Coronavirus: As the young lose their jobs, should older workers be forced to retire?

Age has been taboo in the office for years, but as the young lose their jobs in the pandemic, should older workers be forced to make way?

‘In general, we don’t have very good measures of performance in a firm and we don’t know how to get rid of people easily.’

So here’s the thing about the elders of the tribe — do we owe them or do they owe us?

It’s not a new question but it has been front and centre as COVID-19 forces decisions on politicians, doctors, policymakers and business people.

So far this argument — life is priceless; life comes with a price tag — has been confined to our very old people, specifically those in nursing homes.

But as unemployment hits, what chance a stoush between the not-so-old in their 60s and 70s and the 20-somethings with no hope of a proper job? What chance a more overt ­debate about who should retire and when?

Talking about age in the office has been taboo for years, but should we be so coy about setting a use-by date in a pandemic/­recession? What’s wrong with forcing out older workers in order to hire younger people with new skills and hunger to succeed and who are struggling to get jobs?

Well, for one thing, dismissing the elders goes against history.

Since the 1990s, Australian policy has been to remove age as a barrier to work. The federal Age Discrimination Act of 2004 outlawed forced retirement.

Now older workers are not just legally protected but often designated as special, with skills and wisdom that organisations are urged to embrace. There are countless books about getting the most out of older workers and nowhere do you read much suggesting it’s time to go.

If you are past the age when you can access the pension but you want to keep going, that’s your choice. As well, that de facto “retirement” age has been pushed out by governments around the world as populations age. In Australia, for example, anyone born in or after 1957 will have to work until they are 67 to claim a pension.

What’s wrong with forcing out older workers in order to hire younger people with new skills and hunger to succeed and who are struggling to get jobs?

There are some cases where retirement is mandatory: federal judges must retire at 70 and the states and territories mandate exit ages for judges of between 65 and 72. Defence personnel finish up at 60. Then there are the unofficial policies for partners in legal, ­accounting and professional ser­vices firms, many of whom, in ­effect, sign up to exit at a specified age — anything from 50 to 65.

On the face of it, that’s unlawful, but challenges can often disappear through a negotiated set­tle­ment and the laws are rarely tested. Which makes the case against Deloitte Touche Tohmatsu by one of its partners claiming it has an unlawful mandatory retirement age of 62 very interesting. Deloitte does not have a mandatory retirement age written into its partnership agreements but the Federal Court action is being keenly watched in professional ranks.

At a macroeconomic level, the only reason to exit people from the workforce is if they are crowding out other, younger workers and thus limiting growth.

The evidence is clear that this is not the case, but economists draw a distinction with the experience in individual firms where managers often face real problems in refreshing the ranks if older workers decline to move on.

University of NSW Centre of Excellence in Population Ageing Research senior research fellow Rafal Chomik says: “The argument that older workers keep younger workers out of jobs is common but false.

“There’s a name for it: the lump of labour fallacy — the idea that there is a fixed number of jobs and that if only older people were to ­retire, then younger people could take their place.

“But taking productive older people out of the economy, even in a downturn, is not helping the economy and could exacerbate problems. It could mean returning to an economy that is potentially smaller than it could have been had those older people stayed ­employed through to recovery.

“Economies where employment rates of older people are high tend to also be economies where employment rates of young people are high.”

Chomik says pushing for early retirement was a mistake made by many Western countries during the 1980s. They then spent the next 20 years trying to fix their retirement income systems, which were suddenly under strain because of ageing populations and that early retirement.

Curtin University Future of Work Institute director Sharon Parker says compulsory early retirement in Australia would be a retrograde step. “When mature workers are in the work force, they are producing, earning and spending, which contributes to sustaining and growing the economy,” she says. “If they are outside the workforce, they draw on public funds to a greater extent (via age pensions, disability benefits, health costs), which ­effectively puts a tax on young people.”

