This House would institute a mandatory retirement age

A mandatory retirement age creates increased opportunities for younger workers, especially in higher ranking jobs.

There is no need to apply a universal retirement age will across every sector of the economy. Different retirement ages can reflect the differing demands of particular jobs. The job performance of fighter pilots or surgeons may suffer as a result of the creeping debility uniformly associated with aging – a process known as senescence. Individuals in these occupations are usually compelled to retire earlier than the general population.

However, there is one factor that justifies both collective adjustment of existing mandatory retirement ages, and the imposition of mandatory retirement ages on jobs that do not become significantly harder or riskier as workers age. The absence of mandatory retirement may create gerontocracies – businesses that promote employees according to their seniority. The leadership of gerontocratic businesses and organisations are usually dominated by older individuals[i].

Where retirement ages are high, or a culture of absolute deference to seniority is entrenched- as in Japan- a gerontocracy can emerge. An aging class of executives and directors can engage in patrimonial practices that ensure only other, older workers are able to access senior management positions. This has the effect of suppressing pay rates among younger employees and discouraging innovation and independent thought[ii]. After all, why would a young employee engage in the extra labour and learning necessary to solve intractable problems or develop new products if they will gain no recognition for their efforts?

Requiring skilled or semi-skilled workers to retire at a particular age will also assist in reducing unemployment figures among the young. Retirees will vacate jobs for individuals who are approaching an age where financial independence and building a family become significant life-objectives. This approach is also economically efficient – it makes more sense for the state to pay out on a larger number of pensions- supported by private pension schemes- than to support the young unemployed. If young adults miss opportunities to build careers for themselves, or to become established in a particular trade, the costs associated with joining the labour force begin to rise. Skill sets decay or become outmoded; lack of personal funds reduces workers’ mobility. Thus, it can prove costly for the state to facilitate entry into the labour market for the chronically unemployed. The resolution is necessary for the long-term health of the workforce as a whole.

[i] “Poorer, yes. But by how much?” The Economist, 09 January 2003. http://www.bbc.co.uk/news/world-europe-11204528

[ii] “Corporate governance in Japan: Bring it on.” The Economist, 29 May 2008. http://www.economist.com/node/11455075

It is justifiable, in the interests of public safety and the reputation of key professions, to compel individuals to retire from jobs that are dependent on high levels of physical or mental health. However, proposition’s attempt to depart from the status quo is deeply flawed. The proposition side seem to be presenting an argument in favour of a better regulated wage market and a better constructed corpus of employment law. Neither of these flaws in the status quo would be adequately addressed by the resolution. Moreover, forcibly excluding older individuals from the labour market could harm productivity of the state’s economy by increasing the time and cost of training new workers, and reducing the breadth of skills and expertise available to employers.

Japan is frequently cited as an example of the harm that a “seniority-wage system” can do to both corporate accountability and innovation. The flaws of this approach to remuneration are not causally linked to the age of the individuals that a firm chooses to employ, but to a widespread refusal to assess their productivity and suitability for promotion according to other criteria. As a report published in the Economist notes, the Japanese gerontocracy “has few legal underpinnings; rather, it has to do with culture and tradition. A few business leaders have condemned it, but… politicians have largely kept [silent].”[i]

A full merit based system of pay and promotion would allow older employees to continue to participate, without having to permanently bar them from the workforce. This approach would resemble the status quo to a degree. Employees would be sought according their ability to fulfil the specific needs of the employer; irrespective of their age, the ability of an employee to successfully and efficiently carry out tasks assigned to her would be basic the indicator used to make decisions on pay and promotion.

Even where age and seniority assume a wider, more ingrained cultural significance, as in Italy and Japan, it would be grossly disproportionate to address an apparent bias in favour of promoting senior citizens by excluding them from the workforce entirely.

[i] “Corporate governance in Japan: Bring it on.” The Economist, 29 May 2008. http://www.economist.com/node/11455075

Creating a mandatory retirement age ensures that businesses will be able to maintain employees’ pension plans and healthcare schemes.

In many liberal democracies that operate without centralised, government sponsored welfare systems, the support provided by employers’ insurance systems is the only means of obtaining hospital care or a retirement income for a large number of working age individuals.

