Bríd Smith (Dublin South Central, People Before Profit Alliance) | Oireachtas source

The committee report has exposed arguments and underlying assumptions behind near hysteria over a pensions time bomb, which the report has shown to be a false narrative. Since the recession in 2008, there has been a constant clamour from economists and employers to tackle the rising cost of State pensions. We heard it from the Minister of State tonight that "this must be done", "it is a hard decision", "we have to look after the young", etc. The chief argument the Government and the economists make is that people are living longer and that, in the future, the ratio between the number of workers in the labour force and the number of retired workers will grow and become unsustainable. Words such as "burden" and "dependency" are used to convey that message. Workers living longer are a time bomb that must be defused, and the only solution is to defer pension payments from age 65 to age 68, and possibly later if needs be. The Minister of State has dismissed the committee's report, and I share Deputy Ó Cuív's anger about that.

Why do I say this is a false narrative? First, the calculation of the ratio between those of working age and those over 65 is arbitrary and misleading. We are told there are approximately 4.5 people of working age to every pensioner and that this figure is set to decrease to 3.5 by 2030 and to 2.3 by 2051. This would mean very little even if it were correct. It does not tell us how productive those who are still working are, how dependent those over 65 will be or if demographic trends are certain. That people are living longer now should be a cause for great celebration. Not only are people living longer, but those with extra years are healthier and more active than past generations have been. While they may be getting a modest State pension, many are still active and productive and providing essential labour to the benefit of wider society. In that sense they are not dependent. The ratio used does not tell us how many of those under 65 can and do work, nor does it calculate how many of those over 65 will continue to work or would choose to do so if they were allowed. The statistic is equally misleading at the other end of the equation. A modern, technology-driven economy means that workers stay in education longer than we did decades ago before joining the workforce. At the same time, many women are being forced out of the workforce because of childcare costs. Many of those over 65 continue to play vital roles in our society, even if they have formally left the workforce. Most of them will be in good health, not depending on health services or other services in the same proportion as people of their age in previous decades. For example, it is only because of retired workers, whether grandparents or other close family members, providing unpaid childcare that many families, many thousands of people, can continue to work.

Second, it is presented as a given and an insurmountable fact that the expected cost of this time bomb can be avoided only by raising the pension age. That is not the case. The commission calculated, for example, that the Social Insurance Fund deficit, the fund into which PRSI taxes go and which pays out benefits such as the State pension, could reach €13 billion in 2050 if no changes are implemented. The savings predicted from increasing the pension age to 68 are calculated at €3.8 billion for 2050. In fact, none of these are certain figures, and research shows that when the pension age was increased to 66 in 2014, it had little impact on the number of people who retired at the age of 65. The impact of forcing thousands to work longer will have unintended consequences and will not be cost-free. Childminders and volunteers in many vital sectors will have been kept at work, and that will have a knock-on effect on our society. What the economists and the Government do not publicise is the fact that raising the tax paid by employers could address any deficit. If the PRSI paid by employers were raised by just 4% or 5%, that would add another €3 billion or €4 billion to the fund, as highlighted in the committee report. That is more than the savings from raising the retirement age is predicted to yield. Workers will pay into the Social Insurance Fund throughout their entire working life. Since the last recession, they have also paid additional taxes such as USC, with little or no tangible benefits, while employers in Ireland continue to pay the lowest PRSI rates in Europe. The first step in addressing this issue is to raise that rate and to make sure that the Social Insurance Fund does not face a deficit. The Government, of course, will faint at the notion of raising taxes on employers, but then it has no problem taking the "hard decision" to slash workers' benefits or to raise the retirement age.

Third, the fact that the ratio may increase does not in itself constitute a crisis. By every measure available, worker productivity has increased enormously over recent decades. The gap between workers' productivity and their pay has also widened. In the US, for example, since the 1970s, workers' productivity has increased by a staggering 61% compared with wages, which have increased by only 17%. The difference is pocketed as profits and helps explain the widening inequality across many countries. Irish workers are the same: massive leaps in productivity over decades have gone side by side with a decreasing share of the overall wealth in society. In 1970 the share of national income for employed and self-employed people was 89% of the economy, but by 2012 that had declined to 60%. The point here is that three workers in 2030 will be as productive as five workers were in 1970 and, logically, there is no need to fear that ratio or the ability of society to support a population living longer if wealth and resources are distributed equitably and social supports are funded through taxes on wealth and profits.

As unions and workers fight against these proposed changes, the wider arguments have come under scrutiny and have been exposed. Behind the attempts to raise the pension age is a philosophy that never, ever looks to raise taxes on employers or to tax the vast wealth that workers generate as profits during their working lives. Instead, that philosophy seeks to reduce the rights and supports that workers have fought for over generations. The real agenda behind the myth of a pensions time bomb is the continuation of an ongoing war on all workers' rights and entitlements. We should not fall for this and we should defend the right to retire and bring the retirement age back to 65 as a cornerstone of a decent society.

None of what the Minister of State said is about fairness or equity; it is part of an ongoing war on pensions and retired workers. PRSI on employers is a hard decision, but the Government seems happy to tax retired workers on modest pensions or to force people to work another two years. The best of luck to members of the Government parties when they go before the electorate in 2025 on a platform of raising the retirement age to 68.

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