The retirement debate became so raucous in France that it threatened to derail the presidency of the voluble Monsieur Macron. In Denmark, in the hit TV serial Borgen, we had BirgitteNyborg the female premier treading a fine balance trying to manage coalition partners that wanted to increase the retirement age. She got into a negotiation with the country’s number one business tycoon, but in the end seemed to strike a deal with him when it appeared that it was a bluff that he wanted his manufacturing plants moved out of Denmark over the retirement age issue.
In real Denmark however, the situation is now more trail-blazing than the writers of Borgen seemed to have ever imagined. The retirement age would be gradually raised to 69 in Denmark, due to life expectancy gains in the past few years. Already the statutory retirement age in the country is 65, and very soon will be slightly above 65.
It seems people are working for longer and contributing to the national economic output, but there are protests from those who want early retirement so they could put their considerable pension benefits to good use. But Governments do not want to release those pension benefits too early and certainly business, especially big-business, does not want to pay people not to work in the primeof their lives, as they see it, because they are retiring at that age when their skills and their experience is at a premium.
In Sri Lanka the retirement age has been raised as well, but it could well be asked if the same dynamics operate as in these other countries? Has our life expectancy increased commensurate to the increase of the retirement age, and if so where is that reflected? Where are the statistics, and are they reliable?
The contemplated increase in retirement age here considers Sri Lanka as an outlier because we are supposed to have relatively good life expectancy in the South Asian context, due to good public health facilities. Is that the real reason retirement age is being gradually increased or is it because the economy needs it according to big-business, and we cannot pay retirees comfortably out of our superannuation funds for a long time to come?
In France, the retirement age is currently 62, but it is scheduled to gradually increase to 64 by 2030. This increase is due to rising life expectancy and a shrinking workforce. The French Government argues that the higher retirement age is necessary to ensure the long-term sustainability of the pension system. This is Macronomics at its most cynical in a way. But this business of a shrinking workforce, does it obtain in Sri Lanka?
French workers and trade unionists virtually barracked Macron over the retirement issue, but he was nonchalant. Workers have staged strikes and protests, and they have even threatened to bring down the Government of President Emmanuel Macron, but he would probably be laughing all the way to the next election as he did previously after workers protested. The unions argue that the higher retirement age will be unfair to workers, especially those who have worked physically demanding jobs. They also worry that it will lead to more unemployment and poverty among seniors. Why so? The sick cannot work, and neither can they retire, or so it seems, even though the contours of the exact policy are not yet clear.
The French Government has made some concessions to the unions, such as agreeing to a slower increase in the retirement age and to more generous early retirement benefits for certain workers. However, the unions are baying for Macron’s blood, but then again the last time they did so, with those yellow vests, it didn’t seem to turn out all that well for them in the long run.
In all three countries under discussion — Denmark, France, Sri Lanka — there will be eventually fewer workers to support a growing number of retirees.
All three countries are also concerned about the long-term sustainability of their pension systems. They argue that the higher retirement age is necessary to ensure that there is enough money to pay pensions in the future. This seems to most workers as if they have to pay for the mismanagement by the financial czars who only see the pension funds as vast banking tills into which they can dip their hands, to bridge the budget deficits.
Pension funds are a massive pot of money, and Governments have been known to borrow from them in the past. In some cases, Governments have even failed to repay loans, leaving pension funds in dire financial straits.
There are a few reasons why Governments might be tempted to dip into pension funds. First, it is an easy way to get money without having to raise taxes or cut spending. Second, pension funds are often seen as a soft target, as they are typically managed by unelected bureaucrats.
Of course, raising the retirement age is not the only way that Governments can try to get their hands on pension funds. They can also change the rules governing pension funds, making it more difficult for people to qualify for benefits, or reducing the amount of benefits that people receive.
In 2008, the Argentine Government raised the retirement age for women from 60 to 65. This decision sparked a wave of protests and strikes, and it eventually led to the downfall of President Néstor Kirchner.
In 2012, the Greek Government raised the retirement age for both men and women from 65 to 67. This was part of a series of austerity measures that were imposed on Greece by the European Union and the International Monetary Fund. The austerity measures caused widespread hardship and suffering, and they eventually led to the rise of the neo-fascist Golden Dawn party.
In 2016, the South Korean Government raised the retirement age for public sector employees from 60 to 65. This decision was met with fierce opposition from unions, who argued that it would be unfair to workers who had already worked long careers. The protests eventually turned violent, and the government was forced to back down.
Many people who are forced to work longer cannot find jobs, and they end up living on reduced benefits.
Third, raising the retirement age can have a negative impact on the economy. When people are forced to work longer, they are less likely to spend money. This can lead to a decrease in consumer spending, and a slowdown in economic growth.
These are all details however when considering that the debate about the retirement age is not just about economy, it’s about people. Who is talking about that? Some like to retire early but some others may want to continue working as working gives them an anchor, or more ‘agency’ in life, than retirement. All this notwithstanding, the fact that the retirement age would be as high as 69 in a matter of years — though perhaps not in this country just yet — should cause a sea change in general attitudes.
But even in the West, we would have thought that workers would be celebrating when the retirement age is raised. They are protesting vehemently instead. Why? Because in general they feel overworked and exploited, and want to enjoy some relative quietude in their lives away from all that. It doesn’t happen though due to the economic factors. Those such as Macron are thought to be unfriendly towards labour and are seen, perhaps rightly, as mere champions of big business.
It’s a positive development however, that society has come to a point at which a hike in retirement age is considered at all. It means there is a better quality of life. People live longer lives. We have done something right as human-kind. But we can’t get ahead of ourselves and say we did well, so forget the consequences. Let the extension of the retirement age be debated. There has to be a consensus before long-term decisions are taken, at least in the future, on the issue.