Last week, after several months of deliberation and research, a special commission headed by Finance Ministry Budget Director, Udi Nissan, submitted a recommendation to the government to continue the gradual raise in the retirement age for women, which began in 2004.
The recommendation sounds reasonable enough: Thanks to improved medicine and higher living standards, life expectancy is on the rise, resulting in an increasingly older population. Delaying retirement helps relieve the state’s burdensome social-welfare payments to an aging populace.
The move also benefits women: by working more years, they will accumulate bigger pensions. Numerous Organization for Economic Co-operation and Development (OECD) countries – including crisis-stricken Greece and Ireland – have either embarked on a long-term plan to raise the retirement age, or are seriously considering one.
In Israel, the rise in retirement age will be gradual, going up at a pace of four months a year, from the present level of 62, to 64 by 2017, and 67 in 2026, when the retirement age for men and women will be the same.
However, there is ample reason for caution.
Though significant headway has been made in recent decades, there are
still glaring gender-based inequalities in the labor market. These
inconsistencies need to be addressed before women’s retirement age can
be raised to the level of men’s.
Raising women’s retirement age without taking parallel steps to improve
women’s employment rates – especially as they approach retirement age –
would likely exacerbate Israeli society’s already high level of
socioeconomic inequalities and polarization between the rich and the
poor.
Older women – many of whom are unemployed – would be forced to wait even
longer to receive various retirement benefits, leading to more poverty.
Even women who are employed tend to work in low-paying, physically or
emotionally demanding positions as house-cleaners, cashiers or teachers.
Forcing these women to work additional years would be particularly taxing.
Women, who are expected to devote more time to housework and
child-rearing, tend to devote less time to advancing their professional
careers. It should come as no surprise, therefore, that older women’s
employment rates are significantly lower than older men’s.
Just 62.2 percent of women aged 55 to 59 participated in the job market
in 2009, according to Central Bureau of Statistics data, compared to
76.7% of men. Just 6.5% of women aged 65 or older were employed, or
looking for work, compared to 17.8% of men.
The Treasury, which supports raising the retirement age for women,
argues that doing so would be a factor helping to improve employment
rates for women over 60. There is some evidence for this.
Employment rates for women aged 60 to 64, which began to climb in the
late 1990s, jumped significantly starting in 2005, one year after the
2004 decision to raise the retirement age from 60 to 62.
However, the significant rise could have been caused by other factors as
well, such as the sharp welfare cuts beginning in 2003 that forced many
unemployed individuals to get off the dole and back into the job
market.
Before the retirement age is raised for women, significant steps need to
be taken to ensure that more women enter the labor force and remain
employed longer.
Tax breaks and grants to employers who hire older women would help. So
would special state-funded perks, to placement firms that find work for
older women.
Israel should, though, stay away from measures adopted elsewhere that penalize employers who fire older workers.
Doing so would discourage businesses from hiring these older employees in the first place.
Unlike in Europe, where dwindling birth rates, combined with higher life
expectancy, has resulted in an increasingly older population, Israel’s
balance between young and old is even. Israelis over the age of 65 make
up just 9.8% of the population, compared to an OECD average of 14.6%. As
a result, the need to raise the retirement age is less pressing here.
We are, nevertheless, outpacing the OECD in the speed at which we are
raising the retirement age for women. The average retirement age for
women in OECD countries will reach 64 after 2030. If the Treasury has
its way, this will happen here in 2017.
Women’s groups such as Na’amat, the Women’s International Zionist
Organization, Mahut Center, Itach, and Israel Women’s Network – as well
as social-rights organizations, including the Adva Center and the
Association for Civil Rights in Israel – have addressed some of these
arguments to back their opposition to lifting the retirement age for
women too quickly.
Serious thought should be given to the drafting of a comprehensive plan
that would not only raise the retirement age for women at a slower rate
than is currently being proposed, but also encourage the employment of
older women.
Indeed, raising women’s retirement age without addressing gender-based
inequalities in the labor market is liable to deepen the existing
socioeconomic inequality even further.