Working longer is inevitable in an ageing society

Three score years and 10 may be the biblical life-span but it also looks as though it may become the new age to which people will carry on working. It could well become the "default" retirement age under the plans unveiled yesterday by Patricia Hewitt, the Trade and Industry Secretary.

There is a neat symmetry here. For 70 was the state retirement age fixed in 1881 by Otto von Bismarck, the German Chancellor - it was only in 1916 that it was reduced to the now-standard age of 65. The crucial difference between now and 100 years ago - and the reason why Ms Hewitt is acting - is that then the life expectancy of a German male was under 40. Now, the average age at which men retire in most European countries is about 60, when their life expectancy is nearly 80.

So the Hewitt plans are two-edged. On the one hand, people will have the "right" to go on working until they are 70. On the other, while the state pension will still kick in at 65, they may find that they have to go on until they are 70 if they want a comfortable retirement.

The need to carry on working is an inevitable result of our ageing society. This is not just the simple matter that because we live longer we will have to work longer. It is also a function of the changing ratio of people of working age to those over 65. This ratio varies from 4 to 1 in the US and 2.25 to 1 in Italy. (Britain, with just over 3 to 1, is middle of the pack.)

But these ratios are falling fast and in another half century, when young people now entering the workforce will be drawing their pensions, the ratio in the UK will be about 1.7 to 1. In Continental Europe the position will be worse, with Italy having fewer workers than pensioners.

This will create a huge problem for countries that rely on pay-as-you-go state pensions, where each generation of workers has to pay the previous one's pensions. The UK, plus the Netherlands, Switzerland and Ireland are unusual in Europe in having substantial private-sector pension schemes. Despite all the difficulties of such schemes after a severe bear market, at least there are substantial funds set aside that do not come from the taxpayer.

But even if the pension problem were tackled there would still be the practical problem of getting the work done. Somehow, we have to rebalance our societies so that people keep in work.

Legislation making it easier for people to stay in jobs may be part of the answer. But forcing employers to keep on people who are perhaps too old for the pressures of the job is a recipe for resentment in the workplace. There will also have to be profound changes in the way that work is organised.

For example, the idea that salaries rise steadily until someone retires and then suddenly stop will come to seem very odd. People will increasingly be paid by their output, enabling older people to shade down the number of hours they work or the speed at which they work. Tasks will be organised to maximise the usefulness of the young and less experienced (but also perhaps more energetic) as well as making the most of the talents of the older workers. Pay will reflect workers' contributions to the task in hand, not their seniority.

The good news is that as the workforce ages, we will adapt our work practices to fit it. Technology helps enormously and by good fortune the new communications technologies are coming just in time. More work will be done at home, cutting what for many people is the most physically demanding aspect of work: the daily commute. We can already see examples of companies making a practical effort to tailor tasks for older workers as have the big supermarkets.

But attitudes of the old will have to change too, in that they will have to accept that they will need to adapt to changing work practices. Above all, more of the old will have to want to go on working, for a resentful would-be retiree working for a resentful employer would not make a great contribution to either's welfare.

They have, however, many historical examples of vigour in old age - including that of Otto von Bismarck. When Germany set the retirement age of 70, its Chancellor was a sprightly 74.

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