17 comments on “Retirement Age: Extend? Or to Cut?

  1. Thank you for posting an article of this interesting topic that everyone of us should pay attention to.

    After the European debt crisis, most of the European countries are having federal budget deficit. Now many people are calling their governments to extend the retirement age in order to relief the burden of their governments from pension funds. As you have stated, if the government of France is going to cut off the retirement age, the pension funds would increase by around 40% to 3.0 billion Euros by 2017.

    However, a coin has its two sides. Although we can see that the pension fund would increase drastically by cutting off the retirement age, it is definitely a lesser evil.

    Among the EU, France has overtaken Ireland as the country with highest birth-rate in 2007 (Caroline, 2007). That means the population of labour force would increase gradually when the new-born babies grow up, this will cause an even-higher unemployment rate in France. Unemployment rate has already reached the highest of 10.6% in August 2012 since 2000 (IndexMundi, 2012)(Eurostat, 2012), and it is still on an increasing trend. If the government does not implement new policies to rectify the situation, the problem of high unemployment rate would just keep deteriorate. By cutting off the retirement age, job turnover rate would be accelerated and there would be more job vacancies provided for the youth, this would definitely help relief the high unemployment rate problem. Moreover, although the expense of pension funds of the government would increase, the expense would most probably be compensated by the contribution of workers and employers.

    Furthermore, it is not uncommon to see that employees retired at 60 or even lower around the globe (ChartsBin, 2011), ranging from China to Russia, from Indonesia to Malaysia. Therefore, I think people should not be surprised for France to reduce the retirement age to 60 as it is a common practice for many countries. In Hong Kong, employees in disciplinary forces, such as HK Police Force, HK Fire Services Department, ICAC, are required to retire at the age of 55 or 57 and they are able to get their pensions starting from their retirement (Civil Service Bureau, 2007). It would seem surprising for France to reduce the retirement age from 62 to 60, but when you compare it with the above examples, you may find that it is just a normal policy.

    When this policy first came onto the stage, some people are over-reacted to it, arguing that this policy would pose substantial burden onto the government. However, people should not forget that this policy is only aplicable to those workers who entered the workforce at the age of 18 but not to all workers because the government still really wants the workers who have worked for almost 42 years to take some rest and retire earlier to live their life.

    In conclusion, France, despite its heavy financial deficit, should implement this policy to cut off the retirement age to relief the unemployment problem. Only when the root of problem is being tackled could the problem be solved, otherwise, France would just step into a vicious cycle and its economy could hardly be improved.

    Reference:

    Caroline, W. (2007, January 16). France claims eu fertility crown. Retrieved from http://news.bbc.co.uk/2/hi/europe/6268251.stm

    ChartsBin. (2011). Worldwide retirement ages. Retrieved from http://chartsbin.com/view/2468

    Civil Service Bureau. (2007, February 26). Retirement. Retrieved from http://www.csb.gov.hk/english/admin/retirement/183.html

    Eurostat. (2012). Harmonised unemployment rate by sex. Retrieved from http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=en&pcode=teilm020&tableSelection=1&plugin=1

    IndexMundi. (2012). France unemployment rate. Retrieved from http://www.indexmundi.com/france/unemployment_rate.html

  2. Thank you for your post about whether the government of France should extend or cut retirement age.

    I agree that cutting the retirement age in France may not be appropriate at this moment, as France and other European countries are not performing well recently in the economics’ point of view. Cutting the retirement age may have an impact of worsening the French economy. As you have mentioned in the blog, the size of working class in France may decrease which may reduce tax revenue and government spending can increase potentially. France is currently suffering from a budget deficit, cutting the retirement age may further burden the government of France financially and this may be an obstacle for the government using fiscal policy to boost Aggregate Demand and Gross Domestic Products.

    However, an ordinance may create new law which brings changes to our society and also accommodates our increasingly advanced society. Different countries have different culture and living styles. The retirement age in Hong Kong is 65 whereas the retirement age in France is 62. This may due to the majority of Hong Kongers are willing to work for longer years comparing with the French. The purpose why the government of France would like to cut the retirement age may be because the majority of the French want to retire earlier and enjoy their lives, so enacting this ordinance may reflect the need of the French society.

    Moreover, people are getting more educated nowadays. According to the statistics provided by United Nations, less than 2 million people enrolled tertiary education in 1993 whereas more than 2.1 million people enrolled tertiary education in 2009. When people are more educated, they are more knowledgeable and willing to plan for their retirement. For example, they may engage in different investment activities or they may look for insurance agencies to join different retirement programmes. Therefore, there is a possibility that cutting the retirement age in France may not burden the government severely as we thought because the French may be well-planned for their retirement lives.