That’s the view too of University of Melbourne law school associate professor Alysia Blackham, who says that at the macro level, we want everyone to keep working. Blackham wrote in an online paper last year: “Australia cannot afford to lose skilled workers prematurely. In 2013, the Productivity Commission estimated that overall labour supply per capita will fall by nearly 5 per cent by 2059-60 due to demographic ­ageing.”

Beyond economics, there are other reasons. “Reliance on irrational stereotypes about older workers can prevent businesses from finding the best person for the job,” Blackham argues. “Allowing workers to choose when they retire can improve staff retention, increase workforce morale and help ­employers retain vital skills and experience.”

Parker goes further: “Mature workers have a depth of knowledge that means they make a significant and often unique per­formance contribution. To assume that someone is no longer effective and should be ‘refreshed’ with a younger person is to misunderstand the value of this accumulated experience.”

One of Australia’s leading workplace researchers, University of Sydney business school professor John Buchanan, questions the idea that we should all keep working as long as we can.

“I am a big believer that people, especially in the current labour market, should be getting out of the way to be frank,” he says.

“As productivity increases, we should be working less, and you do that by looking at the length of the working day, the length of the working week and the length of the working life. But we have completely lost sight of that vision and the vision these days seems to be that you work until you die.

“I think that is a pretty un­inspiring view of life.”

He agrees any formal retirement age would have be in the context of other policies, such as a better level of pension. As well, companies need better succession planning and transition programs to move people to part-time work.

“We need a broader debate about what the evolution of a working life looks like, a wide-­ranging discussion about what ageing well looks like,” he says. “Not just kicking them out.”

Forced retirement is one issue, but for most Australians age discrimination kicks in at the recruitment stage when stereotypes can make it hard for the 50-somethings to get a job. One inhibitor is the fear of managers if they hire an older person, they will have a devil of a time exiting them later.

Alicia Munnell, of the Centre for Retirement Research at Boston College in the US, suggests mandatory retirement could actually help older workers get jobs.

“We live in a dynamic economy and the more people working, the greater the demand for goods and services,” she says.

“I know people cite examples of individual companies where older people may be blocking younger ones, but that conclusion does not hold for the economy as a whole.

“All that said, I have always been a fan of mandatory retirement for another reason. I think that employers would be more willing to hire older workers if they knew they would not ‘be stuck’ with them forever.”

Perth-based human resources adviser Conrad Liveris says companies need to get better at phasing people out rather than “pushing them off a cliff” at retirement age.

“At the moment, it’s all or nothing,” he says. “People talk about semi-retirement but that is not available for most people. There is part-time work at the top level for professionals or at the other end of the pay scale with part-time or casual jobs in retail and hospitality, but not many opportunities in the middle.”

Better management and performance assessment are also urged by London Business School economics professor Andrew Scott, who says compulsory retirement is untenable and predicts “the really big battle in the workplace” will be over age discrimination. Firms will find it harder and harder to make decisions based on age, he says.

“In general, we don’t have very good measures of performance in a firm and we don’t know how to get rid of people easily,” he says.

“One of the reasons retirement dates were introduced originally was that corporations thought it was a great non-conflictual way to get rid of workers.”

He argues age is now “malleable” because of the impact of exercise, diet and other aspects such as sense of purpose on the ageing process. There is great diversity in the way people age and links between chronological and biological age is breaking down.

“It is causing us no end of problems because we have basically got a system based on simple concepts of chronological age,” he says.

Scott, co-author with Lynda Gratton of bestselling book The 100-Year Life, says “one of the greatest inventions of the 20th century was retirement” giving people security and a decent quality of life.

But there now is rising inequality because an older pension age means people with bad health, for example, are in a more precarious position if they have to keep working.

Yet the elders’ debate is not a zero-sum game, he says. “The treatment of the old is interesting because the young will be old. Ageism is a prejudice against your future self because you have never been more likely to become old.”

He quotes Facebook founder, Mark Zuckerberg, who in 2007 announced that “young people are smarter”. Says Scott: “Can you imagine saying that about any other demographic group?”