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Retirement age cut a quick fix, makes no economic sense

Xn Iraki
The basis of retirement should be productivity, not age. We can easily measure your productivity despite grey areas, particularly in service delivery. [iStockphoto]

Kenya has a population of about 56 million, with the productive age group (15-64 years) making up about 59 per cent.

This translates into about 33 million people. Public sector workers are about 900,000, which accounts for only 2.72 per cent of the productive group. Why does this analysis matter?  

If we reduce the retirement age to 55, we shall only affect this small group, a trickle in the job market. Why this contemplation? 

One, it could be political. The ruling elite can remould the civil service to suit their preferences by retiring workers early.

It’s more like the renewal of top cadres of the government after an election. This includes ministers (why are they called cabinet secretaries?). Just because they are called that in the US? We can’t pick a Swahili name?  

It is also politically popular to say: “We shall create jobs.” And the youth are looking forward to that. In the 2027 polls, such jobs would be a good vote bait.

The jobs are there, unlike in the private sector where they are created by the market, depending on the supply and demand. Do you recall any job losses in the government during the Covid-19 pandemic?  

Remember one way to exercise power in the government or private sector is through jobs; one can get a livelihood.

Hiring and firing is one of the linchpins of power. Now even the governors can create jobs in the counties. It was one of the most celebrated “successes” of devolution. 

Reducing the retirement age to 55 makes political sense. Retirees will just go home and slowly be forgotten. The newly hired have political use. You can showcase jobs created. 

Does it make economic sense? Retiring someone at age 55 instead of 60 is a social burden.

Should we pay someone a salary for five years or pension for five years?

Working is productive, retiring is not. That was probably the original thinking in extending retirement to 60. And it makes a lot of economic sense. Add the accumulated experience and skills. The new employee has to go through the learning curve. 

The real economic argument for extending retirement to 60 and beyond is productivity. If someone is productive, why bother with his age? There are people aged 70 and more productive than someone aged 50.  

The basis of retirement should be productivity, not age. This is neutral and objective. We can easily measure your productivity despite grey areas, particularly in service delivery.

How do you measure the productivity of a policeman or a medical doctor? The economy will benefit in the long term from a higher retirement age.

Workers will try to be productive to retain their jobs and earn more money. We must reward productivity, which should become the new job security.  

There will be unintended consequences. If I am rewarded for being productive, I will earn enough money to exit the workplace early to go and enjoy the fruits of my labour. Early retirement and more job creation will follow. Let’s think outside the box.  

Do you recall the golden handshake during the Moi era? One would get Sh40,000 to retire after working for at least 10 years. 

The first to take the handshake were the most productive, they knew they could get jobs elsewhere!  

We could also argue that retiring someone based on age is discrimination. We should focus on the work not the age of the worker. I recall a coworker in the US who was 82 years old and always arrived before me at the workplace.

Remember, we do not work just for the money; work gives us an identity, pride and meaning.  

Ironically, the MPs and senators setting retirement age are not bound by such a requirement themselves! Can they start by setting a retirement age for themselves? 

Another more compelling reason is that our life expectancy has gone up. It was 48 years in 1963 as opposed to about 68 years now. We are living longer and should work for a longer time. 

The clamour for lower retirement age emanates from slow economic growth. We are yet to reach the magical 10 per cent envisaged in Vision 2030, only six years away.  

If the economy grows fast enough, we could even recall retirees. We are also shy of saying that creating job seekers is easier than creating jobs.

Procreation is so easy and pleasurable. It’s also private, but when it comes to jobs, everyone is involved. What a paradox. Throw stones at me if you wish! 

Besides, labour is a factor of economic production and countries with declining populations are concerned. Population growth and economic growth should be symbiotic.  

Let us make it easy to start and grow enterprises, most jobs are in the private sector.

Let’s give incentives to job creators, tame graft and expand our markets beyond the borders with quality products and services. This would make retirement age just a number. 

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