Commentary

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The Hazelwood early retirement scheme: history is repeating itself

22 Mar 2017
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The Victorian government’s announcement of an early retirement scheme aimed at redeploying some workers (losing their jobs due to the Hazelwood power station closure) to another power generator in the Latrobe Valley has been welcomed in many quarters. It is considered smart politics and policy, and a win-win for those who need jobs and for those who might jump at the chance of an early departure. The early retirement approach to large-scale job losses is not new. It has been commonly used as a means of creating employment opportunities for workers threatened by redundancy across many developed countries. Yet, as a widely used policy approach, it has been frequently criticised. In Europe in the 1980s and 1990s for instance, early retirement was a popular approach to managing the mass layoffs caused by the industrial transformation at that time.

However, it quickly became apparent that such an approach did little to create job opportunities for younger workers. The jobs early retirees were doing often disappeared entirely when they left, and so jobs were not, in fact, created. Importantly, research shows that some older workers felt pressured into taking early retirement. Surveys have found that many workers had anticipated working on and had not actually wanted to leave. Early retirement schemes were presented to them as a one-off, take it or leave it opportunity, with little time to properly consider their merits or implications. Research has also found that some early retirees felt that they should make way in solidarity with their younger colleagues. While a noble sentiment, many retirees found that early retirement was not the good choice it first appeared. People derive much of their sense of identity from their work, and while early retirement may seem attractive for a few months, the lack of a job may ultimately have adverse consequences for psychological well-being. A rushed decision to leave may also have unforeseen consequences for an individual’s financial well-being. Rectifying this through a quick return to work may be impossible for many older workers. Those leaving through such schemes need to exit with their eyes wide open and be fully aware of the consequences of the choices they are making.

While presented as benefiting everyone, such schemes might be more accurately viewed as ageism masquerading as good public policy. A major concern arising from the proposed Hazelwood early retirement scheme is the downgrading of the value of older labour which is being viewed as less important and therefore dispensable. A better alternative would be schemes that are open to all so that, for instance, a younger person might choose to change career. Thus, while the Hazelwood scheme may create some job opportunities, it is not necessarily as good an idea as it might first appear.

Moreover, at a time when influential bodies in Australia and overseas are calling for policies aimed at supporting longer working lives, the Hazelwood announcement looks like a potentially retrograde step. Research conducted by the OECD demonstrates that there is not, in fact, a ‘lump of labour’ that must be shared out among the workforce, but instead that employment rates for older and younger workers move together. Thus, older workers are not keeping jobs from the young. In this instance, pragmatic politicians may well still conclude that they are doing what needs to be done. Nonetheless, joblessness, whatever form it takes, presents individual and social risks.

 

Philip Taylor is a Professor of Human Resource Management at Federation University Australia and David Thompson is the CEO of Jobs Australia.

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