‘Missing’ older workers could boost UK

With the UK still mired in economic troubles and unemployment high, it is perhaps obvious that we need to get more people into work.

Among older people, who find it harder than any other age group in the UK to move into work, this needs to be a real priority, in particular when we look at how poorly Britain fares compared with our international competitors. We see that getting more people aged 50+ into work can be done.

According to some new research by the Resolution Foundation, a think-tank which focuses on people on low to middle incomes, the employment rate for 55-64 year olds in the UK lags well behind the best performing countries from around the world.

While the average of the 5 best performers is about 72%, the UK falls well short with only 57% in work. Continue reading “‘Missing’ older workers could boost UK”

Is retiring comfortably a thing of the past?

Since the early 1990s the numbers of people working past State Pension age (SPA) has been continuously on the rise. Although people choose to continue working for a variety of reasons, perhaps the most important is simply ‘for the money’.

However if this is why people keep working, for some it will never be enough.

A whopping 45% of those currently aged 50+ and in employment will have to work for at least 11 years beyond their SPA in order to attain a level of retirement income which maintains their standard of living.

And of course many may never reach this marker – for such people retiring will necessarily mean a drop in living standards.

This is the result of new research by the Pensions Policy Institute (PPI), sponsored by Age UK and three other organisations.

The research sets a level of income estimated to bring the equivalent standard of living in retirement, and then poses the simple question: ‘how long will people need to work to reach this?’

The following chart is taken from the report:

PPI chart on replacement rate by SPA

This could have important implications for a variety of reasons.

For example, it indicates that many people will want (or need) to keep working for longer than they may have anticipated. This impacts on individuals who may have to rethink plans for retirement, and provides a further imperative for employers to become more age-friendly.

Also, many people will not be able to work for this long. This is obvious for people who suffer from ill health, but also many who lose their job – even in good health – will find it difficult to re-enter the workforce due to ageist attitudes from employers.

However, the report also looks at the numbers of people attaining a minimum income standard – unrelated to their lifetime earnings – by the time they reach SPA. Happily, the numbers here are much higher (85%), but clearly many people will not be able to continue the same lifestyle if they have such a reduced income.

The research highlights issues facing people both sides of State Pension Age, and shows clearly just how uncertain the future can be without good employment and pension provision.

The full report is available on the Pensions Policy Institute website, and makes for a very interesting read.

Last year Age UK’s More Money in Your Pocket campaign helped 500,000 people put £120 million back in their pockets through free benefits information and advice. This year, we will continue to break down the barriers that prevent people from claiming. For more information, please visit www.ageuk.org.uk/moremoney

Beyond the headline, Seldon judgement is a victory for older workers

Yesterday the Supreme Court handed down its judgement on the case of Leslie Seldon, a solicitor who took on his employers over the legitimacy of its forced retirement policy.

It lands a blow in the fight against age discrimination, cementing the abolition of the Default Retirement Age and making it clear that it will be very difficult for employers to justify forced retirement.

But in order to see its potential impact, we need to look beyond the headlines.

While Mr Seldon had his appeal dismissed, and parts of his case will have to be re-examined by an Employment Tribunal, much of the judgement is a significant victory for those of us who believe that everyone should be treated equally regardless of age.

The majority of the judgement relates not to Mr Seldon’s specific case, but to the principles on which direct age discrimination can be allowed.

While it is still possible to justify discrimination (this was never really in doubt), the new ruling ensures there are additional safeguards which should protect older workers against forced retirement and direct age discrimination.

The Seldon judgement raises the bar on the level of proof needed by employers if they wish to force someone to retire, setting out that employers will have to meet a number of tests in order to prove that their aim in discriminating is ‘appropriate and necessary’.

Some key points here are:

  • The employers objectives in forcing someone to retire will have to relate directly to government policy rather than being simply private.
  • The policy aims must have a genuine application to the individual’s situation, and cannot be crudely tacked on to window-dress justification.
  • The ‘gravity of the effect upon the employees discriminated against’ should be considered.
  • Flexibility for the employer is not a legitimate aim (although it can be a relevant factor in some circumstances).
  • Forced retirement has to be proven as the least discriminatory means possible to achieve the legitimate aim.
  • Performance management should be used wherever possible rather than making assumptions relating to age.

An employer will not, as is being reported in some media, simply be able to say that they are retiring someone ‘to promote intergenerational fairness’ – while this may be a legitimate aim in some circumstances, a substantial level of proof is required to ensure it genuinely applies to the particular role in question, and that there is no better way of achieving this objective.

Crucially the judgement effectively rubbishes the argument that it’s more dignified to force someone out of work than have ‘unseemly’ conversations about capability. Again, this can be a legitimate aim but in most cases it will simply be stereotyping.

Overall it seems the Supreme Court has handed down a balanced and fair judgement, which sets the level of proof needed for direct discrimination at an appropriate and fair level.

While the judgement does continue to allow the justification of age discrimination, we are optimistic that it serves the interests of many older workers.

