Since my last blog, I have flown from the Pacific Ocean across the Atlantic Ocean to the Grand Hotel des Illes Borromees in Stressa on Lake Maggiore in Northern Italy. I’m here to take part in a conference on the role of retirement age in maintaining a viable economy. The purpose is to advise the Italian government on the feasibility of raising the retirement age. Italy already has the highest percentage of the population over 60 years of age and has the least number of people who continue to work beyond sixty. Only 33% of Italians work beyond 55 years, and 11% beyond 60. In comparison in the United States 67% are still employed at 55 and 41% at 60. Twenty percent of Americans work beyond 65 years.

The concept of retirement was introduced by Otto von Bismarck, the chancellor of Germany, who in 1889 set the retirement age at which Germans could receive a pension at 70 years. At that time the average age of death of Germans was 40 years. Using the same approach to modern Americans we would be eligible for Social Security at 109 years of age!!!

Conference participants pointed out that the average workers productivity has peaked by 50 years. In some countries such as Norway there examples of highly productive workers in their seventies. For this to occur, Vittorio Zandomeneghi of Manpower Italia felt that workforce management is vital. This included lifelong learning, flexibility in working hours, potentially reducing salaries as productivity falls and for older persons to be prepared to take other jobs.

 A major roadblock to extending retirement age is the reluctance of many companies to employ older persons. Mario Mascolo, of 3M,  while stressing that his company was interested in lifetime employability. In a company such as his, that works in team, the experience of older persons brings diversity which is valuable. However, he felt that in general older persons did not want to make geographical moves which in an international company is important. He also felt that older persons often found it difficult to work in the new culture of the Internet generation. The financial recession of the last 2 years has made the cost of labor non-sustainable. He, and others at the conference, did point to the demographic changes that are occurring placed many companies at risk of  a “sudden loss of know how”. His sobering conclusion was aimed at older workers when he said: “Don’t compete to avoid change - of course we need change.” 

The conference recognized the non-sustainability of a government pension scheme which attempts to support a population who retire early while living longer. A particular problem is that women who live longer and spend more time out of the workforce than men also tend to retire earler than men. Professor Fiorella Kostoris, whose son is an assistant professor at Washington University, strongly argued for increased re-entry into the workforce of women after their children are grown. She stated that child rearing gives women  excellent and proven work skills. She also recognized that the concept of raising the retirement age was not a popular one. As she put it: “All companies and trade unions argue unreasonably for an earlier retirement age.”

The conference concluded with comments from Renatto Brunetta, an economist and the Minister of Public Administration in Italy.  He pointed out that there was no fiscally responsible position other than to raise the retirement age and to make men and women retire at the same age. This he felt would be simple to do if all politicians, businessmen and trade union leaders were not hypocrites. As far as I could follow his tirade  all Italians, except of course him, were  hypocrites. His speech did not differ much from what we hear from our politicians, except they generally abuse only the other party. It was clear he felt his friends were as incompetent and dishonest as his enemies. A true breath of fresh air!

The BOTTOM LINE: Early retirement is rapidly becoming a thing of the past. Bismarck’s retirement age of 70 years will be necessary if we are to sustain Social Security payments.

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