Scrapping the compulsory retirement age is unlikely to have a major impact

The government has announced plans to scrap the compulsory retirement age prompting equal amounts of praise and scorn. Lobby groups and charities, such as Age UK, which led the campaign to abolish the law, are naturally jubilant, while others fear a blocking effect in the jobs market. However, the reality is that the impact is likely to be limited.

There are those who claim that the current compulsory age law allows employers to effectively make redundancies without the costs normally associated. Others bemoan the loss of skills and experience as a result of this blunt instrument. This could be an issue in certain areas of print as there is a widespread view that, for some years, the quality and depth of training has deteriorated as the number of apprenticeships has dwindled.

Alternatively, there are those who fear axing the compulsory retirement age will block career ladders and cause a back-up of people across the age range, thus reducing employment opportunities for the young. With youth and graduate unemployment a hot topic it was inevitable this would get coverage.

In the US, however, where there is no compulsory retirement age, seniors are relatively active in the workplace and career blocking is not considered a major problem.

It is also much easier to fire underperforming staff in the US, and surely, legally protected underperformers are more of a problem to career ladders and the economy than seniors working longer.

Population boom
In the UK, good workers made redundant in their late 50s and early 60s can find it difficult to secure new jobs as employers feel it is not worth taking on someone one who will retire in a few years, so extending the retirement age could work in their favour.

Whatever the arguments in favour of scrapping the retirement age, there can be little doubt that this is fundamentally a political and economical issue. We know the UK population is skewing, as a result of people living longer and declining birth rates, so there are fewer young people to pay for an increasing number of older people.

According to the European Commission, there are currently four people of working age for each person over 65 in the EU but, by 2060, the ratio will be just two for each pensioner. Unless there is a dramatic shift in birth rates, this will lead to increased pension costs or poorer pensioners.

However, here is where we have to separate the issues. Scrapping the mandatory retirement age will not force people to work longer, but increasing the minimum age at which full state pension can be claimed will reduce government cost. Some argue that this will lead to people working longer because they can't afford to live without the state pension if they stop working.

Undoubtedly, this will affect some but as a population-wide issue, it is not supported by data of actual behaviour. According to (albeit five-year-old) Eurostat figures, the average actual retirement age is typically a year or two shy of the official retirement age right across Europe. While the rich and famous retiring in their 40s and 50s may skew these figures, they are unlikely to have a dramatic effect on the overall figure. It would appear that many people are currently retiring before they can claim full state pension.

Combining these factors with the results of a straw poll we conducted across the industry, anecdotally at least, it would appear to dispel the fears of droves of people being forced to retire against their will. Are there people who are currently prevented from working beyond retirement age? Of course. But will the scrapping of the compulsory retirement age lead to a major shift in actual retirement age? Unlikely, at least in the short and medium term, as it appears to be expectation and economics rather than law that drives people to retire.

Dani Novick is managing director of print recruitment specialist Mercury Search and Selection, www.mercurysearch.co.uk