Women’s retirement

We have breathing space to address gender-based inequalities in the labor market before raising women’s retirement age.

Elderly.311 (photo credit: olderadults.org)
(photo credit: olderadults.org)
In 2004, the government decided to gradually raise women’s retirement age from 60, bringing it level by 2026 to the current retirement age for men of 67. So far, it has been raised to 62 and another hike is planned for January 1, 2012. But a deal reached Monday between MK Haim Katz (Likud), the Knesset Labor, Welfare and Health Committee chairman and the Treasury, will delay additional raises until 2017, when the issue will be reexamined by the Knesset.
If you ask women’s rights groups such as Naamat, Women’s International Zionist Organization, Mahut Center, Itach, and Israel Women’s Network, the decision to freeze the rise is a victory for women.
But is that truly the case?
About five months ago, after much deliberation and research, a special commission headed by Finance Ministry Budget Director Udi Nissan submitted a recommendation to the government to continue the gradual rise in the retirement age for women, which began in 2004. Nissan and his associates argued that higher life expectancy (currently 83.5 years for women) has made it increasingly costly to support retired women. For each year added to retirement age for women, the state saves NIS 7 billion in retirement benefits. Later retirement also benefits women: Working longer means bigger pensions.
Calculations made for Globes by the Mivtachim Pension Fund revealed that a woman who retires at the age of 62 receives a pension of NIS 3,870 a month (assuming she began working at the age of 30 with a salary of NIS 5,000, and received a 2 percent annual pay raise.) If she retires at 64 she receives a pension of NIS 4,280; and if she retires at 67 (like men) she receives a pension of NIS 5,400.
In addition, a Bank of Israel study found that the rise in women’s retirement age in 2004 resulted in higher employment rates among women. It seems employers were more willing to hire women because they knew they would be working longer.
Yet the above arguments tell only part of the story.
After the hike in women’s retirement age from 60 to 62, employment rates increased. But the rise could have been the result of sharp welfare cuts begun in 2003 that forced many unemployed to get off the dole and into the job market.
Raising women’s retirement age under present labor market conditions 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 National Insurance Institute retirement benefits (now at NIS 2,166 a month), leading to more poverty. Also women who do manage to remain employed tend to work in low-paying, physically or emotionally demanding positions such as house-cleaners, cashiers or teachers. Forcing these women to work additional years would be particularly taxing.
In addition, societal prejudices which place undue emphasis on a woman’s appearance make it harder for older females to find work. Entrenched gender roles dictate that women devote more time to housework and child-raising. Less time is left to advance careers. Older women’s employment rates, even years before retirement age, are significantly lower than older men’s. Just 62.2% 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.
Before the retirement age is raised for women, significant steps need to be taken to ensure that more women enter the labor force, get better jobs and remain employed longer.
State-subsidized, full-day childcare would help women get started on a career earlier. Tax breaks and grants to employers who hire older women would help also. So would special state-funded perks to placement firms that find work for older women.
We should, however, stay away from measures adopted elsewhere that penalize employers that fire older workers. Doing so might discourage businesses from hiring these older employees in the first place.
Thankfully, Israel, unlike most of the West, is not suffering from dwindling birth rates.
The balance between young and old is even. As a result, the need to raise the retirement age is less pressing here.
We have breathing space to address gender-based inequalities in the labor market before raising women’s retirement age.