Many firms also offer so-called defined benefit pension plans to their workers. Pensions of this type guarantee that a worker will receive a certain, regular level of income on retirement – an amount calculated according to a fixed formula that takes account of an employee’s salary and the length of their service with a company.

As the Ford motor company attempted to do in 2010, many firms will attempt to remove older employees who show no desire to retire of their own volition. The older an employee is at the point of retirement, the more money- under a defined benefit plan- a firm will have to pay out in the form of pension contributions.

Further, as individuals age they will represent more of a risk in terms of healthcare liabilities. As an individual ages, the likelihood that she will develop chronic diseases such as cancer increases. The greater the aggregate age of a company’s workforce, the more likely it is that the company will, at some point, have to cover the costs of treating a serious illness.

Two specific harms result from this situation. First, employers will become reluctant to hire older individuals, aware of the increased risk that their productivity may be affected by an illness that will be treated at their firm’s expense. Second, as employees age, their retirement settlements will constitute an ever increasing burden on their employer. Life spans across the western world are collectively increasing. The longer an employee remains in work, the larger their pension, the greater the liability they represent to a business.

As a consequence, between the cost of maintaining a previous generation’s pension settlements and the cost of treating the afflictions of longer-lived workers, it is highly likely that some employee support schemes will collapse. Other schemes, as has occurred in many UK businesses, will be closed off to new employees. Either way, the obstacle presented by an aging workforce will deny a younger generation the chance to benefit from schemes and subsidies that their employer provided to their fathers and grandfathers.

Employers’ reluctance to hire older staff and attempts to remove aging staff from payrolls can both be addressed more efficiently via the free market.

It is true that employer-provided pension plans are beginning to falter under the burden of an increasingly long-lived work force. However, this only serves to illustrate the flaws in employee benefit schemes of this type.

The state should not attempt to prop up a method of social welfare provision that is clearly ill suited to current trends in the labour market. Long term employment with particular firms, and especially jobs-for-life, are dwindling.

If individual workers were incentivised or obliged to obtain their own health insurance, and to set up their own pension plans, the burden of doing so would be shifted away from employers. Demand and consumer preference would dictate the price at which these services were delivered, reducing the overall cost of obtaining health insurance or paying into a pension pot.

Employers would no longer be required to assess potential employees in terms of the sums of money they are likely to draw from health insurance and pension funds. Businesses could once again focus on selecting new employees by merit.

Under the status quo, the increasing inaccessibility of employer-led pension schemes has left young adults stranded in a pension market where lack of demand has led to individual retirement plans becoming massively over-priced. Under the resolution, although the financial burden presented by a corporate pension scheme would be more predictable, it would still impact massively on businesses’ profits and artificially restrict the size of the pensions market.

Rather than bear the transaction costs inherent in continual renegotiation of pension schemes and employee benefit plans, rather than accept that worries about healthcare and pension liabilities will cause employers to avoid employing older people, side proposition should trust that the market will be as competent at providing fairly priced pensions as it is at providing fairly priced commodities.

A mandatory retirement age creates increased opportunities for younger workers, especially in higher ranking jobs.

There is no need to apply a universal retirement age will across every sector of the economy. Different retirement ages can reflect the differing demands of particular jobs. The job performance of fighter pilots or surgeons may suffer as a result of the creeping debility uniformly associated with aging – a process known as senescence. Individuals in these occupations are usually compelled to retire earlier than the general population.

However, there is one factor that justifies both collective adjustment of existing mandatory retirement ages, and the imposition of mandatory retirement ages on jobs that do not become significantly harder or riskier as workers age. The absence of mandatory retirement may create gerontocracies – businesses that promote employees according to their seniority. The leadership of gerontocratic businesses and organisations are usually dominated by older individuals[i].

Where retirement ages are high, or a culture of absolute deference to seniority is entrenched- as in Japan- a gerontocracy can emerge. An aging class of executives and directors can engage in patrimonial practices that ensure only other, older workers are able to access senior management positions. This has the effect of suppressing pay rates among younger employees and discouraging innovation and independent thought[ii]. After all, why would a young employee engage in the extra labour and learning necessary to solve intractable problems or develop new products if they will gain no recognition for their efforts?

