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Britain
has aged during the twentieth century. The age structure of the British
population has shifted toward older age groups; high youth unemployment
has increased the pressure on these age groups to withdraw from the
labour force. With financial support from the ESRC, CEPR Research Fellow
Pat Thane organized a workshop on 11 January to discuss the
institution of retirement during the present century in the light of
historical experience. The
morning session commence with an overview of the economic aspects of
retirement by Paul Johnson (LSE and CEPR). In 'The Economics of
Old Age a Long Run View 1881 1981, Johnson contrasted three'
interpretations of retirement. The functionalist approach suggests that
the old retire when they can no longer effectively compete within the
labour market. The liberal view interprets retirement and pensions as
the distribution of an increased prosperity by an enlightened society.
There is also a radical critique of these views, which argues that
poverty and dependency in old age are socially created, and that
retirement and pensions are a means of social control. Johnson
argued that none of these views adequately describes or explains the
dramatic fall over the last hundred years in the labour force
participation rates of the elderly in Britain. Data on the employment of
males aged 65 and above, drawn from the Census returns from 1881 to
1981, show that changes in retirement rates do not clearly coincide with
the introduction or extension of the state old age pension scheme, nor
with more direct efforts by government either to encourage older workers
to stay in the labour force or to promote premature withdrawal from
work. A cross-sectional analysis by occupation of elderly employment
since 1881 shows that old workers have been consistently forced into
marginal, low-wage occupations such as labouring and agricultural work,
suggesting that they stay in the labour market because of a lack of
alternative resources. Even among those who do retire, economic
insufficiency is the norm, with the majority of elderly people today, as
in Edwardian times, living in poverty; for this group the life-cycle
theory of savings seems inapplicable. Johnson concluded that the scope
for individual economic provision for old age, either through more
private saving or continued employment, was still slight, and the
elderly were likely to be a growing financial burden on the state. He
went on to advocate more cross-sectional work on census data in order to
increase our understanding of changes in retirement behaviour. Workshop
participants agreed that class differences were significant.
Working-class retirees were faced with problems of poverty, while the
middle classes often viewed retirement as a valuable period of leisure.
In addition, those with important skills were often able to negotiate a
convenient time of retirement, which added another important dimension
to the analysis. It was also suggested that any economic model should
include the influence of the state on the attitudes of the labour force,
though this might prove difficult to measure. In
the discussion, Jon Stern (DHSS) questioned Johnson's criticisms
of the life-cycle savings model and suggested that the applicability of
this model may have changed over time as income has increased. Stern
also thought that the level of disaggregation of the data - by broad
occupational group -was too limited. It was agreed that a major obstacle
to research in this area is the absence of a longitudinal sample of
personal income and wealth, such as is available in the US. Nicholas
Bosanquet (York and CEPR) stressed the need for more research at the
micro-economic level in order to show the impact of non-governmental
factors like personal saving and occupational pensions on retirement
behaviour. Leslie
Hannah (LSE and CEPR), in presenting his paper The Role of
Occupational Pensions 1900-1980, stressed the wealth of data
available In the records of occupational pension funds, which
researchers have neglected. Hannah traced the development of these
occupational pension schemes. Their growth was associated with an
increasing bureaucratization of employment, and the development of
internal labour markets within firms. He maintained that the institution
of fixed retirement age could be attributed to the structure of
occupational pension schemes. Salaries in bureaucratic enterprises were
often steeply graded according to seniority, and this gave rise to a gap
between wages and the productivity of older workers. Discussants
agreed that the possible taxation of pension funds and the growth of
individual insurance schemes might force organizations to abandon
occupational pensions. Tom Schuller (Institute of Community
Studies), however, questioned Hannah's view of decision-making by large
organizations. Schuller's own research into the retirement policies of
companies had revealed that employers had little knowledge of the costs
of pension arrangements, and this ignorance did not accord with Hannah's
view of the economic rationality of employers. Hannah agreed that this
was a crucial issue. He suggested that where employers required a formal
retirement policy merely to secure acceptance of a mandatory retirement
age, they may have selected pension schemes in a rather arbitrary
fashion. Dulcie Groves (Lancaster) turned the debate towards
pension provisions for female workers. The current increase in the rate
of divorce had made this issue very topical. She noted that the right of
divorced women to share in the pension of their former husbands was
currently under review; it was complicated and required further
research. The morning session concluded with a brief discussion on the
relationship between the age of an industry, the age of the workforce,
and the introduction of a formal pension scheme. This area also needed
further investigation. Vanishing Spinsters In
The Vanishing Spinsters: Women and Pensions 1937-59, Dulcie
Groves (Lancaster) discussed pension provisions for women, a subject
largely neglected in the morning session. This years 1937 to 1959 are of
particular Interest. During this period the number of single women of
working age declined sharply. Groves argued that changes In the
proportion of spinsters in the labour force significantly influenced the
recognition of female pension rights. The first World War had created a
group of single, surplus women who had been obliged to enter the labour
