Employers favour gradual rise in retirement age

Raising the retirement age would have an adverse effect on productivity, according to a survey on pension reform carried out among employers

Many fear that an older labour force may erode competitiveness.

The survey was carried out by the Malta Employers' Association. The full results, obtained by The Times, are to be announced during a conference on pensions which the association is holding on Thursday, at the end of which it will issue a position paper.

The respondents represented the major economic sectors. Sixty-six per cent of them believe that raising the retirement age in Malta is "inevitable".

Fifty-five per cent believe that the best option with regard to their own organisation would be to allow employees to choose whether they want to work till 65.

Only 16 per cent replied that the best solution for their company would be to raise the retirement age to 65 and more companies (24 per cent) prefer to leave the retirement age as it is at present, than to raise it to 65.

Employers would resist raising the retirement age with immediate effect. Raising it gradually would imply a more gradual change in working culture and give companies more time to adapt, the respondents said.

Just over half (51 per cent) replied that they would prefer to raise the pensionable age to 63 for employees aged between 50 and 55 years, and 42 per cent would prefer to stagger the increase in retirement age over a longer transitional period.

The general conclusion from this survey is that employers believe that, due to the changing demographics, the retirement age has to be raised.

However, they are in favour of a gradual approach, both in terms of implementation of the higher retirement age, and also with regard to the options that would be made available to both employers and employees to increase participation in the labour force, thus reducing the burden on the welfare system.

This element of flexibility would also safeguard against possible repercussions on competitiveness which may result from an aging labour force.

Eighty organisations answered the MEA's questionnaire, 20 per cent of which replied on behalf of a group of companies, which means that the number of companies represented by the sample is actually much larger than 80.

The majority of respondents came from the manufacturing sector. Sixty eight per cent of replies came from organisations employing more than 50 persons, with nine companies employing fewer than 20 persons sending in a reply.

The conference on Thursday, being held at the Intercontinental Hotel, will be addressed by MEA president and director general Paul De Battista and Joseph Farrugia respectively, Finance Minister John Dalli and Social Policy Minister Lawrence Gonzi, among others.