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Select Committee on Economic Affairs Fourth Report



5.1. This chapter reviews evidence on the extent to which poor health or inadequate or inappropriate skills may reduce the employment chances of older people. It also considers the extent to which age alone, independently of health or skill, adversely affects job performance. This is a crucial issue for our ageing society, and one about which it is often assumed we know the answer. Our evidence indicates that empirical evidence about the relationship between productivity and age is thin, and we conclude that more research in this area needs to be undertaken as a matter of urgency.

Age and work capacity: the impact of health status

5.2. It is clear that some people below state pension age do not work because of reported poor health. A report in 2000 by the Cabinet Office Performance and Innovation Unit noted that, of the 2.8 million people aged between 50 and state pension age who were outside the labour market, 1.25 million were long-term sick or disabled, and only 0.29 million were currently seeking work.[59]

5.3. The number of people aged over 50 who are long-term sick or disabled has increased over time. This increase should be viewed in relation to the long-run improvement in life expectancy and in health status. Mr Mullan noted that there is unequivocal evidence that health status is improving at all ages, yet there has been a paradoxical increase over time in self-reported illness and in claims for disability benefits (Q137).

5.4. It was noted above (paragraph 4.24) that sickness-related benefit claims among older workers are regionally concentrated in areas of declining industry. Mr David Coats (TUC) suggested that part of the explanation for the paradox of improved average health status and rising disability rates is cultural (Q350). As the structure of the economy has changed, some workers from old industrial sectors have seen themselves as unfit for different types of jobs in the service sector, and employers have also seen them as unsuitable (Q348). Thus perceptions of physical fitness and suitability for specific types of work may be as important as objectively determined health status.

5.5. These divergent trends in age-specific sickness and number in receipt of long-term sickness or disability benefit indicate that many benefit recipients could work if conditions and incentives were appropriate. Only about 50 per cent of Invalidity Benefit claimants originally left work primarily because of ill health rather than other reasons, such as redundancy; their move on to benefit appears to have followed a period of unsuccessful job search.[60] However, Dr Sarah Harper (Director, Oxford Institute of Ageing) noted that current cohorts of older workers may have internalised the notion of early retirement as a normal phase of the life course, and thus may be particularly resistant to policy initiatives aimed at reintegrating them into the labour market.[61]

5.6. It is possible for employers to respond to any decline in the health status of older workers by redesigning the job task or the workplace. Dr Philip Taylor (Executive Director, Cambridge Interdisciplinary Research Centre on Ageing) noted that job redesign had been promoted in Japan as an effective policy response to the ageing of the workforce (Q1006); Baroness Greengross pointed to the effectiveness of similar policies in Scandinavian countries (Q114). Mr Mullan pointed out that it is possible to reorganise the division of labour within work teams so that individuals who have less physical capability - whether or not it is age related - can still fully contribute to the work process (Q162). The TUC noted that many older workers desire flexible employment, and it is therefore in the interests of employers to change the organisation of work so that they can make best use of the growing number of older workers.[62]

5.7. We recommend that the Government, employer and labour organisations collect information and disseminate "best practice" guidelines on ways in which jobs and workplaces can be redesigned to facilitate the employment of older workers who have activity-limiting health status.

5.8. We further recommend that employers should actively evaluate and instigate the redesign of job tasks and workplaces in order to maximise the opportunity for retention and recruitment of older workers.

Age and work capacity: the impact of education and skills

5.9. The employability of any individual will in part be determined by their level of skill. Economic development changes the mix of skills required by employers, with demand for high-skill workers rising relative to low-skill workers. This trend can adversely affect older workers in particular if their skills have not been upgraded since leaving full-time education.

5.10. The CBI reported that low skills are a barrier to the employment of people aged over 50. A third of people aged 50-64 have literacy and numeracy problems, compared to around a fifth of 26-35 year olds. Among the economically active population, 37 per cent of 50-64 year olds are not qualified to level 2 (equivalent to five or more GCSEs at C Grade or above), compared with 27 per cent of 20-34 year olds. Given that the number of low-skill jobs in the economy is shrinking, this educational deficit among older workers acts as a barrier to employment. [63]

5.11. Ms Susan Anderson (Director of Human Resources Policy, CBI) noted that this educational deficit is a particular disadvantage to older persons who become unemployed. On average, a younger job applicant will be more skilled than an older job applicant; thus younger job applicants are more likely to be recruited than older applicants. This effect occurs for economic reasons quite independently of any ageism that may exist on the part of employers (Q611).

5.12. Mr Bruce Warman (Employment Policy Director, Vauxhall Motors) pointed out that there is no separate labour market for the over 50s, nor is there a typical over-50 person. However, the new jobs that are being created are more likely to be in the service sector, involve team work and require skills in dealing with customers. These are very different from typical manual industrial skills. Quite apart from literacy and numeracy levels, some older workers find it difficult to adjust to the different type of skill required in new service-sector jobs. This may be less of a problem for younger people, who are less likely to have had experience in manual industrial employment, and who may possess more up-to-date basic skills due to their recent exposure to formal education (Q612).

5.13. The relative role of poor education and low qualifications can account for some of the high rates of non-employment among persons over 50, but cannot account for the regional pattern of non-employment. Ms Anderson noted that problems of literacy and numeracy are prevalent in all labour markets across the United Kingdom without any particular regional black spots (Q600).