force. During the 1930s these women campaigned for the reform of women's
pension rights. As single women, they were perceived by society to have
a 'legitimate' reason for taking paid employment. This legitimacy
assisted their campaign, and a state pension for women at age 60 was
introduced in 1940. After the Second World War, however, the numbers of
men and women were more evenly balanced, and the social climate favoured
early female marriage. This encouraged women to enter the labour force
before marriage and to return to it after they had completed their
families. In addition, many married women chose not to pay full National
Insurance contributions, and this helped maintain the perception of
women as financial dependants. During the 1950s, although the Labour
Party's superannuation proposals considered female pension provision,
women themselves appeared more concerned with improving widow's benefits
than pension rights. Groves argued that these attitudes were consistent
with the low proportion of single career women in the workforce. During
the discussion, it was agreed that the crucial factor affecting female
pensions was women's part-time employment, which arose from family
obligations and social pressures. Current evidence suggests, however,
that even if there were no obstacles to pension rights for part-time
workers, most women would still opt out of such schemes. Female
perceptions of themselves thus enforce their already dependant status. Pat
Thane
(Goldsmiths College and CEPR), in her paper' Ageing and the Economy
-1948-1964', outlined four subjects for investigation: why the elderly
leave paid employment, how they make the transition from full-time
employment, what positive contribution they make to the economy when
retired, and what effects changes in the age structure of society have
on the economy. After the Second World War it was recognised that the
population structure of Britain was shifting towards older age groups.
This led to intense interest and research into the potential social,
economic, and political effects of such a shift. The labour shortage in
the post-War period had led these researchers to advocate later
retirement ages, and indeed the Ministry of Labour had called for
delayed retirement. By the early 19605, the calls had subsided. The
trend towards earlier retirement continued, aided by the labour boom of
the early 1960s and the extension of state pensions. Thane concluded
that the pattern of retirement was influenced by the state, by
employers, and by individual preferences, and of these three factors,
government seemed to have the weakest effect. Similarly, survey evidence
from the 1950s indicated that individuals did not object to the concept
of retirement, but to mandatory retirement at a pre-determined age. They
also preferred a period of lighter or part-time work prior to full-time
withdrawal from the labour force. Thane suggested that the continuing
trend towards early retirement was influenced by structural changes in
industry and pressures from management. These resulted in an increasing
pace of work and less control by workers over that pace. Older workers
found this particularly stressful and were often forced to abandon such
employment before the mandatory age. In addition, there were fewer jobs
available involving only light labour which had formerly provided a
transition to full retirement. Chris
Phillipson
(Keele) argued that the 1950s survey research had employed a naive
methodology. The State played a major role, he argued, in retirement
patterns through its control over employers. Other participants felt
that while historical data were useful, their interpretation was
problematical. British evidence was cited suggesting that a transitional
period prior to full retirement created social and economic difficulties
for the individual. Lynes produced evidence from France and Sweden,
however, illustrating the popularity of such schemes. The
final paper, 'Managing the Transition from Employment: Questions for
Today', was presented by Tom Schuller (Institute for Community
Studies). He suggested that the transition from full-time employment to
retirement was a complicated process which varied in length and nature
and moved through specific phases before the Individual attained
stability. The roles played by the State, the employer, unions, and the
individual should be analyzed simultaneously. Some measure of the
prevalent attitudes and expectations about retirement should be included
in the analysis. Schuller pointed out that individuals often had
difficulties in forming coherent ideas about retirement, both because of
short planning horizons and because of a lack of experience of the
nature of retirement. Since the retired have little contact with the
unemployed and retirement is generally irreversible, many people enter
retirement with little idea of how they will be socially and
psychologically affected by the absence of daily paid work. Jon
Stern
questioned the benefits of combining within the same model economic and
statistical data with attitudinal, ideological and behavioural evidence.
He doubted whether the latter material was relevant for policy research.
While Schuller conceded the difficulty of measuring workers' attitudes,
he maintained that both the transition period and the changing
perceptions of retirement contributed an important dimension to the
understanding of the aggregate data. Individuals clearly experienced
difficulties in restructuring their lives outside the routine of
employment; further research into individuals' 'time management' would
be beneficial. The workshop concluded with an assessment of the proceedings. It was agreed that the integration of historical, social and economic data, though difficult, was important and stimulating. Participants expressed fears that pension schemes and retirement were about to be restructured without sufficient knowledge of the effects of either the current or the proposed arrangements. The papers revealed that while there are important social, economic and ideological forces and constraints affecting retirement, we know little about their interaction at either the individual or the aggregate level. The present century offers an opportunity for such analysis. Despite changing social and economic conditions, there has been a gradual but steady increase in the withdrawal from the labour market of men and women still able to contribute to the economy.
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