"The claim by women's organizations that raising the retirement age will result in more women without a source of income is simply not true, nor is it based on correct data. What will happen in reality is that the market will reach equilibrium and the ratio between women who will continue working and women who will leave the labor market earlier will not change for the worse," says Prof. Elise Brezis of Bar Ilan University, head of the Aharon Meir Center for Banking. She previously held senior positions at the Bank of Israel. She was responding to Minister of Finance Yair Lapid's decision not to raise the retirement age for women in the 2013 Economic Arrangements bill.
Brezis cites studies in OECD member states, which show that when the retirement age is raised, the actual number of work hours rises accordingly. A Bank of Israel report from two years ago found that the raising of the retirement age of women from 60 to 62, which was carried out a decade earlier, increased the employment of women aged 60-61 by 10%.
"It should be remembered that the retirement age for women in Israel has been raised gradually over the years, in part to avoid harming women. Although women's life expectancy has increased by five years since 1975, the retirement age has been raised by only two years," says Brezis.
On Sunday, Lapid decided that the proposal to raise the retirement age for women, one of the flagship reforms of the Ministry of Finance's Budget Department for years, would not be included in the 2013 Economic Arrangements bill, but would go through the normal legislative procedure. The ministry sought to advance the measure this way last year, but it got stuck in the Knesset Labor, Welfare and Health Committee.
A prominent supporter of the idea is Bank of Israel Deputy Governor Karnit Flug, who is Governor Prof. Stanley Fischer's choice as his successor.
Brezis, one of Israel's foremost macroeconomists and a colleague of Nobel Prize laureate Prof. Paul Krugman, considers herself a feminist. She says that in the long term, society and women will benefit two-fold from the raising of the retirement age. "This reform will help economic growth because participation in the labor force will grow, and the public's standard of living, or GDP per capita, will rise," she says.
"Few people know it, but the historical reason why women have a lower retirement age than men lies in an ugly chauvinistic attitude which women's organizations are apparently unaware of," Brezis adds. "It is linked to the historical practice, which we still see today, in which men tend to marry women who are a few years younger than themselves. Therefore, to ensure than men would not remain at home alone after they retired, it was decided to time the retirement of women, accordingly.
"Raising the retirement age for women will increase women's pension savings and reduce the number of years they will have to live off these savings. Bottom line, not only is this a correction of a historic distortion, but the way to prevent many women from living in poverty after retirement," Brezis concluded.
Published by Globes [online], Israel business news - www.globes-online.com - on April 29, 2013
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