Yesterday, I was writing about how we in Europe and other developed countries might follow in the footsteps of Japan by increasing labour participation rates among older people – not because older people want to go back to work, but because they have to in order to survive. More and more older people in Japan continue to work in low wage jobs as shop clerks and in service jobs.
Does this not just shift the age at which companies make workers redundant to 49 given that companies are not willing to pay for these social damage annuities?
I think companies would plan the labour hiring process in accordance to reduce their monetary liabilities associated with redundancy process. In fact they could probably even stop hiring older people altogether and play hot potato with the older workforce. It would also be complicated to implement with higher rate of casualisation in the labour market.
In my opinion, there should be incentives on keeping an employee long term instead. The longer an employee stays with the company would provide incremental incentives for the company.
Companies are quite responsive to incentives and rather extremely adept at avoiding any kind of punishment driven policies.
Is this all not just a band-aid to cover the fact that encouraging people to retire at 57 is just crazy. Move the age at which you can retire with a full state pension to 67 and the problem goes away.
Interesting idea, but it can lead many employers to avoid hiring middle aged/older employees in order not to pay potential annuity in case of redundancies. Plus younger employees are usually less paid. So the unintended consequence might be actually worsening the employment prospects in category of employees 50+.
JK - you've made a really good argument for the case of automation - ultimately it will be too economically burdensome for companies to take on human capital. Pay-off the near retirees and do away with "employees" wherever a machine can do a job. The world used to always need "ditch-diggers". Now that they have been/will be displaced, can we reasonably expect to train that segment of a work-force to be programmers/write-code? And then the UBI conversation comes round again...
As another reader commented, I think this just moves the keep/fire decision to 49 from 57.
I don’t care for the pollution analogy because that is a bad act by the employer. Letting a less productive employee go is a rational act and will help a younger, cheaper resource in society to become productive and meet needs that he has no cushion of savings to fund. Possibly the root problem is that the retirement benefits at 57 are too generous (kind of like our problem in the US right now with too generous unemployment benefits!).
How about going into opposite direction and getting rid of all the "protections" for older workers? In Poland you cannot fire people for a few years before retirement which is the main reason these people are fired before the period.
Does this not just shift the age at which companies make workers redundant to 49 given that companies are not willing to pay for these social damage annuities?
Thank you for your blogs very insightful
I think companies would plan the labour hiring process in accordance to reduce their monetary liabilities associated with redundancy process. In fact they could probably even stop hiring older people altogether and play hot potato with the older workforce. It would also be complicated to implement with higher rate of casualisation in the labour market.
In my opinion, there should be incentives on keeping an employee long term instead. The longer an employee stays with the company would provide incremental incentives for the company.
Companies are quite responsive to incentives and rather extremely adept at avoiding any kind of punishment driven policies.
It looks like pension in another name.
Is this all not just a band-aid to cover the fact that encouraging people to retire at 57 is just crazy. Move the age at which you can retire with a full state pension to 67 and the problem goes away.
Interesting idea, but it can lead many employers to avoid hiring middle aged/older employees in order not to pay potential annuity in case of redundancies. Plus younger employees are usually less paid. So the unintended consequence might be actually worsening the employment prospects in category of employees 50+.
JK - you've made a really good argument for the case of automation - ultimately it will be too economically burdensome for companies to take on human capital. Pay-off the near retirees and do away with "employees" wherever a machine can do a job. The world used to always need "ditch-diggers". Now that they have been/will be displaced, can we reasonably expect to train that segment of a work-force to be programmers/write-code? And then the UBI conversation comes round again...
As another reader commented, I think this just moves the keep/fire decision to 49 from 57.
I don’t care for the pollution analogy because that is a bad act by the employer. Letting a less productive employee go is a rational act and will help a younger, cheaper resource in society to become productive and meet needs that he has no cushion of savings to fund. Possibly the root problem is that the retirement benefits at 57 are too generous (kind of like our problem in the US right now with too generous unemployment benefits!).
How about going into opposite direction and getting rid of all the "protections" for older workers? In Poland you cannot fire people for a few years before retirement which is the main reason these people are fired before the period.