    In conclusion, I agree that cutting the retirement age in France may not be very appropriate at this moment but negative impacts of this issue may not be as severe as we thought.

    Reference:
    AXA Hong Kong, planning for retirement. (2011). Retrieved from http://www.axa.com.hk/html/AXA_PRO/eng/needs/your%20life%20stages/Planning_for_Retirement.html?

    Golden years income plan, retirement planning, products & services, individual , AIA Hong Kong. (2012, October 04). Retrieved from http://www.aia.com.hk/en/individual/products-services/retirement-planning/

    UNdata, record view, tertiary education (isced 5 and 6) enrolment. (2012). Retrieved from http://data.un.org/Data.aspx?d=UNESCO&f=series%3aE_56

  3. Thank you for bringing up this issue, I think it’s important that we take it seriously.

    Increasing or cutting the retirement age has been a controversial topic in Europe. The underlying arguments are the trade-off of growing government expenditure and reducing unemployment. Yet, the current Europe home is described as the “old Continent”(CENDROWICZ / BRUSSELS , 2010). Low fertility rate and ageing problem are the main reasons contributing and this is pressurising the pension schemes.

    The European’s ageing population is worth our attention. Life expectancy has increased drastically from 65 to “now 86 for men and 89 for women” (“Q&a: Why the,” 2011) in the past thirty years. Rising longevity means more leisure time and yet elderly could not depend on their own assets to afford the spending as the economic crisis has tremendous effect that their house prices dropped and low interest rate has an unrecoverable influence on their savings unfortunately. They now turn to the government. Not to forget the global economic downturn has already created serious debts for government, with increasing number of elderly result in escalating cost of health services and pensions, the government’s expenditure and deficit are expected to rise significantly. Actions to cut big deficit such as increasing tax rates, lowering public expenditure that citizens are unflavored of could not be launched. It would leave the government to face the challenge of raising capitals, therefore they could not afford to have higher spending on pension schemes. Besides, birth rates are maintained at a low level for the past thirty years and with more mums are preferring to stay at home, the number of active labour forces decrease. If they are to retired at a earlier age, tax revenue would be reduced and skills not inherited by next generation.

    Increasing the retirement age is economically and socially favorable. The knowledgeable and experienced workers are better-off with their valuable interpersonal skills that would meet the demand of better service from the society. In return, it might improve competitiveness and open up more business opportunities. Prosperity does not mean to make capable workers redundant and receive benefits while all the youngsters are out at work; instead, it comes with a balance of both. Maximising efficiency of labour force would be achieved when the older workforces could support the fresh employee to maintain competitiveness in economical sense and as well minimising the benefits taken from government.

    Apart from the polemical option to increase retirement age, other solutions are available. Government could force employees and employers to save proportion of income to act as a self-reserve fund, just as like the MPF in Hong Kong. They could as well to encourage the women to join the workforce by affirming to provide enhanced child-care. Higher participation rate could open up more choices for reformation.

    To conclude, the government has not envisaged this severe situation as some uncontrollable factors emerged. While deciding to increase retirement age or not, one should never forget the more you enjoy for now would create a laborious job for your next generation. Discussion and debate forums should be held before implementing any policies.

    CENDROWICZ / BRUSSELS , L. (2010, 7 8). Will europe raise the retirement age?. . Retrieved from http://www.time.com/time/business/article/0,8599,2002296,00.html

    Q&a: Why the state pension age is rising. (2011, 6 20). . Retrieved from http://www.bbc.co.uk/news/10401174

    Britain’s ageing population. (n.d.). Retrieved from http://www.21stcenturychallenges.org/focus/britains-greying-population/

    70 or bust!-current plans to raise the retirement age are not bold enough. (2011, 4 7). Retrieved from http://www.economist.com/node/18529505

  4. Thank you for posting such an interesting and well-researched article, discussing an issue that is widely talked about! First of all, I feel that this article is very relevant to nearly everyone in the world since most of us will be working sometimes in our lives. As you have discussed in your article, many different countries have taken very different approaches towards the adjustment of retirement age and for most, their approach is to rise the retirement age. For example, Greece, another country within the European Union, is thinking of rising the retirement age to 67 from 65 in order to reduce the deficit in her government’s budget (Crookes, 2012). We can see that different countries in the European Union have taken different approaches towards reducing their government’s deficit.

