Older workers are rarely treated kindly by recessions. They are traditionally more likely to get laid off, and once out of work they find it harder than younger people to get new jobs. But this time it’s been different. While it’s still harder for the over 55s, especially men, to re-enter employment, official labour force statistics show no evidence that older workers are disproportionately losing their jobs. Nor, it seems, are they being forced into retirement at 65.
Indeed, there are signs that the recession is accelerating a trend towards working longer that was already being driven by an ageing population, greater life expectancy and reduced pension provisions. According to EEF, the manufacturers’ organisation, which represents manufacturers, almost half the workers in member companies who reached retirement age in the 12 months to April 2009 asked to work on, and 84 per cent of them were accommodated by their employers.
Research from the CIPD, meanwhile, shows a dramatic increase in people’s plans to work later, probably driven by the recession. Its Employee Outlook survey conducted late last year found that 71 per cent of workers aged over 55 plan to work past the state retirement age, compared with only 40 per cent at the height of the economic boom two years before.
The number of people facing this choice is about to bulge. The largest segment of the working population is coming up to retirement in the next five to 10 years, points out Aimee Chapple, UK head of talent and organisation performance at Accenture. “Pre-recession, more of those people might have taken early retirement. But the recession will encourage people to work on,” she says.
The workforce will therefore age even faster than predicted. In some senses, this is good news. Given the skills shortages that remain in many sectors, employers need experienced workers to stay on longer. But it also adds urgency to the challenge of an ageing society that many employers have not yet grasped – and that hasn’t gone away with the recession.
“Not enough companies are thinking about this,” says Sally Ollett, a principal in the human capital practice at consultancy Mercer. “Some companies in sectors such as manufacturing and retail are preparing. But everybody needs to be conscious of their workplace age profile and how that will change over time.”
The extent to which organisations are unprepared for what’s coming is highlighted in recent research by the Sloan Center on Aging & Work at Boston College. It surveyed 700 US organisations in the top 10 sectors that account for more than 80 per cent of US employment, and found that 40 per cent believed that an ageing workforce would have a negative or very negative impact on their business in the next three years. Yet the researchers found that 68 per cent of employers surveyed had not analysed their workforce demographics and 77 per cent hadn’t analysed projected retirement rates.
There is no reason to believe that UK organisations are any better prepared. Chris Ball, chief executive of The Age and Employment Network, which campaigns for a better labour market for older people, says very few UK organisations have an age profile of their workforce, let alone analyse it by occupation or department. “If they do, they often realize they’re not as age diverse as they thought, and that their leaders and opinion-formers, the people who hold key knowledge, are ageing rapidly.”
Those organisations that are thinking positively about ageing generally fall into two camps – they are either facing skills shortages and so want to retain older, experienced workers, or they have discovered that their older workers are often more engaged and better at customer service.
Paul Sparrow, director for the Centre of Performance-Led HR at the University of Lancaster, observes, “There’s more understanding now about older employees as a segment of the workforce, and that’s good news. But not very many have picked up the real issues and appreciated that if the design of work and careers doesn’t change, the assumption, for example, that older people are more engaged, will end up being false.”
Ball agrees. He says that while “age-diversity” approaches are increasingly common, particularly since the introduction of anti-age discrimination legislation in 2006, the notion of age management in a wider sense has not yet taken off. “There’s plenty of fragmented good practice, ideas and policies put together by committed HR managers. But we need to have a more holistic approach, more of a systematic, self-conscious attempt to sustain age management throughout an organisation,” he argues.
One of the biggest issues is flexibility. There is extensive research to show that older people would like to be able to work reduced hours. And yet, for all the awareness-raising and initiatives on ageing that have gone on in the past few years, says Richard Worsley, co-founder and director of the Tomorrow Project, “the notion of retirement as a one-off transition in people’s lives is still deeply ingrained in the minds of employers, policy-makers, individuals and families”.
Geneviève Reday-Mulvey, director of the Four Pillars programme at insurance think tank the Geneva Association, which has been promoting the idea of extended, flexible working lives since the 1980s, says that progress is being made, but it “remains slow”, adding that the need to grasp the nettle is acute. Across the EU (including the UK) the median age of workers is around 40. In Switzerland, it is 50. Moreover, life expectancy at state pension age is increasing rapidly in all countries, meaning people need to find ways to support themselves for longer.
Interestingly, many of the issues that come up in research about what older people want – including the desire for more autonomy and flexibility – are also being demanded by the youngest workers. “We will see different ways of working that will suit both young and old,” says Chapple. “Many organisations have been afraid of the way the younger generation wants to work. But in preparing for that, they’ll also be preparing ways of dealing with the demands of the older workforce.”
The recession too, may end up playing a positive role in changing attitudes to flexible working, says Rachel Krys, campaigns director at the Employers Forum on Age, because many organisations have gone down the flexible working route, rather than making redundancies. “It has created an acceptance than you don’t have to be a mother of a small child to work part time,” she says.
Chapple is optimistic too. She believes that a step change is coming in the next decade as “multiple populations” – young, old, people with families – create a critical mass of workers demanding flexibility. As she points out, “I’m already getting more requests from men in my team for alternative working patterns.”
Yet the cultural changes needed to usher in this new era remain immense. Aside from the challenges of expanding forms of flexible working, the workplace is still fundamentally ageist in its attitudes and in many of its practices. Indeed, Reday-Mulvey says the UK seems to have a stronger culture of youth in the workplace, than, say, Germany, France or Scandinavian countries.
