Port Elizabeth - It can be very short-sighted and even dangerous in the current economic recession for companies to opt for early retirement for employees.
In the current downturn many workers want to postpone their retirement and employers should take advantage of this, reckons Manpower South Africa, a subsidiary of the American Manpower Group, a global player in the placement sector - with representation in 82 countries.
In South Africa, Manpower focuses especially on staffing for the financial, industrial and engineering sectors, as well as information technology.
In an economic downturn it is important to strengthen critical areas within your organisation by holding on to experienced personnel. Costs can be reduced in other areas.
The knowledge, experience and skills of older employees, who may have previously experienced difficult times over their careers, are great assets when the economy is under pressure, explains Manpower.
Considerable damage is suffered when much-older workers retire and their knowledge is lost to the business and the labour sector. Employers are then obliged to use valuable resources to recruit new people or train others to take the place of the retirees when the upturn comes.
Manpower's managing director Jan Coetzee says that, apart from the problems that raised their heads during the credit crisis, there is another threat of which many employers are unaware.
While the generation of so-called "baby boomers" is retiring, there are fewer youngsters to take their places, which can lead to a shortage of workers.
According to a report by the Organisation for Economic Co-Operation and Development (OECD), the global workforce will contract by 12 million between 2025 and 2030.
Although countries like Japan, Italy and Germany - which have the oldest populations - will be hardest hit, the scenario is the same worldwide. Populations age as birth rates decline.
The question arises as to where a future workforce will be sourced, and it seems few employers have long-term solutions.
Or perhaps they are hoping that higher productivity, technological progress and globalisation will solve the problem, the report continues.
While these factors have certainly masked the impact of the growing global skills shortage, employers cannot take it for granted that they will obviate future shortfalls.
The OECD estimates that in Europe by 2050 there will be one worker for every retired person.
Reference is also made to what the European Foundation for the Improvement of Living and Working Conditions has to say about the loss of skills and experienced workers. According to the foundation, economic growth can be crippled in those sectors with older workforces and more retirees.
But Coetzee says that older adults are the biggest available and underutilised segment of the labour force. "Most of these people are still healthy and able to make a contribution long after their official retirement."
He says employers and employees should think twice about how they look upon older workers and their approaching retirement, so that proper planning can be done for the business's future needs.
Many of these employees would like to stay on, but perhaps not on the same conditions. This creates an opportunity to offer such workers an acceptable package, building in flexibility (such as part-time work, sharing a position with someone else).
Manpower SA also points out that many employers mistakenly assume that all workers want to retire as soon as possible. But figures from the American Association of Retired Persons show that about 70% of workers still in the workplace say they want to continue beyond retirement age - or never retire completely.
If an employee wants to be persuaded to stay on, it would probably be easier if he is offered a higher salary for the same full-time position, rather than an opportunity to adjust the balance of his job or lifestyle.
Those who would probably be most inclined to retire are those with the financial means to do so. But, ironically enough, they are often the people with the talents that business most needs.
Financial uncertainty because of the economic downturn has resulted in many workers who had planned to retire having to put off their retirement plans. Falling house prices and shrinking portfolios have forced many to remain in the workplace for longer in order to make provision for a comfortable retirement.
Employers should see the situation as an opportunity to re-negotiate with older employees and make them feel positive about the prospect of staying on. They could consider shorter working weeks or paid sabbaticals for the more mature staffers to allow them to realise some of their retirement ambitions, suggests Coetzee.
- Sake24.com
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