    Personally, I do agree with your point of view that lowering the retirement age might have been a risky decision but with a different reason. Firstly, I feel that perhaps lowering the retirement age will not narrow the tax basis as your have mentioned because as people are retiring, there will be new workers being promoted and coming into the job market. As long as the number of job positions does not decrease, the number of taxpayers should not decrease.

    Furthermore, the normal retirement age in France is relatively low in comparison to other countries within the European Union. For example, the normal retirement age for the United Kingdome is 68 and for Germany and Norway, it is 67 (“Retirement,” 2012). We can see that the original retirement age for France, 65, is still lower than other European countries and now, after this policy has been enacted, the earliest retirement age is now 60 (Rowley, 2012). This restriction on the retirement age will be several problems for the aging population of France, not only in terms of the increase in pensions for the elderly but also, in other aspects.

    Having lowered the retirement age, it meant that the length of time they could potentially be employed is now shortened, hence the length of time they could generate income is also shortened. This does not only increase the period of time where the elderly could claim their pension, but also meant that some people may not have enough retirement savings in their bank account when they reach the retirement age (Francis, 2012). Hence, this not only increase the years where people claim pension but also made those who have retired, potentially live a tougher life or they are under more pressure to save up and generate a higher income while they are working.

    However, statistical research done by OECD has shown that in France, the percentage of population aged 60-64 are employed is only 12% so some may argue that lowering the retirement age may not have a big impact (“Retirement,” 2012). And since the category is ages 60-64, we do not have any evidence to show that this 12% of population is equally spread across the age range as the data collected could have mostly been between aged 60-62.

    To conclude, I feel that the lowering of retirement age gave a restriction to those who are fit to carry on working as well as for those who wish to occupy themselves with work. It will also have a big impact on the expenditure of the French government. Whether it will reduce the deficit in the government’s budge will depends on whether it will generate more job positions in order to reduce the unemployment rate leading to more taxable income.

    References:
    Crookes, D. (2012, September 26). Greece in crisis: How european debt problems affect you. BBC News: Business. Retrieved from http://www.bbc.co.uk/newsbeat/19727017

    Francis, D. (2012, June 11). How high will the retirement age go?. U.S.News. Retrieved from http://money.usnews.com/money/retirement/articles/2012/06/11/how-high-will-the-retirement-age-go?vwo=501cd

    Retirement. (2012, October 05). Retrieved from http://en.wikipedia.org/wiki/Retirement

    Rowley, E. (2012, June 06). French president francois hollande cuts retirement age. The Telegraph. Retrieved from http://www.telegraph.co.uk/finance/financialcrisis/9314666/French-president-Francois-Hollande-cuts-retirement-age.html

  5. At the beginning, I would like to thank for the author’s well-organized blog post concerning the retirement age.

    Firstly, I agree with the author that lowering the retirement age is very “risky”. Retirement age is the age that when people in that country reached, they are expected to leave the job and enjoy the government benefit for elderly. Lowering the age means that more people are getting the benefit but lesser people are going to work. The major source of the revenue of the government is from the tax income of the workforce. It is a simple equation that increasing the expenditure and decreasing the income will make the loading of the local government even heavier. Take Hong Kong as an example, in 2009, the ratio of workforce to elderly was 1000 to 171 and it is expected to increase to 1000 to 454 in 2039. This implies that the relative expense about the elderly benefit is rocketed three times.

    Also, the retirement age is the baseline to get retire but not meaning people must work until that age. Lowering the retirement age means more people are “forced” to retire, which actually breach the freedom of working when they reach the age of retirement. My family member was one of the examples that are forced to leave the job because of reaching the retirement age. This raise another controversy is that should the retirement age depend on the actual age or the mental age? By 2033, 27% of population in Hong Kong will reach the age of 65. Thanks to the improvement medical treatment, many of them are still capable to work. Restricting them from working will definitely affect our society adversely.

    To conclude, I agree that the retirement age should not be lowered in general. It should be the freedom of the elderly themselves to determine whether they should retire or not depend on their own health condition. A rough idea is that rule can be established: if they pass a health check, they can choose to extend the age of working.

    Reference:

    China Daily(2010, August 17). Rethinking elderly retirement Retrieved from
    http://www.cdeclips.com/en/hongkong/fullstory.html?id=49732

    Commission of Property(2005). Report of the Commission on Poverty
    http://www.cop.gov.hk/eng/pdf/ReportFull(e).pdf

  6. Thanks for your blog regarding retirement age and retirement protection.

    What makes France’s move different from a general cut of the retirement age is, under the new arrangement, with reference to your first paragraph, only those who i) started working at 18 or 19 years old, and, ii) had contributed to the pension system for 41 to 41.5 years will face a lowered retirement age of 60. In my opinion, this makes the new arrangement might seem more socially just but also idealistic.