Requiring skilled or semi-skilled workers to retire at a particular age will also assist in reducing unemployment figures among the young. Retirees will vacate jobs for individuals who are approaching an age where financial independence and building a family become significant life-objectives. This approach is also economically efficient – it makes more sense for the state to pay out on a larger number of pensions- supported by private pension schemes- than to support the young unemployed. If young adults miss opportunities to build careers for themselves, or to become established in a particular trade, the costs associated with joining the labour force begin to rise. Skill sets decay or become outmoded; lack of personal funds reduces workers’ mobility. Thus, it can prove costly for the state to facilitate entry into the labour market for the chronically unemployed. The resolution is necessary for the long-term health of the workforce as a whole.

[i] “Poorer, yes. But by how much?” The Economist, 09 January 2003. http://www.bbc.co.uk/news/world-europe-11204528

[ii] “Corporate governance in Japan: Bring it on.” The Economist, 29 May 2008. http://www.economist.com/node/11455075

It is justifiable, in the interests of public safety and the reputation of key professions, to compel individuals to retire from jobs that are dependent on high levels of physical or mental health. However, proposition’s attempt to depart from the status quo is deeply flawed. The proposition side seem to be presenting an argument in favour of a better regulated wage market and a better constructed corpus of employment law. Neither of these flaws in the status quo would be adequately addressed by the resolution. Moreover, forcibly excluding older individuals from the labour market could harm productivity of the state’s economy by increasing the time and cost of training new workers, and reducing the breadth of skills and expertise available to employers.

Japan is frequently cited as an example of the harm that a “seniority-wage system” can do to both corporate accountability and innovation. The flaws of this approach to remuneration are not causally linked to the age of the individuals that a firm chooses to employ, but to a widespread refusal to assess their productivity and suitability for promotion according to other criteria. As a report published in the Economist notes, the Japanese gerontocracy “has few legal underpinnings; rather, it has to do with culture and tradition. A few business leaders have condemned it, but… politicians have largely kept [silent].”[i]

A full merit based system of pay and promotion would allow older employees to continue to participate, without having to permanently bar them from the workforce. This approach would resemble the status quo to a degree. Employees would be sought according their ability to fulfil the specific needs of the employer; irrespective of their age, the ability of an employee to successfully and efficiently carry out tasks assigned to her would be basic the indicator used to make decisions on pay and promotion.

Even where age and seniority assume a wider, more ingrained cultural significance, as in Italy and Japan, it would be grossly disproportionate to address an apparent bias in favour of promoting senior citizens by excluding them from the workforce entirely.

[i] “Corporate governance in Japan: Bring it on.” The Economist, 29 May 2008. http://www.economist.com/node/11455075

Creating a mandatory retirement age ensures that businesses will be able to maintain employees’ pension plans and healthcare schemes.

In many liberal democracies that operate without centralised, government sponsored welfare systems, the support provided by employers’ insurance systems is the only means of obtaining hospital care or a retirement income for a large number of working age individuals.

Many firms also offer so-called defined benefit pension plans to their workers. Pensions of this type guarantee that a worker will receive a certain, regular level of income on retirement – an amount calculated according to a fixed formula that takes account of an employee’s salary and the length of their service with a company.

As the Ford motor company attempted to do in 2010, many firms will attempt to remove older employees who show no desire to retire of their own volition. The older an employee is at the point of retirement, the more money- under a defined benefit plan- a firm will have to pay out in the form of pension contributions.

Further, as individuals age they will represent more of a risk in terms of healthcare liabilities. As an individual ages, the likelihood that she will develop chronic diseases such as cancer increases. The greater the aggregate age of a company’s workforce, the more likely it is that the company will, at some point, have to cover the costs of treating a serious illness.

Two specific harms result from this situation. First, employers will become reluctant to hire older individuals, aware of the increased risk that their productivity may be affected by an illness that will be treated at their firm’s expense. Second, as employees age, their retirement settlements will constitute an ever increasing burden on their employer. Life spans across the western world are collectively increasing. The longer an employee remains in work, the larger their pension, the greater the liability they represent to a business.

