Wednesday, 3 December 2014

Why not lower the retirement age?

Randy has put up a great post calling for more jobs under a Job Guarantee. This is in response to Dean Baker calling for more paid vacation time as a solution to joblessness. Over here in Europe we have statutory paid vacation time on the books already (a maximum statutory requirement of 28 days here in the UK) and we still have an unemployment queue. Big unemployment queues in lots of countries.

It is clear it still doesn't create enough jobs. But that got me thinking about the interaction between an income guarantee and a job guarantee. Full income guarantees are only sustainable if they are considered justified by the rest of the population. Economists struggle with this concept clearly, even though it is blisteringly obvious to most people.

The UK already has an income guarantee in place. It's called the State Retirement Pension and it is about the only bit of the social security budget that no politician seems to like to attack. In fact when the politicians start issuing propaganda via the tax authorities they separate out state pension spending, spinning it as something different from your run of the mill 'welfare'.

So the obvious tinkering-around-the-edges solution seems to be there - reduce the state pension age to 60 for all. 

Yet pretty much all the literature and the general thinking is pushing the age in the opposite direction as well as removing mandatory retirement ages across the world. A lot of this is clear propaganda based on the usual "we can't afford it" nonsense plus a clear belief that equilibrium will sort everything out. Mostly though it just doesn't make any sense. Why push to increase the people who have to work when you have unemployment?

If you look at political manifestos across the spectrum, none of them suggest lowering the state pension age as a goal - even those backing citizen's income ideas. I really can't understand that. It seems like a sure fire vote winner particularly if you sell it as a way of freeing up space so the young can get a job.