Time to grow up over issue of ageing and the workplace

It is a long time since an Irish Taoiseach - Charlie Haughey – was able to boast about the country’s youthful population, about the fact that half of us were aged under 25.

Back in the 1980s, we were young and poor, by European standards. The problem was a lack of jobs for our growing population. Since then, we have grown middle-aged. As family sizes have fallen, we have enjoyed what economists refer to as a "demographic dividend" as the ratio of people of working age to dependents – young and old - has risen.

Over the next few decades, our "dependency ratio" is set to soar as more of us reach retirement age. That could have serious economic implications if we don’t start re-tooling large numbers of our workers before they face being eased into retirement.

At a conference in Dublin Castle organised by the Irish Fiscal council, the OECD’s expert on population ageing Hervé Boulhol pointed out that while the number of over 65s across the OECD area is predicted to jump by 90%, in the case of Ireland the corresponding increase is likely to be around 120% An even more startling statistic was provided by John McCarthy, chief economist at the Department of Finance.

According to Mr McCarthy, there are currently almost five people of working age for every Irish person of retirement age. This is predicted to fall to just over two-to-one by the year 2050 – that is barely 30 years from now. The figures are startling, but hardly surprising. In truth, policymakers have been fretting about the so-called "pensions time bomb" since the 1990s.

At the end of November, John McKeon, Secretary General at the Department of Employment Affairs warned that the country’s social insurance fund would be faced with a deficit of around €335bn accumulating over the next 50 years if action was not taken in the meantime to remedy the situation.

In the US, the public pension systems of some States - including Colorado, Illinois, New Jersey and Kentucky - now have less than half the assets available to meet the demands on them. Those systems are underwater. We in Ireland still have time to tackle the issue of public retirement indebtedness. Our politicians need to own up to the fact that retirement ages must rise across the board and they must equip people for the part time jobs many will be filling.

A new approach to retirement cannot be made to work in the future without a fundamental overhaul of our care systems and our systems of labour market intervention

It was interesting to listen to the psychologist Maureen Gaffney, on RTÉ last Saturday, discussing the huge care burdens which people in middle-age are increasingly faced with as parents survive in greater and greater numbers to advanced ages.

Childcare results in many people withdrawing from careers often at the point when productivity and earnings potential has begun to peak. The burden of the generations is increasingly borne at both ends of the age scale.

Improving the quality of community care – in an age of increasingly dispersed families- is absolutely essential if large sections of the workforce are not to be put in a position where their skill levels are allowed to gradually decay as they are forced back into familial duties.

The no-holds-barred approach to work in today’s output-oriented organisations has increased the pressure on employees.

The pressure may result in improved levels of profits for those in pole positions, but the consequences for many individuals can be incalculable. Many are forced to step back, or step out as a result of this long hours, pressure-cooker culture.

There is no easy answer to all of this. It would appear that it is part and parcel of the high tech globalised world that has delivered fat rewards to many in this economically open society. But it just does not make sense to let go of so many skilled people.

We have yet to really start thinking seriously about how to reintegrate people back into the workforce after lengthy gaps.

Some professional firms have found space for returners in educational roles, but there remains a heavy preference for recruitment of the young in many organisations. As the population grows older, structural - as distinct from cyclical gaps - in the workforce will open up.

Some of those gaps will be filled by immigrants – increasingly drawn from outside Europe. As Germany is discovering, the assimilation of migrants is not always straightforward. Complex skills cannot be passed on overnight, particularly in the case of those coming from countries with rudimentary education and training facilities.

Over time, of course, most become important contributors to a host society into which they end up embedded. While migrants are usually younger than the host population, they also grow older. The demographic challenges can be deferred but not ducked through immigration.

Mr Boulhol estimates that increases of more than eight years in the retirement age will be needed if member country pension systems are to be sustainable.

The equivalent increase in the case of Ireland is 9.5 years as we play a game of demographic catch-up.

However, such an increase would not be required if a rise in the employment rate across the working age population were to occur, or if retirement benefits were to be cut in real terms. The only way the latter could be achieved politically would be where part time employment, after the age of 65, were to jump appreciably. This could happen.

Technology is making obsolete many work functions, but it is also enabling many people – particularly those with creativity and business skills – to work well into what are considered to be the twilight years

Interestingly , despite the severity of the financial crisis, the employment rate among people aged 55 to 64 actually rose by almost 15% between 2000 and 2016 across the OECD area. It rose by more than 20 percentage points in Italy, Hungary and the Netherlands – countries where the average age of the population is considerably higher than in Ireland.

In Ireland, the total employment rate – the number at work as a proportion of the total population – is close to the OECD average. However, from the age of 55, the proportion at work drops off dramatically – from 70% to just 45% by the time people reach their 65th birthday.

In many occupations, there remains in place a culture of early retirement. In some cases, particularly once people reach 60, retirement is welcomed eagerly, no doubt. The grandchildren may have arrived. The chance to develop neglected hobbies or to simply get out for long walks. These are, indeed, the golden years for some, particularly in high-end business, professional and public sector occupations.

But many others – typically women forced out early from the workforce – would welcome the chance to try and fill up largely empty retirement accounts.

This 'time bomb' can be defused without too much difficulty if opportunities are more widely spread across the generations and labour market strategies are reworked to promote second chances for those in mid-life.

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