The world’s population is ageing at a rapid pace and many countries are increasing retirement ages accordingly. Could this do more harm than good?
The issue of the world’s ageing population has been on the lips of both economists and sociologists for years. A combination of a declining birth rate and an increased life expectancy is driving the median global age higher and higher.
The number of people over 65 in the world could be as much as 2.5bn by 2100. The UN describes the ageing population as enduring, pervasive and unprecedented. We may never return to the young populations our ancestors knew and we need to respond to that reality pretty quickly.
The ageing population will skew our society’s dependency ratio. In other words, more people will be dependent on the State than non-dependent because more people will be receiving pensions than paying income tax. An ageing population also drives up healthcare costs. All of these things are enough to significantly destabilise an economy if left unchecked.
Yet, apparently, we have nothing to fear because a solution has been dreamed up: people should just work for longer.
Governments around the world have already begun to implement this solution. In Ireland, for example, the retirement age will creep up to 68 in 2028. It had previously been increased to 66 for those who entered public service after 1 January 2013. Changes such as these have been similarly rolled out across the globe. But have we considered that they may do more harm than good?
‘One size fits all’
Dr Áine Ní Léime is the deputy director of the Irish Centre for Social Gerontology at NUI Galway. She is also chair of COST Action IS1409, an EU-funded research network that investigates the gender and health implications of raising the working age. Her research, which has involved conducting interviews with workers across the spectrum of professions in the US and Ireland, finds that this solution isn’t fit for purpose.
“Extended working life policies tend to be one-size-fits-all, assuming that all older workers are healthy enough to continue working and that work is available to them,” Ní Léime said. “While [they] may be beneficial for some older workers in well-paid, rewarding occupations, this is not necessarily the case for others … those in physically demanding work, or those in precarious employment, or those who are unable to find jobs.”
People in physically demanding professions, Ní Léime added, are more likely to develop work-related chronic health conditions. This makes it “extremely difficult” to continue working past the State pension age.
Women lose out
Women, for many reasons, are disproportionately impacted by extended working life policies. This is because these policies often involve reforms of pension systems that link benefits to years spent in the labour market. They also often encourage workers to contribute to private pension schemes.
Women are both more likely to spend less time in the labour force and less likely to have private pension schemes, Ní Léime explained. There is also a greater concentration of women in low-paid employment, making it difficult to afford a private pension scheme. Furthermore, women are more likely to take breaks from paid labour to provide unpaid care for family members.
These factors all contribute to a startling gender pension gap of 35pc in both Ireland and the US. In both countries, women are more often entirely reliant on state-provided pensions than men.
If women become unemployed at an older age, they may not be able to find alternative employment. Issues such as ageism in recruitment as well as ill health are stacked against workers looking for employment in their senior years.
The life expectancy disparity
Stalwarts of extending working life policies may argue that the increase in working age is proportional to the increase in life expectancy. This presumes that the longer life expectancy is general across society, but there’s a cohort of people who die significantly sooner than average: the most economically disadvantaged.
Experts in sociology and economics have been aware for a long time that the poor live shorter lives than the rich. What they have been recently surprised to see, however, is that the life expectancy gap has grown in recent years.
In Stockton in England, for example, those in affluent areas can expect to live almost 18 years longer than those in more deprived areas. In England, the expectancy gap between the wealthy and economically disadvantaged is 8.4 years.
In Ireland, the life expectancy gap has also grown, especially during the economic ‘boom’ years. The boost in life expectancy experienced by the wealthy was not seen in working-class areas.
What else can be done?
Ní Léime believes that the Irish Government and US government should reassess their policies. “People should be able to choose to work longer if they wish. They should not be forced to work longer by raising state pension age across the board for everyone.”
She also advocated that those in physically demanding jobs be able to retire at the traditional pension age, and that those who began working at an earlier age should be allowed to stop working after 40 years.
Humanity’s past has been stained by the memory of incredible wealth inequality. It tends to be something that people roundly condemn looking back through the annals of time. Do we really want to risk backsliding into the days when the many lived in abject poverty while the few lived a life of lurid opulence? Or is our present day more similar to that picture than people might assume?
Extended working age policies have the potential to either help restructure society or exacerbate the problems already therein. We should think about the future that we want and ask ourselves whether current policies will provide this.