Paving the way for an older workforce

With relatively few exceptions, we follow a pretty straightforward life path in this country. A period of growing up and learning is followed by work and family, a world in which we stay until we retire. Deviance from this life path can happen through illness perhaps, the big lottery win or — what is sadly more likely — redundancy. Is ageism to blame? And can the recent appointment of a business champion for older workers make a difference? Gudrun Limbrick investigates.

Anecdotally, it feels as though you are more likely to be made redundant if you are older. The latest ONS Labour Force Survey appears to bear this out. Thirty six per cent of those made redundant in the second quarter of 2014 were aged 50+, while for 25 to 34-year-olds that figure was 24%. And this situation is getting worse. In 1997 just 26% of those made redundant were aged 50 or older. Anecdotally, it also seems as if it is harder to get another job if you are made redundant as an older person. Again, Labour Force Survey data would appear to bear this out. Forty seven per cent of unemployed older people (aged 50–64) have been unemployed (ie actively seeking work) for more than a year. This compares with just 33% of unemployed 18 to 24-year-olds.

Does this make any sense? Making more older people redundant than younger people appears to fly in the face of economic common sense. Surely it is younger people who will, generally speaking, be cheaper to lose as they are likely to have a shorter time in post. And surely it is older people who have more experience (both life experience and work experience) from which employers can benefit? It must also be true that people in the 50–64 age bracket are likely to be relatively more settled in life than those under the age of 24, who are less settled geographically and in terms of family life. Are employers doing themselves a disservice in missing out on the advantages of an older workforce?

Aside from the potential missed opportunity of focusing on a younger staff team, this trend sets a dangerous precedent that will have an increasingly significant impact as our demographics change. Currently there are just under three million people aged between 50 and 65. It is likely that over the next decade, this number will increase by a million, while the number of people aged 19–49 will decrease in absolute terms. Additionally, the changing State pension age is increasing the numbers of people of working age.

In the light of this, the Coalition Government has launched an action plan to encourage employers to look at the benefits of employing older people. The report, entitled Fuller Working Lives — A Framework for Action, outlines three key initiatives. The first is the appointment of a new Older Workers’ Employment Champion. Dr Ros Altmann CBE was appointed in July 2014. A former director general of Saga, she described her new role being to “help to explain the benefits to both businesses and society of encouraging people to work longer and mobilising the potential which older workers offer”. The second initiative was to extend the right to request flexible working to all employees. Of course, this does not necessarily extend the number of times employees will have their requests granted.

Additionally, the framework outlines a new Health and Work Service to support workers with long-term health problems, some of whom will fall into this older age bracket. The Service is due to start in late 2014 and will provide an occupational health assessment and general health and work advice to employees, employers and general practitioners to help individuals with a health condition to stay in or return to work. Following an assessment, which will take place after four weeks of sickness absence, employees will receive a return to work plan containing recommendations to help them to return to work more quickly and information on how to access appropriate interventions.

We can only wait and see what impact these measure may or may not have on recruitment practices of employers but the message is a good one. It is important to be “age-blind” in recruitment and recruit on the basis of skills, experience and aptitude rather than because a person fits into a certain age bracket, but a significant change is going to need a change in practices to incorporate the flexibility and training opportunities that an older workforce might need.

There is another interesting trend relating to our older workforce. Recent years have shown a relatively steady rise in the number of people older than 65 (ie older than State pension age) who are in employment. In fact, employment among over-65s has increased by more than half since 2008. There are now more than a million people aged over 65 working.

In 2011, the Government abolished what was called the default retirement age. Before the abolition, employers could, if they so wished, force their employees to retire once they had reached their 65th birthday. Employees could always request to stay on after this age but employers could refuse these requests if they wanted to. This has no doubt had an impact on the number of people aged over 65 who are still working. And the numbers are still rising. The number of people aged 65 and over in employment increased by 25,000 in January to March 2014 compared to the previous quarter. There was also an increase of 107,000 over the previous 12 months.

It is not possible to look at the numbers of over-65s in work as a proportion of those who are actively seeking work (the employment rate), as those figures are only available for those people in the traditional working age groups. However, the numbers are significant and set to increase further, not just because of the abolishment of the default retirement age but also because of the increasing number of older people, their improving health and the economic need for people to work to supplement their pensions.

It seems clear that employers need to prepare themselves for the changing demography as this is changing the pool of people available for work. And the benefits to companies of these mature and experienced workers should be self-evident. It is going to be interesting to see what happens to pay levels in the older age brackets as there are already indications that with such a large supply of older workers, age and experience alone may no longer command the higher salaries they once did.

For the individuals, the benefits are also self-evident. Every “extra” year spent working boosts the pension pot and some people enjoy the experience of working well after State pension age. But there are also broader benefits. According to the National Institute for Economic and Social Research, if everyone worked a year longer, the country’s GDP could increase by 1% — the equivalent of £16 billion in 2013. There is, however, a word of caution. What individuals currently have is a right to retire. With an ageing population, the temptation for those who are able to keep working to fund the rest has to be matched with the right to relax after a lifetime of working.