By Santificarnos.com

Most of the companies that have implemented an early retirement plan are satisfied with the results, yet reluctant to implement another such plan unless absolutely necessary. That is o­ne of the conclusions to emerge from the survey carried out by Profesor Sandalio Gómez, holder of the SEAT Chair of Labour Relations at IESE, involving eight large Spanish companies that have introduced early retirement in the last decade.

By encouraging early retirement, these companies have obtained economic benefits (86% of respondents), reduced headcount (78%), improved employee welfare while avoiding industrial disputes (71%) and rejuvenated their workforce (38%). At the same time, though, they have lost a significant repository of knowledge and labour capacity, given that, generally speaking, it is the older employees who have left the company.

The fact is that early retirement, particularly if it becomes commonplace, not o­nly affects the annual income statement and those who leave the company, but also helps to create within the company an atmosphere that does nothing to help the smooth running of day-to-day activity. o­nce they reach the age of 45-50, employees start to feel that their working life is nearly over, and that naturally affects their attitude, as they no longer have much incentive to work hard or update their knowledge and skills. In some cases, this attitude can degenerate, leading to an increase in absenteeism and a complete loss of interest that makes it impossible for these workers to make any useful contribution, with the consequent difficulties for the company as a whole.

Among the Spanish companies that have introduced early retirement schemes in recent years there are two groups: those that have done so o­n the basis of the official redundancy procedure (Expediente de regulación de empleo), which has been used to retire large numbers of workers from the labour force; and selective early retirement, usually of senior or middle managers, which involves much smaller numbers but is qualitatively more significant. The study shows that 57% of the sample companies expect to take similar measures again at some time in the future, but "making the option less attractive".

In contrast to the company point of view, how is this trend towards mass early retirement regarded by the Government and the Social Security system? The answer is: they see it as a very bad thing.

First of all, because it runs counter to the recommendations of the Toledo Pact, signed by all the political parties in Spain, whose aim was to prolong the average working life even beyond the age of 65. Secondly, because early retirement (technically, this term refers to retirement before the age of 58) and pre-retirement (between the ages of 61 and 65) shift part of the costs that previously were borne by companies o­nto the National Employment Institute (INEM), and thus o­nto the Social Security system.

The outlook for pension systems - in Spain and throughout much of the developed world - is gloomy o­n account of the statistical projections of an ageing population and the consequent increase in the economically inactive population combined with a shrinking proportion of economically active workers. At a time like this everything to do with the financing of the public pension system is seen with great suspicion. Bearing in mind that, in this survey, the average age of those who took early retirement was 53, it is worth pointing out that a large proportion of these people will be drawing a pension for 30 years or so. In quite a few cases this will be more than the time they spent working. What´s more, the cost of the pensions that expire is o­nly 63% of the cost of new pensions, which is to say that the "financial commitments" of the system are steadily increasing. Thus, forecasts of the balance of revenue and expenditure of the Social Security system in relation to GDP show a growing deficit.

The financing of pensions in Spain, as in countries like Germany, France and Austria, is based o­n the pay-as-you-go system, which means that active workers pay the benefits of those who went before them in the labour force. Although in recent years a capitalization fund has been built up in Spain, it remains insufficient to guarantee the future. Widespread early retirement could be the death blow that hastens the end of this system of inter- and intra-generational solidarity.

Lastly, early retirement has some very clear effects o­n people. The study reveals that, generally speaking, employees receive the news of their early retirement and learn of the content of the plan in an impersonal way, as something inevitable that they cannot prevent. Although they tend to be satisfied with the financial arrangements -which is understandable, as most receive between 60% and 90% of their working salary - the respondents to the survey feel the need for a more personalized treatment, greater recognition of the years given to the company and their achievements, and more decisive help in adapting to their new role in society.

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