Tuesday, October 23, 2012

Is your Daddy eating your pie? --Youth Unemployment and Old-Age Resolution

Several days ago I happened to read an interesting article discussing old people retirement and youth unemployment: 
Struggling to find an ideal job myself, I start to think about this issue and it seems that I've found an excuse to forgive my father of not intending to retire at 60.

It is not uncommon to hear people say “I know it is going to be difficult to find a job, so I will stay on at university and take a Master’s degree.” Facing the gloomy global economy and the increasingly fierce competition in job market, quite a number of university graduates are opting for continuing education both to recharge themselves and to wait for a booming economic climate. While for the old, many are holding new resolutions to postpone retirement due to various reasons. 

Such stark contrast drives me into deep contemplation: should the old be responsible for the youths’ unemployment? My answer is definitely “no” and I would expect little change in job market within a decade: the young would face a rosy while unforeseeable future confronted with probably recovering yet unstable economy, while the old would find nowhere to sweat their guts out under current retirement mechanism, no matter how fascinating their resolutions may appear. 

The old is not all that to blame for youth unemployment 

Admittedly, in some industries, the elderly constitute a large proportion of youngsters’ competitors. In landing jobs requiring extensive experience such as doctors, teachers and lawyers, newly graduated youths are no doubt at disadvantage; in seeking promotions in these specialized fields, age can also become an obstacle for young people. For example, many young doctors have to stay at assistant-level until one elder doctor moves away, only in which case can the younger climb up to an upper-level position. 

However, the older and the younger generations can hardly be perfect substitutes for each other in most industries, and age/experience is no longer the most important criterion in selecting talents. On one hand, certain management-level jobs are largely occupied by older generation, which actually poses no potential threat to the young. These demanding positions should and must go for the most qualified not only physically but also mentally, in which aspect the younger green hands fall far behind the older and the more experienced. On the other hand, there are still numerous jobs requiring no experience and offering formal or on-the-job training, and these positions are perfect choices for the young but not the old. Therefore, in the real job market, the old can hardly be regarded as job-seizers of the young. 

What’s more, even if the young were indeed squeezed out of employment by the old, the old generation is not all that we should blame. Other factors such as macro-economic environment, individual competency and mentality all play vital role in deciding the job seeking of youngsters. Under current economic downturn worldwide (except in some emerging countries), high unemployment rate is quite common. For instance, the unemployment rate of US last month rose to a historical high in three years to 8.5%, forcing great number of people including the young out of work. So we cannot just pour the dirty water all to the old generation while neglecting the macro climate. 

Finally, even if we could blame the old for grabbing our “iron bowls” and force them to retire at a relatively early age, say 50 or so, the side-effects brought about by limiting their working capacity could not be neglected. Just imagine how our life would become then: the traditional 4-2-1 family mode in China would force the young to bear heavier burden for supporting the non-working old; the government has to appropriate more portion of budget to pension funds; the retired themselves may very likely feel isolated and uncomfortable because of sudden leisure at their 50, a still prime age both physically and intellectually. 

In a word, blaming the old generation for youth unemployment and thus forcing them to retire early is neither meaningful nor justified. 

Look Back and Move Forward: Outlook for 2020 

The challenges of aging population are daunting for any country, especially for developing countries such as China, which possess a population of more than 1.3 billion. The percentage of elderly in China is projected to triple from 8% to 24% between 2006 and 2050, to a total number of 322 million.[1] 

Percentage of Older Adults (Age 65+) in China, 1950-2050

The old: life begins at 60 

The rapid growth of aging population makes this group of people an increasingly non-negligible force. In China, the official retirement age for men, according to 1978 regulations, is 60; ordinary woman workers retire at 50 and woman cadres at 55 [2]. The mental and physical conditions of China’s elderly people, however, have changed drastically in the past three decades, so must the regulations: a more flexible retirement mechanism would be treated on a priority basis when it comes to caring for senior citizens while benefiting the whole society, the younger generation included. 

Flexible retirement mechanism, proposed and practiced by Western countries, attaches great importance to individual distinction. For example, for management-level jobs, people may choose to retire at a relatively older age than for manual works such as construction workers. This strategy, in the near future, would be better received in China given its rapid growing aging population. 