As a consequence, between the cost of maintaining a previous generation’s pension settlements and the cost of treating the afflictions of longer-lived workers, it is highly likely that some employee support schemes will collapse. Other schemes, as has occurred in many UK businesses, will be closed off to new employees. Either way, the obstacle presented by an aging workforce will deny a younger generation the chance to benefit from schemes and subsidies that their employer provided to their fathers and grandfathers.

Employers’ reluctance to hire older staff and attempts to remove aging staff from payrolls can both be addressed more efficiently via the free market.

It is true that employer-provided pension plans are beginning to falter under the burden of an increasingly long-lived work force. However, this only serves to illustrate the flaws in employee benefit schemes of this type.

The state should not attempt to prop up a method of social welfare provision that is clearly ill suited to current trends in the labour market. Long term employment with particular firms, and especially jobs-for-life, are dwindling.

If individual workers were incentivised or obliged to obtain their own health insurance, and to set up their own pension plans, the burden of doing so would be shifted away from employers. Demand and consumer preference would dictate the price at which these services were delivered, reducing the overall cost of obtaining health insurance or paying into a pension pot.

Employers would no longer be required to assess potential employees in terms of the sums of money they are likely to draw from health insurance and pension funds. Businesses could once again focus on selecting new employees by merit.

Under the status quo, the increasing inaccessibility of employer-led pension schemes has left young adults stranded in a pension market where lack of demand has led to individual retirement plans becoming massively over-priced. Under the resolution, although the financial burden presented by a corporate pension scheme would be more predictable, it would still impact massively on businesses’ profits and artificially restrict the size of the pensions market.

Rather than bear the transaction costs inherent in continual renegotiation of pension schemes and employee benefit plans, rather than accept that worries about healthcare and pension liabilities will cause employers to avoid employing older people, side proposition should trust that the market will be as competent at providing fairly priced pensions as it is at providing fairly priced commodities.

The populations of almost all wealthy western liberal democracies are aging. Quite simply, individual citizens are living longer. Throughout the EU the number of individuals of working age is likely to drop from the 2010 figure of 305m to 286m in 2030. Concurrently, the number of EU citizens aged over 65 will rise to 142m[i]. Compelling retirement simply increases the economic burden that pensioners place on the state. An aging population increases the ratio of dependent individuals to working individuals within a state. A mandatory retirement age is an arbitrary and unnecessary measure which exacerbates this problem.

The resolution also fails to take account of the fact that life expectancies throughout most of the western world are rising. The life expectancy of a 65 year old American male is now 17.52 years. The life expectancy of a 70 Japanese female has reached 19 years[ii]. Advances and health care and improvements in living standards have extended the average male life span in some areas of the world to 83. As citizens grow ever older, their dependence on their families and on the state for medical care and economic support grows too. Although this observation might seem to go against side opposition’s case, it should be pointed out that the same advances in medical care that extend our life spans also extend our productive lives.[iii]

We may live longer, but improvements in diagnosis and treatment for diseases of aging mean that we stay can healthier for longer. This being the case, mandatory retirement would only serve to expropriate the labour of otherwise active, productive members of society. It would create a class of financial dependents (“young” retirees in their sixties), with no means of securing themselves against the physical and medical dependence that characterises senescence.

Increasing the age at which retirement becomes mandatory will not adequately offset these dual phenomena. As has been seen in Greece, Spain and France, an attempt to alter an entrenched retirement age- even if it is not linked to mandatory retirement- can provoke substantial opposition among youth and labour movements[iv]. These groups are likely to see such a move as a direct political attack, and will respond accordingly. Secondly, demographers’ predictions about the future habits, health and behaviour of a population are infamously broad and inaccurate.

In short, an upward trend in human life spans correlates strongly with a downward trend in the frequency and immediacy with which older people are affected by diseases of aging. Citizens of western liberal democracies are staying healthier for longer. Requiring these otherwise productive, engaged individuals to withdraw from the work force would burden the pension system with a disproportionate number of financial dependents.

