Friday 27 June 2014

Australia wants to raise retirement age to 70

But many seniors oppose proposal; experts fear it may worsen youth joblessness
The Straits Times, 26 Jun 2014

CANBERRA - Australian Treasurer Joe Hockey wants to raise the country's retirement age to 70, the highest in the world, to prevent an ageing population from draining state coffers.

Mr Hockey is part of the Liberal-National coalition that won power last September pledging to end what he called the nation's "Age of Entitlement" and to repair a budget deficit forecast to reach A$49.9 billion (S$58.5 billion) this fiscal year.

Australia is leading the charge for a group of advanced economies from Japan to Germany that are pushing up the retirement age to head off a time bomb caused by a growing army of pensioners and a declining pool of taxpayers.

Ageing Australians, however, baulked at Mr Hockey's plans.

"Good luck with that," said miner Noel Chatterton, who at 48 will be among the workers who would be affected by the proposed change. "The way my body is, I'll be lucky to be able to work until I'm 60, let alone 70."

The ratio of working-age Australians to those over 65 in the world's 12th-largest economy is expected to decline to 3:1 by 2050 from 5:1 in 2010.

"While Australia is the first to raise the age to 70, it won't be the last," said Mr Steve Shepherd of international employment agency Randstad Group.

Retirement ages are creeping up elsewhere across the globe too. Germany and Britain both plan to raise the age to 67 from 65. In the United States, the eligible age to collect Social Security is rising to 67.

"We should celebrate the fact that Australians are living longer, but we must prepare for adjustments in our society," Mr Hockey said in his May 13 budget speech.

Under his plan, Australians born in 1966 or after will have to work until they are 70, from 65 now, before they can draw their government retirement allowance.

The government will have to get the Bill through the Upper House. The opposition Labor Party has signalled it will vote against the proposal.

Ms Yasmin Keany, 23, who moved to Melbourne four years ago hoping to start a career in arts conservation but is now unemployed after working as a part-time cook, said: "I know a lot of people in their 30s who are still trying to break into the industry but have been forced to work in hospitality.

"If there are a lot more old people looking for jobs, it's only going to get worse."

The decision to increase the retirement age is only going to exacerbate unemployment among the young, said Mr Chris Riley, chief executive of Youth Off the Streets, a Sydney-based organisation that provides accommodation and counselling. "We're wilfully creating a jobless generation."

But the longer years at work can help boost the economy, said Mr Saul Eslake, Bank of America Merrill Lynch's Melbourne-based chief economist for Australia. "If people are working longer, they will be earning and spending more, which creates more jobs."

Monash University researcher Veronica Sheen said many employers will baulk at hiring workers in their late 60s. Ms Joan Chapple had that experience, losing her job when she was 55. She spent three years unemployed and one company told her it was not looking to hire "old people".

"Not everyone wants to or can work for that long," she said. "What's stopping the politicians from later changing the age to 75? How far can they go?"

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