    First, it might seem more socially just because it could allow blue-collars, whose jobs are usually more physically demanding, to retire earlier. It is reasonably that working in such conditions for long might make their physical health deteriorate more rapidly than the others. Given their physically working conditions, even if they are willing to, their physical conditions may not allow them to continue working at their old age. Thus, it should be judicious of this group of people to retire a bit earlier.

    However, I doubt how this new arrangement will protect the above target group of workers. Regarding the new arrangements, the person who fits into the 2 criteria in the second paragraph will face a retirement age of 60. There seems to be no specifications on the industry or the type of work the person is working. If it is effective on the wrong people, it could be an obstacle in their lives. Also, some who should still contribute to the country’s pension system would not be doing their job.

    All in all, it is understood that there is a rational behind the cut in retirement age. But, in practice, more details specifications might be needed to clarify and set criteria for the new arrangements; otherwise, it could further worsen the economy of France.

    References:

    France to lower retirement age for some. (2012, June 7). The West Australian, Retrieved from http://au.news.yahoo.com/thewest/business/a/-/world/13893125/france-to-lower-retirement-age-for-some/

    National Committee to Preserve Social Security and Medicare. (2012, June 8). Why Raising the Retirement Age would be Dangerous [Video file]. Retrieved October 6, 2012, from http://www.youtube.com/watch?v=xCFmKfKCFbk

  7. Reducing the retirement age would result in fewer taxpayers and thus lowers levels of tax revenue generated for the French government. Concurrently, leading to risen levels of government expenditure on pensions and social security benefits paid to retired citizens. Moreover, the aging population trend further stresses the government’s allocation of resources and in turn, may even worsen the current condition of public deficit.

    In addition, the key objective of this law is to benefit those who began working at a young age and have been continuously contributing to the work force. However, these targeted workers only constitute a small segment of the population. Instead, I believe the government should focus on other groups of citizens who require more attention and assistance, such as women who had children and long-term unemployed. They are in greater need when compared to these targeted workers who have clearly displayed their working capabilities.

    Although I cannot strictly say the government should not lower the retirement age, it can be agreed that it is not a suitable time to implement such measure given the current situation. Furthermore, the consequences mentioned above leads to the question to whether such measure would be effective in benefitting the targeted group or bring about any change.

  8. This is a very interesting topic that will someday affect every single one of us. Although the writer of this blog did a fine job at summarizing and telling us at the facts and possible consequences, I hold the opinion that we should also take a look at the reasons of why the reducing of retirement age has happened in France.

    Numerous countries in Europe (including France) are famous for having benevolent pension rates compared to other parts of the world. With enough pension amounts, the aged workers have less incentive to work when they have met the retirement age. On the other hand, other countries in Asia have less secure pension systems, which also provide less pension amounts. In such countries, aged workers feel that pension fees are not enough to entirely depend on, resulting in the willingness to work as long as they are capable of. This tendency should not be considered as a cultural difference (which some of the other students have mentioned) but a result of different social welfare system.

    In fact, it has been only two years since the retirement age has increased from 60 to 62 under the presidency of Nicolas Sarkozy. The reason of such enactment was similar to the concerns of the writer of the blog, which were decreasing tax rates and government deficits. (CBC News, 2010) However, the enactment met severe disapproval involving violent strikes of which both the students and current labor forces participated. Apart from the probable willingness to work less years in the near future, those against the increase of the retirement age stated that the employment rate of workers aged between 55 and 64 is the one of the lowest (39.0% in the year 2009) among Europe.(OECD, 2012) Thus, they believed that the change in the retirement age is unlikely to bring significant increase in the economic activity or tax revenues.

    Two years have passed, and the current government seems to agree with the protesters to the degree that they are reducing the retirement age back again. Whether this is the consequence of insignificant affects from the previous increase (3% of increase in the employment rate of aged workers 55 – 64) or to get more support from its people is hard to tell, but how other countries of Europe will deal with retirement age is still an interesting topic to keep an eye on.

    References:

    CBC News, France retirement age strike stepped up. (2010, October 18).
    Retrieved from: http://www.cbc.ca/news/world/story/2010/10/18/france-retirement-strikes.html

    OECD, Labor Market Statistics: Employment rates by age group. (2012, October 07).
    Retrieved from: http://stats.oecd.org/Index.aspx?DataSetCode=STLABOUR

    • I found a few errors I’d like to fix but it seems like I can’t edit the comment once I’ve submitted it….
      please erase ‘at’ in line 2
      telling us at the facts and possible consequences,

  9. From my point of view, cutting the retirement age exerts a extraordinary large influence in not only elderly employees, but also the whole society. Therefore, I agree with the author that lowering the retirement age is really a risky decision of France.

