Should the law tell you when to retire?

Workers may be forced to hang up their tools at a certain age, no matter how keen they are to continue. Kerry Platman delves into the debate over whether this should be made law

The most powerful man in the world economy has recently been re-appointed to his job at the age of 78.

Alan Greenspan is now in his fifth term at the helm of the Federal Reserve Bank to ensure stability for both the US and global economy. Yet under plans being discussed in the UK to outlaw age discrimination in the workplace, he could have been forced to retire 13 years ago.

The UK Government has run into problems with its age equality legislation, which must be in place by 2006. The delay to the draft guidelines, reported in Personnel Today on 29 June, stems from a deep split in attitudes to mandatory retirement. The dilemma is this: should the new law to ban age discrimination protect those workers beyond normal retirement age, or should it give managers the specific right to dismiss staff just because they have reached the age of 65 or 70?

Such a silver ceiling to the legislation is hotly contested among government officials, lobbying groups and employers.

On one side of the debate is the powerful business lobby of the Confederation of British Industry (CBI) and key government figures. They insist that mandatory retire-ment is vital if UK businesses are to reduce red tape and remain competitive in a global economy. On the other side is the Chartered Institute of Personnel and Development (CIPD), the Trade Union Congress (TUC), the age-campaigning lobby and other key figures in the Government. They see a law intended to ban age discrimination, but that allows for discrimination purely on the grounds of age once workers reach 65 or 70, as nonsense.They believe this is the kind of arbitrary, age-based decision-making that they have worked so hard to expose and eradicate.

The irony is that both sides believe the age equality legislation is a good thing. They condemn workplace practices that hire or fire people simply because they are too young or too old, realising that what people have to offer does not depend on age. Yet recent survey data points to a widespread perception that age discrimi-nation is occurring in many workplaces across the UK.

Both sides also recognise that skill shortages are inevitable unless we change our employment practices. Our workforce is ageing, not only in the UK, but across the developed world. It is a subject of concern for governments, industrial sectors and multinationals.

This is the big picture into which the age equality legislation must fit. By signing up to the Equal Treatment Directive four years ago, the UK Government committed itself to introducing age legislation that covered direct and indirect discrimination, those in work or seeking work, the private and public sector, vocational training providers, professional associations and trade unions.

But the devil lies in the detail. The directive gives each member state some discretion over exemptions to the new law and, crucially, appears to allow member states to apply a mandatory retirement age if they want to. The Government’s consultation document suggested a default or mandatory retirement age of 70. It is reported that this might be lowered to 65.

A mandatory retirement age of 65 would mean that age discrimination against a 64-year-old would be illegal, but acceptable against the same individual one year later. Staff would be free to work for longer with the consent of their employer, but could also be shown the door just because they had hit 65, even if they were perfectly able to continue doing their job.

Because it could easily be argued that older people are most likely to suffer age discrimination, it has been suggested that this age cut-off is the equivalent of race laws giving legal protection to one ethnic minority group but excluding another.

The Government has its work cut out to reach a compromise. Yet, the ramifications of choosing one route over another are enormous. A mandatory retirement age will see only modest changes to the kind of policies and practices that have influenced early retirement patterns for more than a generation.

It is clear that a legally-permitted age ceiling will provide few incentives for radical approaches to work and training for older staff. But HR managers may heave a collective sigh of relief that their performance, assessment and retirement policies can largely remain in place. In the short-term, they will need to do little more than censor age-specific clauses in employment contracts, redundancy terms and reward systems.

Take the second route and we are forced to rethink our attitudes to work and retirement in our latter years to reflect an ageing and healthier population. It is a leap that growing numbers of public and private-sector organisations are making. For instance, Shropshire County Council – recipients of a 2004 Age Positive Award – banished compulsory retirement among council staff three years ago.

Staff who wanted to, were fit to do so and met the requirements of the job, could stay working past 65.

Margaret Brierley, Shropshire’s acting head of personnel, says the policy has helped to solve skills shortages in a number of key areas, such as supply teaching, transport, and cleaning. “If we had a retirement ceiling of 65, we’d really struggle to meet our recruitment needs in these areas,” she says.

The plain fact, as both sides of this argument recognise, is not that there are too many older workers, but too few. In 10 years of specialising in this field, I have yet to come across older people who believe they have a divine right to paid employment, irrespective of their ability to do the job. People in their 50s and older have been tempted out of the job market by pension incentives, change management regimes and attitudes that undermine their potential contribution to work. We do not need age legislation that compels experienced and valued workers to leave, but innovative measures that tempt them to stay.

The crucial issue is finding ways to extend our working lives, not truncate them. As management thinker Peter Drucker says, the organisation that first succeeds in retaining knowledge workers past traditional retirement age, and makes them fully productive, will be at a tremendous competitive advantage.

How to prepare for retirement go to

The opposing camps

In favour of a mandatory retirement age

When the Government first consulted on the age legislation in early 2002 as part of its broader consultation exercise on equality and diversity, the nation appeared to be split over the merits of mandatory retirement. Just under half the responses (43 per cent) supported the move, but this still left the majority (57 per cent) against. Initial reports suggest a similar divide over responses to the 2003 age consultation exercise and it remains the most hotly disputed aspect of the legislation.

One of the strongest advocates of the mandatory age of retirement is the Con-federation of British Industry (CBI). In its 14-page submission to the Government, it says that abolishing an employer’s right to fix a retirement age would lead to practical problems, especially for small and medium-sized firms and for companies with poorly developed performance-management systems. Firms would have to justify and re-justify each individual retirement and this could lead to tribunal cases.

The CBI urged the Government to adopt a “consensual” age of retirement at 65 years. This would create clarity and consistency, by making the state pension age the same as the normal retirement age. Employees could work for longer, but without a unilateral right to do so.

Against a mandatory retirement age

Fierce opponents of fixed retirement ages include groups such as the charity Age Concern and the Third Age Employment Network, a group supporting mature workers in the UK.

They say that such arbitrary age cut-offs are incompatible with fair treatment, and are a visible sign that people are being dealt with differently, regardless of their ability or fitness. It would reinforce ageism and the culture of early retirement, and cast a shadow over the final years of work. Mandatory retirement, they say, is an anachronistic management tool that should be replaced by proper assessment, supervision and training. Keeping a fixed retirement age would give employers little incentive to change.

The CIPD has also come out against mandatory retirement. The unions have tended to be more equivocal about retirement ages. In the past, they have been firm supporters of financial incentives that eased older people out of full-time employment, but current TUC policy is to firmly reject the default age and to favour more choice and flexibility in later life. Still, its 13-page submission to the Government acknowledged union concern about the effects of abolishing retirement ages on the downgrading or delaying of pension entitlements.

The facts

Working in later life

A mandatory retirement age might seem like a rather small legal loophole to be squabbling over, especially since so few individuals remain in paid work until 65 years, let alone 70. More than 100 years ago, it was common for men over the age of 65 to be in paid work. Census records examined by Professor Pat Thane for her study of old age in English history found that 73 per cent of men over the age of 65 were in paid work in 1881. Even among older women, most with permanent occupations recorded in the census continued to work after 65. Today, average life expectancy has risen by 29 years, but only 9 per cent of men and women over state pension age are still in paid work.
For HR resources on changing demographics, turn to page 66

Kerry Platman is senior research associate at the Cambridge Interdisciplinary Research Centre on Ageing at the University of Cambridge. She is working on an international study of Workforce Ageing in the New Economy.

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