CHAPTER 5: AGEING AND WORK II: PRODUCTIVITY
AND SKILLS |
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
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
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.
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
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.
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
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
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.
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
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
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.
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."
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.
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.
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
Ibid, p 25 Back
Dr Harper, volume II, p 462 Back
TUC, volume II, p 119 Back
CBI, volume II, p 219 Back
Disney, volume II, p 299 Back
Pension Provision Group, Pensions and the Labour Market,
(2001) p.23; with thanks to the Engineering Employers' Federation Back
EEF, Summary of Responses to EEF Age Discrimination Questionnaire,
p 1 Back
Warr, volume II, p 484 Back