Coronavirus is causing a worldwide shift towards working from home, widespread redundancies and layoffs, and a dramatic rethinking of business strategies from “thrive” to “survive”. When the dust has settled and “herd immunity” has been reached, what might be the long-term impact of coronavirus on older workers?
This article by Niamh Crotty, an Associate in the Employment team at Lewis Silkin LLP, sets out some of the long-term issues facing employers and older workers, including:
Will older workers be disproportionately affected by furlough and redundancies and will this contribute to knowledge and skills loss?
With unemployment set to increase and employers able to have their pick of the talent, will age discrimination in recruitment rise?
How will older workers readjust to the workplace after long periods of working from home, perhaps in isolation? How will they adapt to more permanent working-from-home arrangements?
Will older workers be forced to stay in work because their pensions have diminished during the downturn?
Coronavirus will change the workplace
The workforce is ageing. At the end of 2019, The Guardian reported that the number of employees aged over 65 had increased by 188% in the last 20 years, from 455,000 to 1.31 million. The same newspaper reported in May 2019 that there were more than 53,000 over-80s working in the UK, 25% of whom were working full-time.
There were already significant pressures on older people in the workplace before the pandemic. Common challenges facing them include knowledge loss, a dip in productivity and a disparate relationship with customers, all of which may be exacerbated by the work-from-home and furlough phenomena. The longer-term impact of Covid-19 on the ageing workforce is impossible to predict, but it is undeniable that coronavirus is likely to create lasting changes in how we live and work.
Coronavirus, furlough and older workers
Older workers may be more likely to be furloughed, for various reasons. They may be categorised as vulnerable, or if they have caring responsibilities at home (and so may volunteer). Or they could be furloughed as a result of unconscious bias or age discrimination, if they are perceived as being less adaptable to the immediate needs of the business.
Employees cannot do any work for their employer while on furlough, which may have a disproportionate impact on older workers who are already much less likely to have opportunities for training, development and progression within their careers. A protracted period of not working or socialising with colleagues may contribute to loss of skills and knowledge and reinforce an already incongruent relationship with younger co-workers in the longer term.
Coronavirus, redundancy and older workers
Former chancellor Alistair Darling has warned that the economic impact of the coronavirus pandemic will be "far, far worse" than the banking crisis in 2008. He predicts that, despite the government’s furlough scheme, unemployment in the UK will rise in August 2020.
The International Monetary Fund (IMF) has remarked that even if the coronavirus outbreak was short-lived there would be a global contraction of 3% GDP, but a second wave in 2021 could leave economies struggling for years to come. It therefore seems likely that redundancies and unemployment will become more common in the longer term, as governments are forced to withdraw their coronavirus income support schemes.
Age discrimination and redundancy
Redundancy can be a difficult area for employers to navigate and age discrimination claims can often arise. Although the UK has equality legislation prohibiting age discrimination in the workplace, significant age biases are still prevalent in many organisations. In 2019, 44% of older workers in Europe and 64% in the UK said they were concerned about age discrimination.
According to research carried out by Rest Less, redundancy rates in the UK among those in their 50s are more than double the rates for those in their 40s, with those in their 60s second to those in their 50s as the age group most likely to be made redundant. Losing a job can have a major impact on a person’s livelihood and career aspirations, but this is especially true for those over the age of 50 who can find it difficult to obtain a new job due to age bias in recruitment. If predictions of mass redundancies are correct, many older workers may struggle to re-enter the job market.
Coronavirus, unemployment and older workers
According to an analysis of labour market data, workers aged between 50 and 64 are more likely than any other age group to face long-term unemployment, which suggests there are multiple barriers to older workers re-entering the workforce. Between May and July 2019, those searching for work aged 50 to 64 were 33 per cent more likely than under 50s to be unemployed for more than two years. Studies show that as workers get older, the duration of unemployment lengthens and their chances of finding a job decline.
While younger workers between the ages 15 to 24 were the most affected by unemployment in Europe during the 2008 recession, a 2014 study in the US found that the average duration of unemployment for the 55-64 age group was nearly double the length of those aged 20-24 (according to US Labour Department data).
The authors of the study, David Neumark and Patrick Button, said that “the sharp increases in the duration of unemployment for older workers during and after the [recession] indicate that older individuals who lost their jobs because of the downturn or who were seeking new employment have had a harder time finding work than other workers have”. They explained that an event like the 2008 recession “disrupts the labour market so severely that sorting out which effects are due to age discrimination and which to worsening business conditions becomes very difficult… nonetheless, increased discrimination during and after the [recession] may have extended unemployment durations of older workers, especially those near retirement”.
As such, it is not clear whether age discrimination becomes more prevalent during a recession. However, as unemployed older workers are more likely than younger workers to remain unemployed for longer periods, this may suggest age discrimination in recruitment. As a result of these protracted periods of unemployment, it may turn out that older workers who become unemployed as a result of coronavirus may never re-enter the workforce, particularly if they are nearing retirement age.
Coronavirus, homeworking and older workers
Coronavirus has resulted in a global experiment in homeworking taking place and for many industries, particularly professional services, it has apparently been a success. For example, the lockdown restrictions gave Barclays Bank an opportunity to test out concurrent remote working for 70,000 out of its 80,000 employees and, as a result, it is already exploring a more decentralised approach to work. There are predictions of a cultural shift towards homeworking after the pandemic subsides, which prompts consideration of the long-term impact of a remote workforce on older workers.