5.14. The literacy and numeracy deficit of people over 50 is, to some extent, a cohort effect related to the educational and employment history of people born in the 1940s and early 1950s, rather than a simple age effect, so it may be diminished among future cohorts of the over-50s (Q1015). On the other hand, if access to workplace training is rationed by age, then a skills deficit among older persons is likely to persist across future cohorts, since workplace training plays an important role in maintaining and updating the skills of the working population. Dr Philip Taylor suggested that employers are less willing to train older than younger workers (Q1015). Mr Neil Churchill (Communications and Marketing Director, Age Concern) referred to survey evidence which indicates that the proportion of 50-65 year olds who receive workplace training is approximately half that of younger age groups (Q298).

5.15. Professor Disney indicated that the cost-effectiveness of training may be an issue of concern to employers, since the potential pay-back period is greater if the training is provided to a younger worker, provided that that worker stays with the employer.[64] Evidence supplied by the Engineering Employers' Federation, however, indicates that the median length of time a worker stays with any particular employer is 5 years 6 months, with shorter tenure the norm for younger workers.[65] Furthermore, Mr Churchill pointed to research which shows that the benefits for the employer of job-related training are usually reaped in the first year, so any age-related rationing of workplace training would appear to be a function of non-economic management decisions.

5.16. The Government are actively promoting life-long learning for current and future cohorts through a combination of public provision, individual effort and workplace training. Dr Taylor pointed out that life-long learning, and other policy measures designed to increase the employability of older persons, will be most successful if directed at the entire life course. It is more effective to enhance the skills of 30 and 40- year-olds to assist them in maintaining continuous employment, rather than to attempt to revive the skills of people in their 50s once they have become detached from the labour market (Q1006). Nevertheless, it does not follow that there is no point in reviving or enhancing the skills of people in their 50s and older.

5.17. We recommend that the Government and employers work together to develop mechanisms to promote equal access to workplace training and life-long learning for workers regardless of their age.

The relationship between age and job performance

5.18. The ageing of the population will increase the number of older workers relative to younger workers in the United Kingdom labour market. If older workers are close or perfect substitutes for younger workers, then this shift in the age structure of employment can be achieved with minimal economic disruption. If, on the other hand, older workers differ significantly from younger workers in their skills, trainability, productivity and reliability, an ageing of the workforce may have significant economic impact. It is therefore important to determine whether, and in what ways, older workers differ from younger workers in their workplace performance.

5.19. A survey conducted by the Engineering Employers' Federation (EEF) of its member companies revealed that most employers who expressed a view about older workers generally considered them to be more loyal, committed, reliable, trustworthy, accurate and stable than younger staff. On the other hand, in the context of manufacturing production, workers under 40 were considered to be faster, more efficient, more physically and mentally able and to have better sickness records.[66]

5.20. Some EEF members also noted that health and safety issues deter them from recruiting older staff to do heavy physical work because they are "not physically up to the pace over an extended period."[67] Mr Warman (Vauxhall Motors) agreed that health and safety considerations were important for some, but not all, industries. He said that he was "very uncomfortable about having people over 60, generally, working on a production line" (Q612).

5.21. Mr John Philpott (Chief Economist, Chartered Institute of Personnel and Development) noted that most employers do not have direct information on individual productivity; this is extremely difficult to obtain from workplace studies, because in most organisations the output is the joint product of many individual workers (Q772). Professor Peter Warr (Institute of Work Psychology, University of Sheffield) pointed out that workplace studies do not necessarily provide unambiguous evidence of the relationship between age and job performance, because the process of self-selection means that individuals who detect changes in their own performance, motives and capabilities may move to less demanding work, or may withdraw entirely from the labour force.[68]

5.22. Despite this difficulty in interpreting research results, Professor Warr informed us that extensive research has shown that, on average, there is no significant difference between the job performance of older and younger workers. Although the average association between age and performance in a job is about zero, in some cases older employees clearly perform better and in others they are clearly less effective than younger ones. However, these conclusions are derived from studies which typically designate older workers as those aged 40-55. Little research has been conducted on the work effectiveness of people aged 55 and above. [69]

5.23. Mr Neil Churchill (Age Concern) pointed out that, although productivity is difficult to measure, it is clear that older workers can bring to the workplace characteristics such as knowledge of the institution which are of value to employers, and which younger workers are less likely to possess (Q284). Thus a workforce with a diverse age structure may possess a broader and richer array of skills than a workforce comprised solely of young or of old workers.

5.24. Dr Philip Taylor (Executive Director, Cambridge Interdisciplinary Research Centre on Ageing) noted that, despite the research findings that age has no net effect on workers performance, when supervisors and managers are asked to rate the performance of workers, they consistently rate the performance of older workers below that of younger workers. Dr Taylor suggested that this may reflect the way in which socially constructed age stereotypes operate in the workplace (Q1006).

5.25. It is clear to us that there appears to be little robust evidence on the relationship between individual age and worker productivity, despite the importance of this issue.

5.26. We believe it is essential to improve knowledge of the relationship between individual age and worker productivity in order to provide a sound foundation for evidence-based policy. We therefore recommend that the Government commission research on the relationship between individual age and worker productivity in order to strengthen the evidential base for future policy initiatives in the area of older-age employment.

59   Cabinet Office Performance and Innovation Unit, Winning the Generation Game (2000), p 21 Back

60   Ibid, p 25 Back

61   Dr Harper, volume II, p 462 Back

62   TUC, volume II, p 119 Back

63   CBI, volume II, p 219 Back

64   Disney, volume II, p 299 Back

65   Pension Provision Group, Pensions and the Labour Market, (2001) p.23; with thanks to the Engineering Employers' Federation Back

66   EEF, Summary of Responses to EEF Age Discrimination Questionnaire, p 1 Back

67   Ibid Back

68   Warr, volume II, p 484 Back

69   Ibid Back

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