Proposal to cut retirement age to 50 misses the point

Golfers at work. Retirement should be about quality of life not job creation. [XN Iraki]

A bill proposed by a young lawmaker seeking to lower the retirement age of civil servants from 60 years to 50 ostensibly to create jobs makes political but not economic sense.

To the layman, this is good news as the jobless will finally have a chance to get a public service job that is permanent and pensionable.

The public jobs are coveted, particularly in the rural areas where the first salaried men and women are civil servants, from teachers to chiefs and policemen.

They have a higher quality of life and unlike those in the private sector, the majority are seen to work less for their pay.

To most rural folks, such employees do not really work, and they don’t get “tired”.

Public service jobs are secure compared with the private sector where performance is job security. 

Add the pension part and public jobs become even more attractive.

We are paid pension after retirement, part of which is from our own savings. This old-age financial security can make a big difference when we are less energetic.

For the vast majority, retirement and the rest of their life is a continuum; there is no difference.

The dream of every young person is to get a formal job, work till retirement then rest and age gracefully.

The reality on the ground is that unemployment is high and public service jobs or government jobs are seen as the last bulwark against unemployment.

That cadre of employee number about 700,000 including teachers, the police, soldiers and county employees. Most Kenyans think the number is much higher.

The public sector employees used to retire at 55 years.

But the government raised the age to 60 to forestall a huge demand in pension.

This makes economic sense, such workers are still productive. With a pension, one is paid ideally for not “working”.

The MP is, therefore, assessing the right problem with the wrong solution. The problem is joblessness, not retirement age.

The proponents of lowering retirement age might as well say more Kenyans should die to create vacancies.

Let us use data to distil the truth from an emotional debate.

If in the unlikely event we sacked all the 700,000 civil servants and created that number of jobs, it’s still a drop in the ocean.

From the CIA website, Kenya working population (age 24-64) is 38 per cent of the population. Do your maths, the population of Kenya is about 50 million.

Thirty-eight per cent gives you 19 million, while 700,000 out of 19 million gives you 3.68 per cent or about four per cent

Where will 96 per cent get jobs from? Better yet, where do they work now?

Focusing on four per cent of employees in Kenya in job creation is very “local thinking”.

Biggest driver

This percentage would even be lower because of the Government, both national and county, often over employ.

The bigger issue is not retirement age, it’s economic growth. Retirement age is a sideshow.

In Japan and many European countries, retirement age is in the upper 60s because of the shortage of labour. It’s 67 in the US, Japan, and the UK.  

The nations’ bigger fear is that they don’t have enough young people paying pension for the retired.

If our economy grew fast enough and population growth was not as fast, we would have enough jobs for almost everyone without retiring people early.

We would even import workers from other countries. Why do Kenyans go to work in the US, the UAE and other countries?

The biggest driver of economic growth is the private sector. That should be our focus, not retirement age. 

How do we help Kenyans build new enterprises? How do we ensure there is demand for our goods and services and jobs thereof?

Treat entrepreneurs

Remember the private sector creates the 700,000 jobs in the public sector through taxes; both county and national governments do not invest.

One way to create more jobs is to treat entrepreneurs with respect. We treat our parents with respect because they took care of us, paid our fees and much more.

They sponsored our lives. The governments should treat their sponsors, the taxpayers, with respect.

Don’t we treat our cows well to get more milk? Jobs are created when we produce and sell something in the local market or abroad.

Walmart, the supermarket chain had 2.2 million employees last year.

Amazon had about 650,000 and Toyota about 370,000. Noted how other nations create employment through exports? Yet, we love imports.

Let Kenyans work up to the age of 60 and beyond. At 60, most people are still very energetic.

After all, we do not just work for money but for the satisfaction we get out of that job. Once we expand the economy, we could raise the retirement age further.

-The writer is an Associate Professor who teaches at the University of Nairobi