“Surfing The Trend” of Workers Wanting to Stay on the Job
From the 1950’s to the early 80’s there was a constant trend toward earlier retirement. However, in the mid 80’s that trend gradually started changing. At a recent AARP International Profit From Experience Conference, Jan Denys, the Manager Corporate Communication and Public Affairs and Labor Market Expert, Randstaad, Belgium, noted this change in many countries and he suggested that governments and employers should “surf the trend.”
In many countries the trend to later retirement is a function of governments having to make the official date of retirement an older age. This is badly needed, as retiree social programs are severely testing government financial capabilities. However, changing the retirement age is meeting with mixed results. It is amazing that Sarkozy was elected in France with a key plank in his platform being that the French needed to work more. Across the border in Germany, the recent increase of the retirement age to 67 is being challenged (The Economist on 10/11/07, reported that 80% of the German voters want to roll back the government effort to get the retirement age up to 67).
In the United States, The Congressional Research Service , on September 7, reported trends in labor force participation to Congress ( link). the low point for the percent of men and women 65 and over working hit their low points in 1985 (15.8% and 7.3%, respectively). For men 55 to 64 the low point of 66.0% was reached in 1995.
As the CRS report points out, there is no solid statistical analysis that provides solid reasons for this trend development. However, the author (Patrick Purcell) puts forth a hypothesis that one of the reasons is likely to be the significant switch in employer pensions from Defined Benefit to Defined Contribution (largely 401ks). The former is likely to penalize a worker for staying beyond a defined retirement age (differs by plan), while the latter provides more savings for retirement for those who stay on the job.
The author also notes that increasing use of ‘phased retirement’ could be a factor. This is tricky because, as the author points out, “No statutory definition of phased retirement exists.” Yet, several surveys report that what workers would like the most in order to stay on the job is flexibility in work schedules. Employers, on the other hand, are afraid of the statutory uncertainty of phased retirement programs. Therefore, the safest route is often to have employees retire, then apply for work as a consultant or contract worker.
The net is, it is very encouraging that more workers are staying on the job. The AARP surveys indicate that 70-80% of them want to. And that extra work is good for the employers and the economy as well. Employers and government should take advantage of this by ’surfing the trend!’