ABOUT five years ago, I facilitated a workshop for senior civil servants who were approaching retirement. One of the small group activities was for them to brainstorm and generate ideas that would help to make their retirement years more pleasant and healthy. One thing that struck me about the list that was prepared was the number of special concessions that they were requesting.

These included concessions on travel, motor vehicles, health care and cooking gas. I advised them that it would be hard to convince our taxpayers to take on these additional costs when we could not even properly fund the basic educational process that was intended to prepare young people to be productive members of society.

I made a counter proposal that they request low-interest loans, about half a million dollars per person, to be used as seed capital to start businesses. These enterprises would give them a chance to put all the skills and ideas that they had developed over years of productive labour.

They would be expected to employ at least two young people within the first year and to develop a programme to transfer some of their well-honed work-related attitudes to these young people. They would provide the brains and heart with the young providing the hands and feet, a win/win package.

I explained then that money was being inefficiently directed at young people who had little education, limited skills, and poor work attitudes with the expectation that they would become entrepreneurs. I believed then and now that this money could best be cycled through retirees as they were tried and proven.

More importantly, this activity would keep the retirees active and healthy, and provide them with income which they would need because chances were they would be living for much longer than any of their retirement plans had anticipated. Naturally, my idea got no traction.

The origins of retirement

We are on the threshold of a crisis. The roots of the modern concept of retirement go all the way back to the era of Germany’s Otto von Bismarck, who founded the first welfare state in 1881. At that time, the average worker toiled in a factory and the average life expectancy of 45 years. Retirement age was set at a point where few persons would actually live to get the full benefits. For those few lucky enough to reach the age, it was conceived as a small recompense for physical and mental exhaustion.

Using this same rule, today’s retirement age could be set at 95 years. In 1900, only four per cent of the world’s population was over age 65. Today, that figure is up to 13 per cent. Today in the USA 4.5 persons are working to pay every pensioner. By the year 2030, the projections are 1.7 persons in the workforce for every person on pension. Today there are about 70,000 people who are 100-plus years old. They make up the fastest-growing age group of Americans. This group has tripled in the last two decades.

The leading edge of the crisis

In a recent issue of Newsweek Magazine (January 30, 2006) Stefan Theil explored the implication of these demographic shifts in developed countries. In the USA and Europe, they are beginning to look at making serious adjustments to their pension plans and prescribed retirement age.

In the last year Belgium, Italy and France have all experienced massive protests against pension reforms that would, among other things, have raised the retirement age. In Germany, political resistance has forced the new government of Chancellor Angela Merkel to go slow on efforts to raise the official retirement age from 65 to 67; the plan now is to increase it by one month a year between 2008 and 2032.

Many firms are already preparing for the demographic shift. In Japan, the world’s most rapidly aging society, the number of people between 15 and 64 is expected to decline by an average of 740,000 a year for the next decade. Corporations like Canon and Mitsubishi have already started rehiring their own retirees, as the pool of young job applicants shrinks.

The trends are the same all over the developed world. DaimlerChrysler, whose share of over-45 workers will have risen from 41 per cent in 2002 to 68 per cent in 2011, has set up an Aging Workers Task Force, made up of human-resources managers and health counselors whose main job is to make sure that employees stay productive longer.

Contrary to still widespread stereotypes, there is very little hard evidence to suggest that companies cannot stay competitive with a rising share of older workers. When Danish retailer Netto set up three “oldie” supermarkets, where at least half the staff is over 50, absenteeism went down and customer satisfaction up.

The same thing happened at British hardware chain B&Q, whose “elder worker” stores in Manchester and Exmouth were 18 per cent more profitable than its regular outlets – due in part, the company says, to six times less employee turnover and 60 percent less pilfering and breakage. These are meaningful numbers.

To get around one of the main drawbacks of pay systems that often award workers based on seniority more than performance, some companies are introducing “peak wage” contracts that gradually reduce pay past the age of 55 or 60, often combined with fewer working hours.

That kind of flexibility is becoming increasingly popular in Japan, where Nomura Securities in December became the latest company to announce such a programme. Starting in April 2006, all employees who wish to work past retirement can be rehired after 60 at more-flexible hours and pay, and often in a different job.

The surprising news for many younger workers who are dreaming of a life beyond the “rat race” is that most seniors are happy to be working. In America, two thirds of the ‘working retired’ say they return to the job because they want to, not because they have to. When Finland raised the retirement age in the 1990s, polls showed that most Finns saw working longer as an opportunity to stay integrated in a social life often centred on the workplace.

The crisis for Jamaica

My prediction is that Jamaica and other developing countries will also be impacted in other ways. The developed world will soon begin to adjust their immigration policies to attract more young skilled persons from high birthrate countries.

So while we prepare ourselves for the longer work life and more flexible hours, we will need to also considerably increase the number of people who leave secondary schools who are able to meet matriculation criteria. This will allow us to increase the number of our skilled and professional classes to not just replace those who choose to migrate but to meet our own local needs.

We will also be able to enter into bilateral arrangements with organizations and companies in low birth rate countries to train people specifically for their needs. This will ensure that they pay for the training provided and that Jamaica is compensated. As the prices for sugar and bananas go down, we would get a premium for educated and skilled Jamaicans.

Dr Semaj is a frequent facilitator for strategic planning retreats, cultural alignment and organisational restructuring. He conducts staff selection and development programmes for different business sectors across the Caribbean