    As the last comment mentioned, possibly this policy could solve the unemployment problem existed in the society in the following years. To my mind, it , nonetheless, is a shortsighted and inconsiderate strategy implemented on the society. Inevitably, with sophisticated medical skills which keep extending human life longer and longer and the sense of propagation reluctance, the highly evolved human society is incapable of escaping from population aging. According to a research, it expected that the proportion of population 60 years or older around the world will be increased from 10% in 2000 to 21% in 2050 (Department of Economic and Social Affairs Population Division, 2012). As the trend of population aging is becoming worse, lowering the retirement age could probably reduce the labor force and increase the burden on the government’s shoulder as more resources has to spend on them as the population of retired people will increase.

    To look more precisely, increasing pension fund is not a lesser evil. Eventually it may significantly exacerbate the financial crisis in France. For instance, the French government budget deficit has already existed for 38 years (The Economist, 2012). Meanwhile, the public debt of France is nearly at 146% of its GDP (Bill, 2012). Facing a lot of financial problems, 3.0 billion Euro expense becomes significant to the economy of France. Leaving no attentions, it is foreseeable that France is following the steps of nearly-bankrupt euro cities like Italy and Greece.

    To conclude, I got the same consideration as the author that France is taking a risk decision, which just like a gambling. If all the changes are in the right track, France may still stand strongly as the second largest economy in the Euro zone. However, if the economy of France maintains gradually deteriorate after the risk decision making, France may easily fail in a worse situation.

    Reference:

    Department of Economic and Social Affairs Population Division(2002). World Population Ageing: 1950-2050
    http://www.un.org/esa/population/publications/worldageing19502050/pdf/62executivesummary_english.pdf

    The Economist (2012, Sep 8). The French budget: One cheer Retrieved from
    http://www.economist.com/blogs/newsbook/2012/09/french-budget

    Bill, B. (2012, July 24). France’s debt crisis could doom the European Union Retrieved from
    http://www.csmonitor.com/Business/The-Daily-Reckoning/2012/0724/France-s-debt-crisis-could-doom-the-European-Union

  10. Thank you for bringing up the issue of retirement age, which has been a controversial topic under the circumstance that many developed countries are now encountering the aging population problem.

    I agree with your view point that a cut down in retirement age could shift the job vacancies to the unemployed. However, the effectiveness remains in doubt since only 15% of people above age 60 are still working. On the other hand, the policy would exacerbate the fiscal position of pension system.

    First of all, the actual age at which people stop working is usually a few years earlier than that of actual legal age of retirement. According to OECD statistics, the average actual retirement age in France was slightly under 60, as compared to 64 of most OECD countries, . It is foreseeable that the actual retirement age in France would further decrease as a consequence of legal retirement age cut.

    Second, the amount of time French people spend in retirement is the longest among all OECD countries: 28 years for women and 24 for men. Such time would be lengthened under the new policy with no doubt.

    [img]http://www.oecd.org/media/oecdorg/directorates/directorateforemploymentlabourandsocialaffairs/44984734els%20chart5.jpg[/img]

    Public pensions make up 85.4% of French people’s retirement income, which is also the highest among OECD countries. As a result, the decrease of actual retirement age and lengthening in retirement years stated above would definitely lead to increase in pension system burden.

    [img]http://www.oecd.org/els/pensionsystems/44971294.xls[/img]

    The cut in retirement age is not only risky but also a whitewash of the recent historical high unemployment rate in France. Precisely, the cut down of retirement age is not creating new jobs, but only shifting the existing job from people aging 60-62 to the unemployed. It only creates greater demand for public pension system, of which the burden is bore by either the government or the workforce. It does not solve the unemployment problem form the root but only shift it elsewhere. Such policy is nothing more than burying the head in the sand.

    Apart from the increasing public burden on pension system, the policy also deprive Apart from the aggravation of pension system burden, the policy also drive people of the choice to work. I agree that it benefits the labor with jobs that are physically demanding. Nevertheless, there are many other jobs which involve a much lower and affordable degree of manual. Cutting the age of retirement means that people who enjoy working in later age are forced to retire.

