A silver lining for the UK economy? The intergenerational case for supporting longer working lives

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The older workforce is part of the answer to the fiscal pressures of an ageing society

We are living longer and working longer. While an ageing society contributes to pressures on public finances, it also creates new opportunities to rebalance the fiscal equation. Making work better for us all as we age will support more people to work for longer. This increases tax revenues, reduces benefit spending and boosts overall levels of GDP, consumer demand and employment opportunities for all ages.

The need to work for longer must be viewed in the context of inequalities within generations. Older workers face higher levels of long-term unemployment, long-term low pay, gender pay differentials and health-related inactivity. Too many people are approaching retirement with inadequate savings, are in poor health and at risk of missing out on a good later life. Policy solutions that focus on younger workers to the exclusion of older workers will fail to address these key structural inequalities in the labour market, leading to further disparities for Generation X and younger workers as they reach middle age. Making work better for older workers will benefit individuals, the economy and the state – now and into the future.

Despite the growth in older workers over the last 20 years, there is still a stark gap between employment rates of people in their 50s and early 60s and those in their 40s. Currently, less than half of the population are in employment the year before they are eligible for their state pension. This age employment gap is likely to grow in line with the scheduled rises in state pension age unless action is taken now.

The key driver of supporting people to work for longer is to improve the quality of work. Improving employment practices for older workers will make the workplace better for everyone.

We need to support current older workers to remain in work for longer

Health conditions and caring responsibilities are the major reasons for early exit from work in later life. We believe Government needs a joined-up approach to support health in work, particularly for slow-onset, age-related conditions which are not viewed or treated in the same way as disabilities by either individuals or employers. Rates of unpaid caring peak in mid-life, which can often lead to people leaving work. Employees over the age of 50 are most likely to say that working part-time or flexible hours would encourage them to delay retirement. Workplace flexibility from the point of hire onward is crucial to help people manage both health conditions and caring responsibilities.

Job quality and role design can also help retain older workers. A quarter of all workers in the UK do not think they could to do their current job over the age of 60, rising to one in three for lower-skilled manual workers. Employers need to find innovative approaches to role design and use of technology to assist and enable people to remain in good quality work for longer.

We need better support for those out of work who want to return

Once out of work, those aged 50-64 have more difficulty than any other group in returning to work, and the reality is that many never work again. Despite the long-term negative impact of prolonged worklessness, employment support has paid relatively little attention to people in mid and later life. Skills, training and employment support has been targeted at young people over previous decades and by different governments. As a result, there is still a lack of good evidence about what works to support older jobseekers. It’s clear we need further experimentation and innovation to address the multiple barriers that older jobseekers face.

We also need to recognise that paid work might not be possible or desirable for everyone as they age. Poor quality work can be detrimental to health and wellbeing, and people who are not able to work must also be supported. In light of the rising state pension age, a significant number of people nearing state pension age are likely to transfer to working-age sickness and disability benefits, unless mitigations are put in place.

We need workplaces that work for everyone irrespective of age

There are significant age biases in the workplace with older workers more likely to experience discrimination in recruitment. Equal opportunities policies and legislation in themselves have not been sufficient to drive changes in behaviour. There is a need to open up discussions about age at work and use a range of policy levers to support employers and older workers to create more equal and inclusive workplaces.

What people want from work is broadly consistent across generations. However, older workers are much less likely to have opportunities for training, development and progression. Across the OECD, only Turkey and Slovenia have lower levels of training for older workers than the UK. New investments in skills and retraining could redress this imbalance, allowing older workers to reskill and progress in the workplace.

Employer behaviour is key to retaining older workers. Older workers are more likely to stay in work if they think that their work matters, their employer supports them and their needs are taken seriously.

Employers should:
– Promote good workplace health, support working carers and embed opportunities for good quality flexible work from the point of hire. – Promote the use of technology to adapt job roles around the needs of older workers, particularly for people with health conditions and to offer flexibility through remote working. – Work with older workers to ensure that where, when and how they work can best enable them to maximise their contribution, improving satisfaction and retention. – Reduce the impact of age-bias in recruitment by reforming the application process, training those who hire and manage staff and promoting age-diversity champions. – Support all employees to plan ahead from mid-life, including career and personal goals, relationships and caring responsibilities, wellbeing, health and finance.

An ambitious aim to support more people to be in good quality work as they age

The Centre for Ageing Better, along with employers and partners in the Business in the Community (BitC) ‘Age at Work’ campaign, has set out an aim to increase the number of people aged 50-69 in good quality work by 1 million over the next five years.

Enabling people to enjoy good quality work for longer will benefit individuals (in terms of living standards, wellbeing and retirement savings), the economy (in terms of skills and workforce, as well as GDP) and the state (in terms of increased tax revenues and reduced or deferred demand on public services), now and into the future.

In this policy paper for the Intergenerational Commission, the Centre for Ageing Better sets out some of the policy options that could help achieve this aim.