Problems of homeworking for older workers
Reduced social interaction, perceived lack of trust from management and pressure to be productive can cause team dynamics in a remote workforce to become strained. Younger workers often have a perception that older co-workers are set in their ways, unmotivated and not tech savvy. Such attitudes may be become even more entrenched during long periods of working from home when workers grapple with technology, productivity and motivation.
For many older workers, coming into work provides their daily life with structure, purpose and camaraderie. Social connections contribute to better mental health and wellbeing and, for many older adults, the community in which they spend the most time is the workplace. Long-term working from home may lead to feelings of isolation and loneliness, particularly as older workers are likely to be less connected by social media than their younger colleagues. As working from home becomes more commonplace in the future, keeping in touch by virtual means such as Skype, Zoom and Instant Messenger will be crucial to fostering and maintaining good working relationships. If older employees are not availing of these as much as younger co-workers, there is a risk that cliques will develop in the workforce that exclude them.
Employers should encourage regular virtual catch-ups between teams and among peers to inspire connection and team spirit. Unily, a digital workplace provider, has been looking into the topic of reverse mentoring as a means of tackling tech-literacy in a cross-generational workforce. This is the practice of older executives being mentored by younger employees on topics such as technology, social media and current trends. Not only will this increase older people’s confidence in their technological capabilities, but it may also help forge cross-generational working relationships.
Coronavirus and pensions
During the coronavirus outbreak, stock markets have fallen considerably and are likely to be volatile for some time. Workers with defined contribution pensions will have been hit hard by these falls. Older workers who are close to retirement will be particularly concerned if their pension pots have shrunk, as they will have less time for markets to recover. Normally as workers get closer to retirement age, however, pension funds start investing in “safer” places (e.g. bonds) to limit the risks caused by unpredictable stock markets.
Those approaching retirement are generally recommended to delay taking their pension for as long as possible. Steven Cameron, Aegon’s pensions director, advises older workers who are “already using drawdown, or plan to move into drawdown soon… to avoid taking out any more than you need to while fund values remain depressed… The more you can leave invested, the more you will benefit if stock markets recover.”
While the state pension is not directly affected by economic shock, the Social Market Foundation (SMF) has argued that the 2.5% guaranteed increase to it should be removed in order to save the government £20bn. According to the SMF, “in the post-crisis world of slow, painful recovery, a triple lock ensuring a 2.5% minimum rise in pensions would constitute enormous generosity to pensioners, at a time when working-age adults face low or no wage growth and significant unemployment”. Arguably, this ignores the fact that state pension in the UK remains one of the lowest in Europe and removing the guaranteed 2.5% increase would hit the poorest pensioners hardest.
Accordingly, we are likely to see a further reduction in retirements and phased retirements as older workers hold off withdrawing from their pension for as long as possible. According to Hymans Robertson, defined contribution pensions are already starting to show positive signs of market recovery due to dramatic falls in the number of expected retirements this year on account of the ongoing pandemic.
Strategies for employers
Employers can minimise the lasting effects of coronavirus on older workers in various ways:
Since workforces started working from home en masse, employers are seeing that difficulties with technology can have a serious impact on remote work satisfaction and contribute to raising stress levels, particularly among older workers. If homeworking is to continue in the long term, organisations should ensure that support and training are in place to support those experiencing technical difficulties. There will inevitably continue to be glitches, so organisations should encourage employees to be patient with one another, as well as with clients who are likely to be having similar difficulties in the work-from-home environment.
As discussed above, working remotely for long periods brings its own challenges including feelings of isolation and exclusion. Employers should ensure that training and upskilling of older workers continues while they are working from home. This can help address any loss of knowledge and boost confidence, making older workers feel valued and integral to the organisation.
Employers should also keep in contact with older workers and promote virtual team coffees and catch-ups. Employees should be encouraged to show kindness and compassion to their older co-workers, an important factor in developing inter-generational relationships in both the virtual and the physical workplace.
Organisations should consider providing training to team leaders on how to manage remotely, particularly in view of the importance of employers and managers giving appropriate support to older workers. Micro-management should be avoided, however, as it can indicate a lack of trust in an employee’s ability to do a task. Many older workers may also have other responsibilities such caring for elderly parents or grandchildren. Managers should reassure them that they are trusted to manage their own workload but that support is available if they need it.
Flexible working may help people work for longer. It can significantly improve work–life balance for older workers by helping them manage health conditions and accommodate caring responsibilities. One of the positive outcomes of coronavirus is that many organisations are beginning to see that flexible-working arrangements can be effective. Working from home during the pandemic may be a useful way for older workers to test-run remote working and a more flexible working pattern. If some of that flexibility can continue when things return to “business as usual”, it could ultimately help older workers stay in the workforce for longer.
Coronavirus may have already changed the face of the workplace as we know it. The IMF has described the global economic downturn as the worst since the Great Depression of the 1930s. Unemployment will rise and may persist, although the furlough scheme is expected to limit the rise in UK unemployment to 4.8% in 2020 (from 3.8% last year). Older workers who adapt and thrive during this period of uncertainty will be even more valuable to organisations in future once the pandemic is finally over.
Niamh Crotty is an Associate in the Employment team at Lewis Silkin LLP.