    To conclude, it seems that the cons of lowering of retirement age overweight the pros. The policy result in higher burdens on pension system as well as restriction to people who are still willing and be able to work. It seems that it is more a ‘promise made, promise met’ made by the newly elected left-singed government, rather than a policy that involved long-term sustainability concern.

    Reference:

    French cuts pension age for some despite EU unease. (6 June 2012). Reuters. Retrieved from http://uk.reuters.com/article/2012/06/06/uk-france-pensions-idUKBRE85517A20120606

    Pensions in France and abroad: 7 key indicators. (2009). OECD. Retrieved from http://www.oecd.ord/els/pensionsystems/pensionsinfranceandabroad7keyindicators.htm

  11. Thank you for bringing up such an interesting topic, which raised several interesting comments. It was an interesting read and very thought provoking at the same time.

    To start of, I would like to point out that this move by French’s newly president, Francois Hollande, is a controversial one as it undoes former President, Nicolas Sarkozy’s, efforts of raising the retirement age from 60 to 62 back in 2010, which was aimed at reducing heavy government debt amidst the Euro crisis. In fact, back in 2010, many economists complained that the retirement age was now raised far enough. Although France’s deficit is about 4.5 % of GDP this year, which is less that the 7.10% deficit in 2010, (http://www.datosmacro.com/en/deficit/france) , comparing the statistic for the year before 2010, it is still relatively high.

    As mentioned in one of the comments, the enactment by Sarkozy in 2012 was met with much disapproval and insignificant increase on alleviating the tax deficit. However, I believe that in the long term, a higher retirement age will have a more positive France more than a lower retirement age, as it puts the system on sounder fiscal footing. Here are the reasons why.

    Firstly, as what the author of this post said, France will have to spend ore on “state-sponsored” pension checks, which is predicted to cost France more than $1.25 billion. According to Allianz, France’s problematic pension problems is a consequence of its ageing population. Currently, the government spends 14 percent of its GDP on them. I believe that although Hollande may mean well for the country, however the consequent raising of taxes to finance the increase payouts would actually cause more burden to the working population of France, especially in the current Euro crisis. It could be a potential costly mistake. Secondly, by having a higher payroll taxes to pay for the increased pensions, labour costs would be raised (Wall Street journal, 2012). This reduces France’s economic competitiveness greatly, when many other European countries are trying to cut down on its labour costs. As such, in the long run, the new policy may not help better the budget deficit. I feel that Hollande, who favours tax increase, should focus on reducing it’s national expenditure instead. Not only may increasing tax payroll create disincentive for the current and new working population to work, it may also discourage investments in France, and as a result, have a detrimental effect on the deficit.

    To conclude, I agree firmly with the author that it is a very risky decision made by the France government. Especially in this Euro crisis, every decision made should be meticulously planned and analysed before hand. Whatever it is, we will be able to tell the impact of this policy in time to come.

    Reference:
    CNN (2010, April 20). Five things to know about the French election. Retrieved from
    http://edition.cnn.com/2012/04/20/world/europe/french-election-five- things/index.html

    The Wall Street Journal (2012, June 6). France gives workers more benefits. Retrieved from

    http://online.wsj.com/article/SB10001424052702303753904577450000181349894.html

    Allianz (2010, June 18). Population trends in France. Retrieved from
    http://knowledge.allianz.com/demographics/country_profiles/?286/population-trends-in-france

  12. Setting of retirement age is always a debatable issue among many societies. Thank you for sharing the situation in France and to allow us knowing more about the situation in other places than Hong Kong.

    I think that France should lower the retirement age as the greatest problem that the French Government currently facing is not the European economic crisis, but from the high unemployment rate of the youth.

    First, although France is suffering from the economic crisis like other European countries, the major economic problem is that the youth generation’s unemployment rate is greatly higher than the unemployment rate of the whole country. It has reached 26% while the average unemployment rate is around 10%.

    Such a problem will cause unstable situation to the society. When the youth generation cannot get placements from the job market, it would be a waste of manpower. The jobless youngsters tend to protest to voice out their opinions that would increase the instability of the society. Moreover, the middle-level managers are always in that position causing the youth generation cannot promote to higher places. The unstable condition caused can greatly affects the well being of citizens and society.

    Therefore lowering the retirement age can allow more youngsters to fill in the job vacancies from the population, as well as more of them can work and will get more satisfaction from job and would not cause some anti-society protest or activities that would cause trouble to the society. It can utilize the manpower as well. Although the pension pool would be decreased, adding the proportion of salaries that each worker needs to pay can restore it. When the country citizens are satisfied, it can lead to a more stable structure no matter for the economy or families. A more stable political situation can be achieved so that more different policies can be carried out effectively.

