Neither the Pope’s resignation nor “Grey Power” stepping aside will create jobs for younger people

Chris BallI was in Roubaix, Northern France, discussing attitudes to work and retirement on both sides of the Channel when the Pope announced his decision to step down. It was interesting to see reactions in this once Catholic country to the news of his holiness’s decision to retire.

 

The typical response in an (admittedly unrepresentative) sample in my impromptu on the spot survey was a Gallic shrug of “Naturellement, tout le monde a le droit de racrocher” – everyone has the right to hang up his boots.

 

This contrasts somewhat with French expressions of wonder that so many people in Britain are deciding to work beyond conventional retirement ages – though in most cases retiring well below the Pope’s 86 years.

 

The French, relying on exaggerated media reports of older people still at work in their 80s and 90s, assume we are literally toiling away till we drop.

 

Lies, damned lies and misunderstandings are often at the root of such problems.

 

One example is seen in the thoughts of Michael Saunders, a Citi Bank economist writing in the Daily Mail recently,  “Grey power (is) winning the battle…over young people”

 

“The ageing of the population and workforce is inevitable and reinforces the likelihood that the UK will have sluggish growth in domestic demand, productivity and real pay.”

 

Oh, really?

 

Let’s suppose for a moment that an older population actually will lead to slower growth, how does it help to worry about it?

 

The best policy is surely to try to keep people in work longer. Talking down the utility of the older worker to prospective employers really could have an impact on national output.

 

Better an older person in a job than out of work altogether (and totally unproductive in economic terms.)

 

In any case, while some studies on age and productivity do indeed some show productivity negatively correlated with age, by no means all of them do so.

 

I have seen and heard of plenty of examples where the knowledge and experience of older workers is recognised as being of great value.

 

If we want to measure output we should be wary of the controlling variables such as levels of training which workers in respective age groups receive, the extent to which companies make use of ICT or interventions used to maintain working capacity.

 

BT undertook an experiment some years ago, in which they measured outputs of different age cohorts and found younger workers in skilled roles to be more productive.

 

When they retested participants enjoying a common level of recent skills training, the differences disappeared.

 

When comparing outputs of younger and older workers one should take other things into account, such as an element of deliberate downsizing of roles, reduction of hours and so on which older workers sensibly often opt for but which may reduce productivity.

 

As for the assertion that, older workers have been effectively stealing the jobs of the young, this too flies in the face the facts.

 

I call in aid the most authoritative international study of the implications of demographic change on working life. The OECD’s  Live Longer; Work Longer  debunks the idea of age cohorts being in competition for a fixed number of jobs.

 

If we really could help younger workers by asking older employees to move out of the way, it might pose a moral dilemma of whether to work or not to work. But we can’t and it doesn’t!

 

Keeping people of all ages in work boosts aggregate demand, contributes to taxation and is more likely to lead to job creation than the reverse.  The fixed “lump” of labour notion is, according to most observers, fallacious. Hence they dub it, “the lump of labour fallacy.”

 

Which brings me on to the real story about the numbers of jobs “created” since 2008. Yes, “93 per cent of the increase in the past ten years has been among over 50s – a rise of 1.5 million people – 22 per cent.” But likening the over 50s to greedy kids devouring more than their share of the treat is wide of the mark.

 

Figures last week from the Office of National Statistics show that between 2008 and 2012 the number of “main job” self-employed workers rose by 367,000. 84 per cent of this increase was for those aged 50 and above. As people get older they are much more likely to be self-employed. (Just 5% of young people are self-employed, compared with 37% of those aged 65 or over.)

 

Moreover, a phenomenal 60 per cent of this increase in self-employment took place between 2011 and 2012. So you could argue that older people, by their ingenuity and enterprise, are a key factor in whatever buoyancy there is in the economy.

 

The Pope’s retirement won’t save or create a single job for a younger person of course – which does not mean that he should not move aside if it suits him to do so.  Unlike the rest of us however, occupancy of his office for a few more years would never have raised concerns about productivity in the first place. Somehow, I doubt that he will join the ranks of the self employed however!

 

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