[i] “Special report: Pensions.” The Economist, 7 April 2011. http://www.economist.com/node/18474681

[ii] “Special report: Pensions.” The Economist, 7 April 2011. http://www.economist.com/node/18474681

[iii] “Active and Healthy Aging – A Long-term View up to 2050”, Miriam Leis, and Govert Gijsbers, European Foresight Platform, 31 January 2011, http://www.foresight-platform.eu/wp-content/uploads/2011/01/Paper_Active_Healthy_Ageing_FIN.pdf pp.11-12

[iv] “France burns as strike descends into violence.” The Independent, 20 October 2010. http://www.independent.co.uk/news/world/europe/france-burns-as-strike-descends-into-violence-2111270.html

As stated in side proposition’s first argument, the age at which retirement becomes mandatory can be flexible. The state will always be able to raise or lower the retirement age in response to demographic factors, such as the rate at which diseases of senescence begin to appear in the general population. Spain[i] and France[ii] have already passed laws raising the age at which individuals can qualify for a state pension. Proposition side’s arguments do not run contrary to this type of action.

If the general fitness, wellbeing and life expectancy of the population increases, the age of retirement can be raised in response. An increase in the retirement age can be made relative to a population’s average lifespan.

If an adult’s working life is extended, then the amount of time that they spend paying tax will also be extended. This increase in tax income will offset some of the financial burden associated with an increasingly long-lived population. Moreover, as opposition point out, advances in treatments for diseases linked to senescence have effectively reduced the amount of time that individuals reaching the ends of their lives will spend as dependents.

The late entry into the labour market of many young adults can be blamed on an ill-advised attempt by the UK and other European states, to use universities to deliver courses unsuited to being taught in a free-form academic context. Many subjects, especially those based on engineering, mechanics and construction require immediate engagement with real-world Apprenticeships and training schemes that emphasise placements within industry and hands-on teaching of core skills will do more to address the needs of the young adult work force than current forms of post-eighteen education. Concerns raised by both state and industry about late entry into the work force can be adequately addressed by bringing the world of work into the classroom at a much earlier stage.

[i] “Spain to raise retirement age to 67.” The New York Times, 27 January 2011. http://www.nytimes.com/2011/01/28/world/europe/28iht-spain28.html?_r=1

[ii] “Pension rallies hit French cities.” BBC News online, 7 September 2010. http://www.bbc.co.uk/news/world-europe-11204528

Compelling retirement at a set age reduces the diversity of the labour market. The advantages of employing older workers are increasingly being recognised. Higher levels of experience, training and education make for a more adept, reliable employee and lower training costs. Loyalty is increasingly becoming a characteristic of older workers; a well-known study conducted by Warwick University in 1989 observed the effect of staffing a branch of a large British retailer exclusively with individuals aged fifty or over. The study’s supervisors noted that staff turnover at the store was six times lower than- accounting for statistical controls- than the study’s chosen comparator. Profits, meanwhile, increased by 18% and the store staff were found to have a much wider skill base than average.[i]

These trends are a marked contrast to the behaviours that are coming to dominate the rest of the working age population. Indeed, given the increasing uptake of university degrees and other forms of higher education, it is now the case that many young Europeans are entering the labour market later than their parents and grandparents.  This imbalance at the entry point to the labour market is easily corrected by avoiding any form of compulsory retirement age. However, the resolution would inhibit this process of automatic adjustment, restricting the age range from which new workers can be drawn and restricting the total pool of workers available to the economy.

It cannot be denied that there are advantages to employing younger workers. However, businesses will function more efficiently if they are able to choose, on an open labour market free of artificial restriction, the right hire for the right job. Under certain circumstances, this may mean a young graduate, familiar with information technology and with greater geographic flexibility. Under other circumstances, it may mean seeking out a more experience, older worker and making arrangements to allow for part time working while he cares for grandchildren, addresses reduced mobility or simply enjoys the freedom that comes with being able to afford to work less. Both classes of employee are suited to differing tasks and needs within contemporary businesses.

[i] “B&Q, Ireland: Comprehensive approach’, Eurofound, 28 March 2007, http://www.eurofound.europa.eu/areas/populationandsociety/cases/ie002.htm

Diversity within the labour market is less important than inclusiveness. States are less likely to implement schemes that will allow individuals from disadvantaged socio economic backgrounds to obtain expensive forms of vocational or higher education if those individuals will be prevented from putting their skills to use by an obstructive gerontocracy.