    References:
    StarTribune Business. (2012). Unemployment in eurozone hits record high as recession deepens (2010). Retrieved 1st October, 2012, from
    http://www.startribune.com/business/172207861.html?refer=y

    Reuters (2012). 3-French joblessness tops 3 mln for first time in 13 yrs (2012). Retrieved 26th September, 2012, from
    http://in.reuters.com/article/2012/09/26/france-jobless-idINL5E8KQ3Y420120926

  13. Thank you for posting and sharing your views on this case. However, one interesting aspect of this case took my attention and I would like to present it here.
    In 2010, when Mr. Hollande’s predecessor, Nicolas Sarkozy proposed an increase in the retirement age to 62 from 60, though it was welcomed by the financial markets but the reform faced strong opposition from public including major strikes in oil refineries, schools and public transport. Now, when the new Socialist government has reversed the retirement age to 60, the opposition is criticizing for potential burden over the welfare system.
    Hence it seems that we have to evaluate the reform from economic as well as social aspect. I agree that this change may over burden the social welfare system but we must not forget that government is fully committed to meeting the targets. According to them, not more than 110,000 people would be added to the pension rolls each year and the costs will be funded by a 0.1 percentage in payroll charges.
    Furthermore, the new employments created would be helpful towards decreasing the unemployment rate and they would also be a contribution to the tax revenue.
    The government proposes this reform as an act of social justice and is committed to achieve its targets. We must not forget that the oppositions and the unpopularity of the previous reform caused the government to take this step. Moreover, it is applicable to only a certain proportion of people who started working as teenagers and it would be socially justified that they be retired at age 60.

    References:
    Report on French union’s strike on President Nicolas Sarkozy’s efforts to increase the retirement age:

    BBC news articles:
    http://www.bbc.co.uk/news/world-europe-18337884
    http://www.bbc.co.uk/news/world-europe-11632144

  14. Thank you for the informative blog and also insightful comments arousing my attention to this issue. This issue has been broadly discussed in many parts of the world, including Hong Kong due to the change in population structure and also the changes of the economic situation. I would like to add to the side note that the retirement age in HK is 65 only to those under the Mandatory Provision Fund Schemes Ordinance (“Mandatory provident fund,” 2011) but for the civil servants, the retirement age is 60 years old unless under special circumstances (“Retirement,” 2007).

    Before I make a conclusion to whether I agree to cutting the retirement age, I would like to consider the problems brought by doing so. First you have already stated that while cutting the retirement age, the working force in France will drop depending on the amount of people affected. Usually, the Salaries tax contributes to a big proportion in the Country’s income, if the number of working population decreases, the amount of Salaries taxes collected would inevitably decrease. Adding to the fact that France is under the pension system, which means if the employees have been working for 40 years their pension upon retirement will be 50% of their salaries. Hence if the retirement age is cut to 60 years old, the government will need to distribute the retirement pension to the people who have retired for additional 2 years, creating extra financial burden to the French government. Some might argue that this would not be a big problem for them because the additional payment is only for 2 years compared to the lifetime pension to the retired, but we should not ignore the fact that the French government has been experiencing a financial deficit of 91 billion Euros in 2011, equating to 5.2% of the country’s GDP. It has also been shown that the government GDP has been as high as 1.72 trillion Euros, equating to 85.5% of GDP at the end of 2011 (Buffery, 2012). Which more or less shows that the French government would not be able to take up the extra burden brought by the cutting of the retirement age.

    Another problem the French government have to realize is that there is an aging population problem and also an increase in the life expectancy in the country. For the aging population problem, according to the National Institute of Statistics and Economic Studies for every 100 inhabitants aged between 20 and 59 in 2050, there will be 69 inhabitants aged at least 60, double the 2005 ratio (Insee, 2006). Meaning that the number of people receiving the pension will increase gradually. As for the life expectancy, the life expectancy at born was reported at 81.37 years old in 2010 and due to a rise in the life expectancy from year 2004 to year 2010 (“Life expectancy at,” 2010), I would predict that the life expectancy continues to rise over the years meaning that in the long run, the French government would have to pay out the pension for a longer period of time to each of them.

    The last thing I would like to point out is that the retirement age in France is comparably lower than most of the countries. When we look at the graph provided by the Organisation for Economic Co-operation and Development. The official retirement age is only 62 compared to 65 in most countries (“Ageing and employment,” 2011). While Looking back the retirement plans the government made, it can be found that the retirement age has just been risen to 62 back in 2010 by the President Nicolas Sarkozy (Bennhold, 2010).