First, there is many a good tune played on an old fiddle. More and more would-be retirees begin to feel like spitting out their entire life’s story to anyone who will listen, and they would like to postpone retirement age to further flex their management muscles. To quote a survey conducted by Daqing Petrol Administration Bureau among its 15,000 would-be retirees, about 76% of the healthy elderly would like to remain at work. If promoting the result nationwide, we will find the figure rather enormous. In addition, in an online survey participated by more than 360,000 netizens in China, nearly 230,000 voted in favor of implementing flexible retirement mechanism, accounting for more than 62% of all participants. [3] 

Next, flexible retirement mechanism would act as a stimulus for national economy. The experience and knowledge imparted by the working old would play an important role in boosting the national economy, making bigger national economic pies. The elderly yet the competent should be encouraged to work and benefit the country with their deep knowledge and rich experiences. In this way, the lacking of academic and management personnel in many fields can be quickened. 

Last but not least, the society as a whole benefits from a more flexible retirement mechanism. Increasing elder workforce can help ease the burden of both the young and the society. As one researcher of the Chinese Academy of Social Sciences calculates, China now needs another 1.3 trillion yuan ($196 billion) to ensure that its aged people get enough pensions to lead a decent life. However, China's pension and welfare systems are not yet strong enough to deal with an aging population. When developed countries encountered an aging population, their per capita GDP was between $5,000 and $10,000, but China's was only $806 in 1999 when 10% of its people passed the age of 60. China's per capita GDP rises above $4,000 now, but it is still below what it was in Western countries' when they first encountered an aging population. [4] Therefore, by implementing a flexible retirement mechanism, less elder people would have to draw from national treasury and more budget could be spared for other utility. 

The factors above are more than enough to warrant a change in retirement regulations. Thus, a more flexible retirement mechanism serving the interest of different working groups may be well under way. 

The young: rosy yet unpredictable future ahead 

As stated above, the youths are not necessarily forced out of employment by longer working periods of the elder generation. Thus, the prospect of the young hangs more on the macro-economic climate and individual capability than on the changes in older generation’s work patterns. 

To begin with, the future demand for labor may increase as the world economy is recovering from the crisis months earlier, when we will hopefully embrace a brighter and more prosperous economy. However, the new hit of debt crisis of US and European countries and the shadow of financial crisis are still hanging over the heads of many fresh faces who are just stepping into the job market. Volatile as it is, the world economy is rather difficult to foretell. After all, who knows whether another brewing crisis is around the corner in the near future? To hope for the best while prepare for the worst may be the best strategy for the young then. 

Next, let's take a look at the supply side. Take China, one of the world's largest economies now and in the foreseeable future, for illustration. It is estimated that during the next five decades, the demographic condition of the nation would have undergone tremendous changes, with the elderly surprisingly occupying larger proportion of national population while the youth population sharply shrinking. Under such circumstance, there would very possibly emerge a huge shortage of workforce, posing a turning point for today's 20s in job market. 

Population Pyramids, China: 2000 and 2050 
                                                    2000                                       2050     

Thus, confronting a possibly upward-shifting yet volatile demand side and a surely downward-shifting supply side, according to the Demand-Supply theory, we could safely draw two key words of the overall prospect of youth labor market in 2020: PROMISING, yet somehow UNPREDICTABLE.

In sum, the coming decade would possibly witness more flexible retirement age of older generation while unpredictable future for the young in the job market. Hopefully, for the elderly, a more meaningful old-age life will be ahead; for the young, striving to be the most competitive would always be the golden rule.

----by Xiao Zhong 


[1] China's Concern Over Population Aging and Health, by Toshiko Kaneda, Population Reference Bureau (Feb. 27, 2008) 
[2] Same Retirement Age for All, by Gao Zhuyuan, China Daily (March 24, 2011) 
[3]Flexible Retirement Mechanism http://baike.baidu.com/view/4429840.htm 
[4]Debate: Aging Population, by Mu Guangzong, China Daily (Jan. 10, 2011)

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