ageing society envisaged by the WHO.

The scale of the problem facing policymakers is astonishing and also highly resistant to action. For instance, among Australia’s approximately three-quarters of a million disability pensioners, the majority are aged over 45, some half a million, of whom the vast bulk are not in any kind of employment. This figure dwarfs that for unemployment among older people and makes clear that any attempt to activate older people of working age is fraught with difficulties. Many are too distant from the labour market, while workplaces are not accommodating of people with disabilities. Such numbers would also obviously overwhelm current public employment services.

Add to this the many older jobseekers who, due to a lack of skills currency and histories of employment in declining sectors, experience occupational downshifting, gravitating to insecure, low wage and unskilled work. They risk substituting the trap of joblessness for that of low quality work, an unlikely basis for economic stability in old age.

What is required is a complete strategy for our ageing society and in this regard the ‘active’ approach should be favoured. This would necessitate policymakers developing policies for the whole of a working life, intervening at particular junctures along the way, rather than attempting remedial actions in a person’s 50s, when success is improbable. It would also address a much wider range of issues concerning social participation. Of immediate concern will be making any active ageing strategy relevant to those many workers left behind as economies restructured over the last three decades, who have largely been abandoned by generations of policymakers. They have found their way into permanent economic inactivity or insecurity and are left contemplating a future that will contain few of the attributes contributing to a successful transition to old age.

Professor Philip Taylor works in the Faculty of Business and Economics at Monash University’s Gippsland campus.

This article has also appeared on 5000First.com.au


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