    To conclude, I agree that the French government shouldn’t have much incentive to reduce the retirement age and I personally agree to your views that cutting the retirement age can be risky. However, as this law only applies to certain workers, who have contributed to the pension fund for 41 to 41.5 year and have entered the workforce at the age of 18, I might say that the number of people affected would be very limited and hence the effect to the government is negligible. I would say it still is worthwhile considering if the French Government has done enough to prove the extra expense is insufficient to cause heavy burden to the government over a period of time. It can also provide an incentivize function to the citizens saying that the French government is still caring and considerate to its citizens, reducing conflict between the government and the general public.

    Ageing and employment policies – statistics on average effective age of retirement . (2011). Retrieved from http://www.oecd.org/insurance/pensionsystems/ageingandemploymentpolicies-statisticsonaverageeffectiveageofretirement.htm

    Bennhold, K. (2010, Sep 15). France moves to raise minimum age of retirement. The New York Times. Retrieved from http://www.nytimes.com/2010/09/16/world/europe/16france.html?_r=0

    Buffery, V. (2012, Mar 30). France beats deficit target for 2011 . Reuters. Retrieved from http://uk.reuters.com/article/2012/03/30/uk-france-deficit-idUKBRE82T09P20120330

    Insee, I. R. (2006, Jul). Population trends in france – looking ahead to 2050 – an increasing and ageing population . Retrieved from http://www.insee.fr/en/themes/document.asp?ref_id=IP1089

    Life expectancy at birth; total (years) in france . (2010). Retrieved from http://www.tradingeconomics.com/france/life-expectancy-at-birth-total-years-wb-data.html

    Mandatory provident fund. (2011, Nov). Retrieved from http://www.gov.hk/en/about/abouthk/factsheets/docs/mpf.pdf

    Retirement. (2007, Feb 26). Retrieved from http://www.csb.gov.hk/english/admin/retirement/183.html

  15. Thank you for your informative and insightful post.

    I do agree with you that lowering the retirement age in France is a risky decision. However, I have a different opinion to your point that cutting retirement age can solve the problem of youth unemployment, assuming that the top management level is saturated with older generations. Since a lot of the older generations are born in the period of post World-War II baby boom, it is only a matter of time for this large group of people to meet the retirement age. More job vacancies will be provided by then; meanwhile the social mobility will be regulated. Therefore, this new policy can only impose a short term positive effect to the unemployment problem.

    While this new policy contributes in lowering the local unemployment, it creates more long term social problems. In fact, a lot of people are still fit for work at the age of 60. They may have saving plans for their retirement or family commitments which require them to work over age of 60. Blue collar workers may seem to have benefits from this new arrangement. However, they may not have enough savings for their retirement. Further government welfare and subsidy may be required which will add financial burden to the society. In long term, in face of the problem of ageing population and low fertility rate, there may not be enough working population to support the society. Therefore, it is unwise for the government to lower the retirement age.

    The French government may consider taking alternative approach to tackle with the problem of public deficit and unemployment. For instance, the current tax and welfare system could be reviewed and adjusted to enhance its source of earning and reduce public expense. The government shall also pay attention to birth control in order to have better allocation of limited resources.

    Reference

    Eurostat. (2011). Population structure and ageing. Retrieved from http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Population_structure_and_ageing

  16. Thanks for your sharing, Che Yan.

    It is really debatable whether France should cut its retirement age or not. In fact, such an action will affect the interests of different stakeholders, including the government, young workers at the bottom, those “elderly” who are still working, and so on. Personally, I am not in favor of such a reduction of retirement age as of the aging population. The government has to pay more and more on the social welfare, and it will affect the economy of France eventually.

    I do not agree with your point that “cutting down the retirement age in France will undoubtedly create more job vacancies for youngsters”. Reducing retirement age does not necessarily mean that there will be more jobs for the young people. According to the INSEE national statistics office, youth unemployment rate has increased from 22.4% to 22.7%, and the government itself even has to launch a scheme to create around 150,000 state-subsidized jobs for the youngsters to lower the unemployment rate. It can be seen that such a reduction of retirement age does not benefit a lot to the young people.

    All in all, I do not think that the cut of retirement age is a move of “social justice”, and it will lead to a burden of the social welfare system.

    References:
    http://www.reuters.com/article/2012/09/06/us-france-economy-unemployment-idUSBRE8850AQ20120906

    http://articles.philly.com/2012-06-07/news/32102101_1_retirement-age-pension-system-pension-requirements

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