Why the long wait for a life of leisure?

March 06, 2000|By Diane Coyle

LONDON -- From the moment the alarm rings in the morning, it is all a blur. One cup of coffee, then pack the lunches, dress the children, wolf a piece of toast, race to school in the rain, belt to the station.

A peaceful respite, albeit in the company of hundreds of other harassed commuters, reading some documents or the newspaper. Then a sprint to the desk at the other end, plunging straight into eight or nine or ten hours of work with no breaks.

Then home as fast as possible to take over the child care, to the relief of partner or nanny. Finally, most professional days end comatose in front of the TV, drink in hand.

Is this you?

The pressure of working life is one of the staples of dinner party conversation: the long hours, having to take work home at the weekends, the impossibility of escape from the demands of mobile phone and pager.

Many a person with a good and satisfying job is likely to feel completely overburdened and harassed, unable to square the demands of their work with the needs of their family, never mind having any free time for themselves. The pace of life feels as though it is growing ever faster.

Although on the face of it unrelated, such pressures are one aspect of the demographic problem suffered by most industrialized economies.

Aging populations

All have an aging population due to lower birthrates in recent decades. The ratio of elderly to working age is rising, very sharply in the case of countries like Germany, Italy and Japan.

Most of the policy focus has concerned the fiscal problem this implies. If the public sector is paying pensions though a pay-as-you-go system, aging implies exploding government spending.

And the policy prescriptions have consisted of measures to cap this public spending, replacing it with private pension provision. British governments tackled this early; the U.K. pension problem is to ensure that low earners do not fall into poverty in their old age.

But is aging an economic problem in a broader sense? There is some evidence that it is linked to slower productivity growth, but even this is not necessarily a matter for concern when retirement is seen as a positive choice for more leisure over more income.

After all, older people could continue to work longer, yet the average retirement age has been trending downwards for more than 30 years.

Figures from the Organization for Economic Cooperation and Development show that for the average OECD male with life expectancy of 76 years, 38 years are now spent in the work force and the rest in education, unemployment and, especially, retirement.

The typical retirement component has climbed from a couple of years in 1960 to more than a decade now.

The pattern for women is different, with 28 years of the expected 80 spent in employment, decreased unemployment, and an increase in retirement from less than 10 to more than 20 years.

The combined effect is that, on present trends, the share of the population in work will peak at close to 50 percent some time between now and 2005, and then as the postwar baby boom starts to think longingly of leisurely days pottering in the garden, to plummet to 41 percent by 2030.

Once again, there is nothing innately bad, in an economic sense, in mass gardening or line-dancing by the over-60s.

Faulty policy?

But given the scale of the aging affecting the OECD economies, and the nature of the intense pressures being felt by those currently working, a blazingly obvious policy question is why on earth do we have a tax and benefit system that encourages people to take all their leisure when they are older, and none when it would be most desirable to them, in the prime of life?

After all, research conducted by the OECD's analysts shows that on the whole people do not use their formal retirement to sail around the world, visit the lost temples of the Incas or start a new e-business from the spare room.

Mainly they do more of the things they always used to do in their leisure time anyway: watch TV, see family and friends, or plant lobelias in the spring.

It is a safe bet that most people would rather spread their leisure more evenly over their whole lifetimes, and not take it all in the final 10-20 years. Peter Hicks, the OECD's aging expert, says the existing institutional framework makes this financially untenable, however.

"We have stacked the cards in favor of early retirement. People do not have a free choice."

Hicks says: "Why should governments be funding retirement?" A tax system generous to savings might be a good idea for other reasons, but it should be neutral about when people choose to spend their savings.

Of course, there will always be a role for government in ensuring that old people -- like younger ones -- have adequate incomes. And there is a question of ensuring there are incentives for people to save enough for their retirement.

But making a special effort to create incentives for people to stop working at 60 is sheer pensions madness. When will governments have the vision to lift their eyes above the problem pensions pose for their budgets and tackle the crazy structure of lifetime work incentives?

Diane Coyle wrote this piece for the Independent newspaper in London.

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