Of course the proof of the pudding is in the eating, and we will have to wait and see how this is all interpreted in the Employment Tribunals and lower level courts.

In any case, we hope that employers do not go down the route of attempting to justify discrimination. Instead, investing resources in developing good age-neutral management systems will improve performance of staff across the workforce while delivering other business benefits like improved staff retention and better utilisation of skills. 

Helping employers do this is where the Government’s emphasis should now lie.

Read a blog by The Age and Employment Network about the Seldon case

Find out more about Age UK’s equality and human rights work

Five years on: what impact have the Age Regulations really had?

With the end of the Default Retirement Age gaining much attention over the weekend, 1 October 2011 also marked another, perhaps less newsworthy, milestone – it was the fifth anniversary of the implementation of the Employment Equality (Age) Regulations.

The regulations made age discrimination in employment illegal, and gave workers aged 65+ rights regarding unfair dismissal and redundancy.

It was an attempt to make a clear statement against age discrimination, but one which failed because of a huge anomaly contained within it.

As well as the regulations’ good points, they also included a new policy – the Default Retirement Age – which allowed employers to forcibly retire people aged 65 and above for no reason other than their age.

What impact have the Regulations had?

To mark this anniversary, Age UK has looked at the practical impact of the regulations on employer policies and practice towards older workers. Continue reading “Five years on: what impact have the Age Regulations really had?”

Flexible working – the future of work?

The ability to work flexibly is becoming an increasingly important part of modern working life, especially for older workers.

Altering working patterns to meet personal commitments is, for many, essential to remaining in employment. This is especially true for those with family and caring responsibilities but still need to earn the wages from a full time job, or those who wish to wind down their careers.

And there are countless other examples of circumstances where individuals aged 50+ can benefit from altered working patterns.

So what actually is flexible working? Continue reading “Flexible working – the future of work?”

The end of forced retirement – today!

The 6th of April 2011 marks a milestone in the employment rights of older workers. Employers will no longer be able to issue forced retirement notices to their 65+ workers, meaning that for the first time employees in this age group will have the same legal protection as their younger colleagues.

Such a step has been needed for years, and can surely only be a positive move for the 900,000 people – and rising – who already work beyond age 65.  Chart 1 shows the upwards trend in people working at age 65 and above, and how this has increased by over 50 per cent going back to May 2005. While not everyone wants to continue to work after 65, for those who do the end of forced retirement will restore personal choice and economic independence, allowing people continue to build pension provision and benefit from the social networks that many workplaces bring.

Chart 1: numbers in employment aged 65+

So we congratulate the Government for sticking to their guns and ending this deeply unfair practice.

There have, however, been a couple of minor changes to the transitional arrangements. The Department for Business, Innovation and Skills had originally proposed having a blanket end to forced retirement on 30 September 2011 i.e. within six months of the last notice-issuing day (yesterday). However, last minute changes to the transitional arrangements have meant that employers will still be able to give up to a years notice to their employees – providing they are 65 before October 2011– meaning workers could be forced out until April 2012. In addition, it will still be possible to agree an extension of up to a furher six months, meaning the final forced retirements could take place as far away as October 2012. This is disappointing for many, but for some it will be considered preferable to being forced out of work immediately.

So what’s likely to happen in the post-DRA world? Continue reading “The end of forced retirement – today!”

A lump of fallacy, or two plus two does not equal five

This is a joint post from Christopher Brooks, Employment and Skills Policy Adviser, and Jose Iparraguirre, Chief Economist.

A worrying trend has recently emerged among the policy commentariat, which is taking aim at older workers and laying the blame for the high rates of youth unemployment at their door. Yes, the debate around ‘job blocking’ has emerged once again, in spite of academic and mainstream policy thinking having discredited this theory many, many years ago.

Every now and again the ‘job blocking’ argument manifests itself in policy. Most notably for our purposes, in 1970s Britain there was a predominant view that older workers directly ‘blocked’ younger workers from entering the workforce. The Government of the day introduced the Job Release Scheme in response, which incentivised early retirement on the basis that the unemployed youth would then move into the vacancies. The scheme ran for around a decade before ending as a total and spectacular failure – not only had the scheme failed to improve youth unemployment, but it had proven that if anything there was a direct correlation between high employment rates among older workers  and high employment rates among younger workers.

Since then, thankfully, thinking among governments and policy makers has moved on, and the real relationship and causes – that the labour market is highly flexible, and that there is precious little competition for jobs between young and older seekers – have been recognised.

But every now and again the original theory rears its ugly head. Indeed, it is so well-known that economists have even coined a term for it: the ‘lump-of-labour’ fallacy. For some background, this theory has been around since the 19th century, and it seems to die hard (according to Nobel-prize winning economist Paul Krugman, it tends to bounce back whenever the economy contracts).

Firstly, what it is all about? During this current contraction of economic activity employment levels among older people have been going up whereas the number of younger people in employment has been falling. This is true both for men and women (especially above state pension age).

Continue reading “A lump of fallacy, or two plus two does not equal five”