The existence of subsidised university places, school vouchers and government sponsored internships and apprenticeships depend on economic demand for skilled workers. Without a mandatory retirement age providing a predictable degree of attrition within a workforce, there is no guarantee that socially inclusive education policies will increase the number of young adults entering the workplace. Correspondingly, it will become increasingly unlikely that governments will be willing to continue funding inclusive education. Why should the state continue to subsidise the teaching of skills that will go unused and eventually atrophy?

Older workers are more likely to have built up pension plans, and to have substantial personal savings. It is also more probable that they will have met their mortgage liabilities (that is, they will be in full possession of their own homes) and paid off any student debt that they have incurred. In general, older workers will suffer little if they are compelled to leave the workforce at a certain age. We can contrast this situation with that of younger workers who, if they are excluded for the work place due to a lack of demand for fresh labour, will be unable to build up the assets and capital that will provide them with a safety net and a comfortable standard of living later in life.

The efficient operation of businesses must be balanced against the financial freedom and quality of life of a state’s citizens.

It is naïve to assume- as side proposition do in their opening argument- that standards of innovation, knowledge and insight will improve within a business simply because it is compelled to hire younger workers. This is especially true of the professions – jobs and businesses that service pressing social needs tightly regulate the knowledge and conduct of their members and, typically, require them to continually maintain, revise and update their knowledge and skills.

In many professional roles expertise and mastery of the skills underlying the job itself take an unavoidably long time to achieve. Judges in the UK have to have held legal qualifications for five to seven years,[i] consulting physicians for which it takes twelve years to get the relevant qualifications and training,[ii] architects and master craftsmen are all as much a product of experience and practice as they are education and investment.  Implicit in the cost advantage of hiring a young professional is the knowledge that they will have to work under the supervision and tutelage of older colleagues for most of their lives. Professionals are also a product of knowledge sharing and mentorship.

Put simply, arbitrarily using age to exclude older professionals from their fields of expertise will have a material impact upon the training and development of younger professionals. Western liberal democracies’ professional classes are based partly on communitarian principles of a carefully curated shared culture. Removing senior practitioners in law, medicine and civil administration severs a link with the collective knowledge of that professional culture – a link that cannot easily be replicated in the classroom environment.

[i] “Becoming a Judge”, Judiciary of England and Wales, http://www.judiciary.gov.uk/about-the-judiciary/judges-magistrates-and-tribunal-judges/judges-career-paths/becoming-a-judge

[ii] “The length of training involved in becoming a doctor”, Medical Careers, http://www.medicalcareers.nhs.uk/considering_medicine/length_of_training.aspx

It is equally naïve to assume that professional education can only be delivered effectively by an age-based hierarchy.

A more dynamic approach to the division of labour within the professions could eliminate an overreliance on seniority-led training and professional development.

For example, both the UK and the USA draw members of their respective judiciaries from the ranks of lawyers and barristers. These individuals receive relatively little formal training, with the state relying on legal professionals’ prolonged contact and interaction with other judges to provide aspirant members of the judiciary with an understanding of their role and duties. Consequently, barristers and advocates may practice for decades before they are regarded as having accumulated sufficient experience to take up a place on the bench. This reduces the total number of judges able to oversee cases and, consequently, reduces the number of cases that a court system can process.

Many European jurisdictions, by contrast, do not require judges to have practiced as lawyers. Instead, specific training is offered to law students considering a career in the judiciary, in a similar fashion to the specialised training offered to medical students. Focussed education of this type, delivered by academic institutions, produces a more consistent, predictable standard of legal reasoning across the judiciary. It also enable judges to begin sitting at a younger age, ensuring that there are more judges available within the court system, thereby allowing more cases to be heard. Danute Jociene, Lithuania’s judicial representative in the European Court of Human Rights was only 33 years old when appointed. Rosalie Silberman Abella, the youngest justice of the Canadian Supreme Court was 59 years old when she was admitted to the superior bench.