Worsley points out some of the prejudices: “There are all sorts of views about the capability of older people – that they lose physical and mental agility, particularly with eyesight and memory. But these are pretty small. The most serious deterioration will happen in the seventies and eighties,” he says. Moreover, there are ways of accommodating these issues, where there is the desire to do so (see below - JD Wetherspoon).
Recruitment is also a particularly fraught area. Although a handful of employers have focused on the advantages of hiring older people, many are reluctant. Jerry Wright, managing director of recruitment process outsourcing company CPH Consulting, says many employers are resistant to hiring people for certain roles – particularly sales roles – beyond a certain age. It’s not unusual for a 45-year-old to be rejected on grounds of “culture fit” because the average age of the team in question is mid-thirties, he says.
Education and training are other areas that are heavily geared towards the young. In many organisations training opportunities stop when people reach their forties or even mid-thirties and a vicious circle sets in whereby older workers don’t put themselves forward for training. Talent management programmes carry a similar bias, being geared towards young people who then get more development opportunities.
This kind of bias against older workers is understandable, but illogical. The thinking is that return on investment is better for younger people. Yet older workers tend to be more loyal to their existing employer, so are less likely to leave before a training investment has paid off. What’s more, points out John Philpott, the CIPD’s chief economic adviser, the longevity of skills nowadays is much less than it used to be. “Most training will be out of date within five years anyway,” he observes.
Changes in pension and retirement legislation may help to shift these attitudes. The state pension age will be 65 for all men and women by 2020 and is due to rise to 68 by 2046. In the meantime, the government will consult this year on removing the national default retirement age, currently set at 65 (see below).
But the biggest shift will probably come from the demographic changes themselves, as the bulk of the baby boomers reach traditional retirement age. “They will be at the vanguard of demanding change. Highly talented people have traditionally put their energy into negotiating salaries – will they now divert that into demanding flexibility?” asks Sparrow.
“You will suddenly see more older people in the workplace and that will drive the cultural change,” adds Krys, of the Employers Forum on Age, who observes that the two people in their mid-sixties in her organisation are a tiny minority in a building of some 2,000 workers. “In 10 or 20 years, they could be in the majority.”
Regulation: Should default retirement age stay or go?
Last July the government announced that it was bringing forward a formal review of the national default retirement age (NDRA) to this year, instead of 2011 as originally planned.
The NDRA allows employers to set a mandatory retirement age of 65 or above and to refuse to hire someone who is within six months of that age. It was written into the 2006 Employment Equality (Age) Regulations, which outlawed discrimination on the grounds of age, following pressure from employers, who wanted to retain the right to forcibly retire older workers.
Although it is widely expected that the NDRA will be abolished, this is not guaranteed. Many employer bodies, including the CBI and EEF, the manufacturers’ organisation, continue to support it, arguing that it helps companies plan better and makes it easier for them to have conversations about retirement with individual employees.
Those who want it abolished, including the CIPD, say it is straightforward discrimination and serves no useful purpose. Getting rid of it, they say, will send a strong signal to employers that the world has changed.
However, the big, often unspoken, argument against outlawing mandatory retirement is that it would be detrimental to underperforming older workers. Such workers can currently be allowed to coast towards retirement, but would have to be “performance-managed” out if their employment had no end date.
JD Wetherspoon dispels older worker myths
Pub and restaurant chain JD Wetherspoon, which late last year announced plans to hire an extra 10,000 people over five years, has been emphasising the benefits of an age-diverse workforce for the past three years.
Head of personnel and training Mandy Ferries says that the motivation was a desire to reflect the customer base and to enlarge the pool that the chain recruits from. Like most organisations in its sector, the majority of JD Wetherspoon’s 21,000 employees are aged 18-24 – but it does have workers in their sixties and seventies and one kitchen-worker who recently turned ninety.
The main change that JD Wetherspoon made was to increase awareness among staff through training on the benefits of recruiting from a wider range of ages. This has fed through, mostly via word of mouth, to greater recruitment of older people.
“We dispelled myths about older people not being up to the job,” says Ferries. Pub work can be quite physical, but part-time working is firmly established in the industry. Ferries says that there is no discernible difference in the amount of long-term sick leave taken by older staff – and for short-term sickness, older workers take less.
When it comes to the most physically demanding aspects of a job – such as stocking up fridges with bottles at the end of an evening or working in the cellars, older workers can get help from fitter colleagues, says Ferries. And there have been no issues with performance management: “We show our managers how to manage performance at any age. Younger people haven’t found it harder to manage older workers,” she says. “And in many cases they like having a mother or father figure on the team.”
Research: The bigger picture
The extent to which people want to or are able to stay on in work depends significantly on their level of skills and the quality of work on offer. Research done by the Four Pillars programme in Switzerland, which promotes flexible extended working lives, shows that people with a higher level of education are more likely to stay on longer, as are people who consider themselves to have good-quality work. The availability of part-time work, meanwhile, results in sick levels going down.
Linda Alker, who is conducting research for the European Social Fund at Manchester Metropolitan University, says workers fall into four categories: mainstream workers across all sectors, who might need to update their skills to stay employable; specialist older workers who are in a good position to stay on and contribute via coaching and mentoring roles; highly skilled managers who can often make a transition to contracting or consulting; and a large group of low-skilled people who will need considerable training and development.
Chris Ball, chief executive of The Age and Employment Network, says that government has so far put most of its efforts into getting employers engaged with age issues. However, it needs to engage individuals and unions to a greater degree, particularly if mainstream and lower-skilled workers are going to remain employable. “You are trying to change the way people conceptualise careers and working lives and what their ideas are of their own retirement.”
Article from People Management