Work Nouveau

The chances are that those of you in your 20s and early 30s will have to continue working until 70 so as to qualify for a full state pension. That is if you can find a job. Of course there are plenty of examples of those reaching their pinnacle of success in later life, De Gaulle was president of France between the ages of 68 and 78. Konrad Adenauer stayed in power in Germany for 14 years between the ages of 73 and 87, Ronald Reagan was president between the ages of 69 and 78, etc.

In 1980, 45% of CEOs in the 300 largest U.S. companies were aged between 60-69; however things are changing, by 2002 only 25% of CEOs were in that age group (Spencer Stuart), and probably that percentage has decreased even further today. Even the political world is changing: Sarkozy became president at 53, Blair became Prime Minister at 43, Obama president at 45, Merkel Chancellor at 51.

OK JFK was young too but a real rarity at that time. It is fair to say that in many fields people are reaching the top positions 20-25 years earlier than 40 years ago. Although a top politician might expect to be in power for no longer than 8-10 years, most are now generally young enough to have a second successful (and lucrative) career post politics. Many business leaders are bowing out earlier as well, Bill Gates has retired from his business activities at the age of 53 to focus on his second career.

Amongst mere mortals things are rather different. In Belgium the average retirement age is with 57 and only 25% of the male population aged 55-64 are still in the workforce, even the European average retirement age is only just over 60.

Currently EU life expectancy is 74.7 years  for men and 82.5 for women, although those surviving until 60 can expect to survive at least another 20-25 years. In Europe-12, life expectancy has increased by 1.8 years over the last 10 years, and so in 40 years time when Gen-Y retire, it is conceivable that this will have increased by another 10 years. This means that a sixty year old will likely to survive until 90. and healthy life expectancy is usually estimated at 10 years less than the total, so one would hope that this extension of life expectancy would be associated with a similar extension of active life expectancy.

In cyclic downturns (every 8-10 years) voluntary redundancies are most likely to affect two categories:

• those older who see final payment as rounding off pension needs, and
• those younger ones who feel confident of getting a new job and use capital for home/investment.

Those not going for the offer tend to be more constrained by family and mortgage commitments, typically in the 40-50 age band, however these are exactly the people who are most likely to be hit with compulsory redundancies. The point is that those being made redundant from their late 40s onwards (kids still at school or college, house not yet paid off) have a significantly reduced chance of re-entering the employment market in a position to make full use of their accumulated knowledge and experience, whereas the top dogs are just beginning to capitalise on theirs.

Dr John Philpott, CIPD (Chartered Institute of Personnel and Development ) Chief Economist comments, “but the business performance of organisations will be strengthened if they have the right people and skills in place to prepare them for the upturn in the economy, whenever it comes.” In the current wave of redundancies in the UK around 38% are amongst Managers and Professionals with 23% being amongst Skilled non-manual workers, indicating that in the current environment the majority of redundancies in the UK are amongst knowledge intensive positions. It is reasonable to assume that this will be replicated in other economies.

An interesting aside: research has also shown that retiring early at 55 or 60 is not associated with better survival rates than retiring at 65 in a group of past employees of the petrochemical industry. Mortality was higher in employees who retired at 55 than in those who continued working (BMJ) (text). So work really is good for you!

Given the above, it is reasonably safe to assume that a large amount of potentially shareable knowledge is lost to employers when putting large scale early retirement and compulsory redundancy programs in place. There is real and valuable knowledge (aka experience) being put to one side in favour of stacking supermarket shelves, driving a taxi, or gently vegetating at the 19th hole or similar establishments. It is quite understandable that managers find that some employees in their 50s are providing diminishing returns in terms of classical bottom line and this involves many factors including seniority based salary structures, less inclination to binge work, etc.

However it is an established trend for many hitting the job market in later life to launch into new business ventures and usually with a higher degree of success than their younger counterparts. This can be attributed to several factors, the first is that of course they have greater experience and another important consideration is that perhaps they have more realistic projects which can be self funded rather than relying on external funding which can be fickle to say the least.

Certainly the USA and UK have significant influxes of mature entrepreneurs but sadly in many parts of Europe there is far less encouragement. For example, early retirement benefits can be lost if an official business is formed, whilst training and investment programs tend to be focussed on the young. There are some good examples of the parent organisation encouraging entrepreneurship in the groups being made redundant e.g. Philips in Austria, but still a rarity.

Whilst many of us understand that the new working environment places new requirements on society, many of the policy makers seem to either not understand or choose to ignore the need to re-engineer the whole education, work, retirement continuum, being content to leave it to the forces of the market, which we now know to be rather short-sighted. Our young need exposure to work environments before quitting the educational hallows, whilst all of us need training throughout our lives, and finally retirement should be a gradual transition, not a sudden cold shower.