Re’tire’ment: Who is tired?

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June 24th, 2010 Ushamrita Choudhury

The French government’s decision to raise the retirement age for those employed in public and private service to 62 years earned the ire of a majority of the worker unions there. This seems a rather boorish reaction on part of the French, considering France itself, along with several other member countries of the European Union, is under a deluge of debt.

France, whose budget deficit is currently 7.5 per cent of its GDP, however, is at a marginally better position than other EU countries such as the UK, Spain, Greece, Portugal and Ireland. The euro crisis has sobered sentiments across the European continent. Spending has trickled. Governments are trying hard to resuscitate their respective economies, but their efforts seemed to have yielded naught thus far.

France’s pension reforms, analysts say, are a welcome move. The French government proposes to raise the retirement age bar from 60 to 62 years over an eight year window. With a low percentage of the youth entering the workforce, and an ever-increasing ageing population, a constructive action such as this will enable France to answer at least some, if not many, of its fiscal infirmities.

An annual pension deficit of approximately 32 billion euros threatens to burden the French bourses further, with projections estimating that this amount will touch nearly 114 billion euros by 2050.

Upping the retirement age in France signals a positive trend, irrespective of the resistance generated by labour unions there. The advantages can be enumerated thus: first, France’s pension liability will be reduced to a certain extent, facilitating a quicker return to acceptable fiscal statistics.

Second, there will be a greater utilisation of human capital. An aged, or, rather, experienced population can bring more to the table by way of sound knowledge and a mature skill-set, which can benefit public and private organisations alike, because experience is a highly-valued asset across the board.

Third, at a psychological level, the aged will have avenues to make their lives more secure, because an increased retirement age will also mean better post-retirement facilities provided by the government, due to improved public finances.

The Indian government, too, is contemplating increasing the retirement age, from 60 to 62, for those who are employed in the public sector. In the private sector, the retirement age bracket is 58 to 62 years. However, considering the rate at which the Indian economy is growing, it would make sense for the government to mandate a higher retirement age in the private sector at least.
Given the fecund service sector in the country, if companies allow for a retirement age bracket of 65 to 70 years, it would translate into a golden opportunity for senior professionals and firms alike. Today, the mature population seldom wishes to retreat from an active professional life. By provisioning softer taxation policies and simple, safe and profitable investment opportunities, the government can encourage senior professionals to contribute significantly to the growth mechanism of the country.

Given a chance to work post-retirement, most service-sector professionals would lap it up. Sentiments in this regard have been strong. If insisted upon by the service sector, a higher retirement age could soon translate into reality. This move, in turn, would indicate a developmental trend in the growth dynamics of the economy. Although a far way off, if this idea is mooted at the right time and place, by service-sector and industry oriented bodies like the CII and Ficci, it would herald an important socio-economic development in an otherwise unpredictable economic growth story.

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12 Responses to “Re’tire’ment: Who is tired?”

  1. Veeru Says:

    Already planning commission of indian govt. was thinking a decade back to raise the retirement age, first thing is that 65yrs age of professor lobby already executed and other have a chances of 62 yrs. In private sector, it depends on the people but peoples are slightly growing to open own industry and SSI units. Generally R&D sector of any deptt. using the experience of retd.executives and indian intelligence department also using for solving the case and take the references of prev. case.
    Some of the ministery uses their employees on fixed amount basis for using their experiences.
    Really it’s a interesting topics for GD. and try for live telecast on this topics to generate in peoples.

  2. Ushamrita Choudhury Says:

    Dear Arun,

    I agree with what you say. However, I feel the government can increase the retirement age in the private sector. Although the increase will be applicable to all firms/organisations, there is no hard and fast rule that every employed person will want to continue working post a certain age. There could be such a provision. Taking it or leaving it will obviously be left to an individual’s discretion. And there is always enough scope for growth in an emerging economy. Of course, conditions apply!

    Regards,
    Ushamrita

  3. Arun Says:

    There a few fundamental flaws in your thinking. 1. Unlike the French, India has a largely young population. As it is, there is a challenge finding enough jobs for them. 2. An older workforce means productivity issues given the problems related to health etc. 3. If experience of the older lot needs to be harnessed, then that can very well done by being selective and not have a blanket cover including everyone in the workforce and utilising the best to groom the next gen. The list can go on…

  4. Shuvro Sen Says:

    Your approach towards writing on any topic has always been different from others. Thats how reading what you write is always interesting. Congratulations Ushamrita

  5. shukla chowdhury Says:

    Excellent thought. This is very true in 2day’s context, because mature persons have lots of experience. so this value should be utilised effectively on a working platform. An extended professional life is beneficial not only 4 business but also an individual’s growth. I think this process will also lead 2 a healthy balance in society.

    HEY WORLD! LIFE HAS NO RETIREMENT. IT KEEPS GOING ON………………………………………

  6. Sanjeev Says:

    Why no reirement age for politicians in India who are holding public offices?? Even if a person cannot walk or think in right senses are holding important Chief Ministers posts.

  7. Nilesh Says:

    Nice piece. But, methinks that just like the Indian govt, Sarkozy’s boys are just buying time, as in, they are trying to defer huge retirement benefit payouts by another two years. Did you ever think of that?

  8. Sudhamrita Choudhury Sengupta Says:

    Ushamrita,
    Your work is always stellar and today, once again, your talent is clearly evident. I am proud of you and Samar certainly would join me in giving you two thumbs up for the articulation of a new thought!
    It definitely is a beautiful read!

  9. Wynrica Gonsalves Says:

    Ushamrita, your take on the matter is very astutely put. We are prematurely putting to pasture experienced individuals who still have much to offer. Many ‘retirees’ are still in their prime and are wasting way their time doing nothing at home. By raising the age, the government will definately be taking a conducive step towards building up its economy.

  10. Abhijit Chaudhuri Says:

    You chose a sensitive topic to write about and articulated extremely well. It would have been interesting know the replacement ratio of retired employees with those of new comers, apprentices as the old world would love to call them. A lower growth rate (population) of the young populace may actually leave some gap in the work force if the retirees out number them and leave the economy short of adequate work force.

  11. Esha Zaveri Says:

    It is time the french reigned in on their fiscal woes. And this was a long time coming. The pension scheme isn’t sustainable. And the general climate in most advanced countries of an aging population and a shortage of labour supply warrants a closer look at cutting back on benefits. Questions raised with respect to older employees shortchanging younger workers joining the workforce also has been discredited as a current study by Gruber and Milligan show.

    PS. Good article Ushamrita!

  12. Harshavardhan Uchil Says:

    Excellent writing Ushamrita. I mean it.

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