Retirement age dilemma

By: Raul J. Palabrica Jr.
Philippine Daily Inquirer

If there is one legislative proposal that senior citizens in our country can find common cause with today, it’s Senate Bill No. 2797 sponsored by Sen. Miriam Defensor Santiago.

The bill seeks to extend the compulsory retirement age of government employees from 65 to 70 years.

Echoing the sentiments earlier expressed by a retiring University of the Philippines professor, the bill cites improved life expectancy due to advances in medicine and the productive use of experience gained from long years of service as justifications for its enactment into law.

In the private sector, the general rule is, if a business entity has no retirement plan or agreement providing for retirement benefits in place, mandatory retirement kicks in at age 65.

The law exempts from this requirement retail, service and agricultural establishments or operations that employ not more 10 employees or workers.

The exemption rests on the premise that these businesses are considered “mom-and-pop” or family enterprises that engage the services of household members or people who are within the traditional Filipino extended family network.

The benefits of the support system that family businesses usually provide for their relatives or loyal workers often exceed the retirement pay due them computed at 15 days’ salary for every year of service.

Incentive

The arguments raised for extending the period of service in government apply equally to the private sector.

In fact, in terms of health protection most private companies, compared with government offices, are more generous in the grant of medical privileges and benefits to their personnel.

The growth of the health maintenance organization (or HMO) business in the country has made it possible for companies to make available to their staff prompt and effective medical assistance at affordable costs which are, for tax purposes, considered deductible expenses.

While retaining employees for longer periods may be advantageous to the company and to the veteran employees concerned, the employees below them stand to be adversely affected by such extension.

Prolonging the services of retireable executives invariably delays (or prevents) the promotion of young, competent subordinates.

The average (or mediocre) employees may be content with any work assignment given them, but not the intelligent or ambitious employees with marketable skills.

The latter, especially if they are graduates of elite schools or have completed higher studies in their chosen discipline, will have no incentive to give their best if they think the route to the executive floor is blocked by overstaying executives.

Ambition

A company can only give so much compensation, perks and privileges to hardworking, ambitious employees to encourage them to stay on the job while waiting for the people above them to wake up one morning and decide they’ve had enough of corporate life.

If the room at the top is clogged with septuagenarians in good physical and mental health, those waiting in the wings cannot be faulted for opting to move to the competition, or putting up their own business before they become too old to test their managerial skills or lose their attraction value in the professional market. The corporate headhunters will only be too glad to call on them.

Besides, sooner or later, there is bound to be generational differences between “senior citizen” executives and young, MBA-toting underlings on their management styles.

There is no assurance that the ideas learned by Generation Y members in graduate school would find an approving ear from Generation X executives who learned the ropes of the business from experience or books written by Adam Smith and his contemporaries.

True, experience is the best tutor. But specialized education or training is sometimes needed in certain areas of business to enable the company to keep up with developments in the market or meet the challenges of the competition.

Balance

While business stands to benefit from longer service by veteran employees, it cannot be denied that the regular infusion of new blood is essential to continued growth.

Age bias aside, no matter how chronologically challenged employees may try to keep abreast with the developments in their business field or be receptive to new ideas, youthful exuberance and innovative disposition cannot be easily duplicated.

By and large, the levels of intellectual comprehension and, in this computer-driven world, technological dexterity of a person are affected by the biological changes that accompany the aging process.

Getting the benefits of experience by tried and tested employees without dampening the professional enthusiasm of younger employees or profiting from their exuberance calls for a delicate balancing act by management.

Creating consultancy or advisory positions for soon-to-retire employees may be good in the short term, but not in the long run.

Unless the “baby sitter” is a major stockholder or closely related to the owner, no executive worth his salt would take lightly to any form of oversight supervision by a former superior or colleague.

In the corporate world, age versus youth is as sensitive and controversial an issue as gender representation in the executive rooms.

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