Ready for Ageing? - Select Committee on Public Service and Demographic Change Contents


Annex 5: Working for longer (see paragraphs 4 and 8-11 of the report)

103.  As described in Annex 4, an increase in the number of retired people would affect the 'dependency' ratio, as well as having an impact on the economy and the fiscal choices that are available to the Government. But if the average retirement age rises as longevity increases, the 'dependency' ratio could be stabilised or reduced. This would result in a likely increase in GDP per capita (see Annex 4) and a boost in tax receipts.

104.  More importantly, however, individuals choosing to work for longer would themselves benefit from additional income, the potential for more saving, a reduction in the length of time the individual is dependent on those savings and often an improvement in physical health, mental health, and in well-being.[88]

105.  By employing older workers, employers would benefit from the fruits of older workers' experience, knowledge and wisdom and a substantial implicit wage subsidy from employing people over state pension age, because they may undertake part-time work for a relatively low wage due to enjoying supplementary pension income.[89]

106.  Wider social benefits related to people staying in work for longer include reduced levels of isolation and loneliness among older people, with accompanying healthcare savings.[90]

107.  By 2030, men aged 65 in the UK will expect to live until they are over 88 (23.4 years past the age of 65), and women to the age of 91 (26 years past the age of 65).[91] If our society and economy are to maximise the benefits of longer lives, older people must be enabled to stay in employment for longer.[92] Expectations of early retirement must change.[93] Employers and the Government should remove disincentives for older people to work for longer—although the choice to continue in work must remain entirely with the individual. Possible incentives are discussed below.

108.  The Committee considered that the following measures would do much to change attitudes to people working later in life:

·  The incentives in the tax, benefit and pensions systems for both early and fixed-date retirement should be actively reviewed. It should be beneficial to defer taking state and private pensions. ILC-UK conducted a survey on the prospects for extended working lives that demonstrated a strong willingness across all age groups to work for longer in various circumstances. For example, 41% of men and 39% of women said they would consider delaying their retirement if they could defer their state pension entitlement in return for higher payments later—which in fact they can already do.[94]

·  'Cliff-edge' retirement should end: a culture change is needed so that both individuals and employers end the expectation of retirement at an arbitrary age. Flexible retirement and withdrawal from the workforce must be made a reality, by enabling people to downshift to part-time work, and wind down work while taking up pensions, benefits and tax relief more flexibly. ILC-UK reported that 46% of men and women would consider delaying retirement if their employer offered support for reducing their hours, or for more flexible working.[95] Dr Ros Altmann, Director-General, the Saga Group, described "a phase of life after full-time work where you are cutting down but not stopping altogether".[96]

·  Employers need to be much more positive about employing older people. Employers and employees should adopt a more flexible conception of how and when people move on from paid work as they get older, to their mutual advantage.[97] Employers should demonstrate more flexibility towards the employment of older workers, and help them to adapt, re-skill and gradually move to more suitable roles and hours when they want to do so.[98] The TUC argued that if employers paid more attention to flexible working, health and safety, retraining, and procedures against discrimination, employees would work for longer.[99] Kayte Lawton, Senior Research Fellow, IPPR, told us that while it is difficult to shift employers' attitudes, it is possible to use "smart regulations" to open up opportunities for part-time work and flexible working. She proposed a right to return to a job "in a similar way as maternity leave works: if you have a period of ill health and you need to take a number of months off your employer then is required to take you back".[100]

·  As part of breaking down the outdated cultural expectation of cliff-edge retirement at an arbitrary age, the Government should look at moving away from using age as a defining measure for service or benefit eligibility. Age is no longer a good indicator of need or ability to pay, so the Government should review whether age alone is a sensible determinant for tax liability, access to services or benefits.

·  Employers should support those with responsibilities for caring for older people—particularly people in their 50s or 60s who care for elderly parents—to continue part-time or in flexible work. Carers UK reported that by 2037, nine million people are projected to be caring for "an older or disabled loved one", and that in the last 10 years the proportion of carers caring for over 50 hours a week has doubled.[101] Carers UK have found that more than 40% of carers who gave up work did so due to a lack of sufficiently reliable or flexible services. The average cost of recruitment, retraining and lost productivity is around £11,000 per staff member lost, according to the organisation's analysis.[102] Carers UK also reported that 41% of those who described themselves as looking after their home and family (85% of whom are women) said that "they would rather be in paid work, but services available do not make a job possible". The peak age for caring, 45 to 65, also often represents employees' peak age for training, skills and experience, which employers are at risk of losing at short notice if the social care system cannot enable families to juggle work and care.[103]

·  The Committee received impressive evidence from employers such as BT and B&Q who are making notable strides towards creating a more favourable employment environment for older people, but was disappointed not to receive more evidence from employers' representatives about whether they also saw a need for similar shifts in other employers' attitudes and working practices.[104] The primary motivating factor for those companies that had introduced policies to enable people to stay longer in work was that this approach was beneficial to their profitability.[105] Employers should recognise that the employment of older workers is in their interests, as well as having a beneficial effect on economic growth.[106]

·  Welfare to work policies should also address the needs of older people. Steve Webb MP, Minister of State for Pensions, proposed that the Work Programme could do more to get older people back into work.[107] The Department for Work and Pensions has for some time aimed to improve its service to those approaching retirement age, but its plans must be more ambitious and urgent.[108] Low-skilled and manual workers will face particular hurdles to continued employment and re-employment. Employers need to think imaginatively about how they can help this group of people to stay working in suitable jobs if they wish to. These workers should receive help to retrain; manual workers should be supported to shift to non-manual roles.[109] The Government should not neglect their responsibility to support the large numbers of people who, as a result of physically demanding working lives or due to co-morbidities associated with older age, will be too sick or disabled to continue in work.[110]

·  The Government should communicate the benefits of people staying longer in the workforce. In particular, the Government should publicly reject the 'lump of labour fallacy' that wrongly argues that more older people in work will disadvantage the young. More older people in work will not mean fewer jobs for young people. A larger workforce, with more people in work and earning, creates its own demand; and we know that in practice the fallacy does not hold—previous attempts, both in the UK and abroad, to create jobs for young people by encouraging early labour market withdrawal have failed miserably. A 2008 report by the Institute for Fiscal Studies on early retirement and youth unemployment concluded "we find no evidence of long-term crowding-out of younger individuals from the labor market by older workers. The evidence, according to a variety of methods, points always in the direction of an absence of such a relationship".[111] Permanent Secretary, Department for Communities and Local Government and Head of the Civil Service, Sir Bob Kerslake, confirmed to us that "It is absolutely clear that we will have to work longer", but that while "the Government have faced up to that issue", he was "not yet sure the country has faced up to that issue".[112]

109.  Extending working lives will be a vital part of the response to living longer. In addition, the country will still need to make important choices about public service delivery in order to ensure that the growing older population gets the public services that it will require. The following annexes outline these choices.


88   Q 330 (Ben Jupp, Director, Social Finance); B&Q. Back

89   B&Q; Q 330. It should be noted, however, that salaries for older workers may be higher to begin with. Back

90   B&Q; see Professor Peter Goldblatt at Q 542 for the connection between social isolation and ill health. Back

91   ONS, Pension Trends, Chapter 2: Population change, February 2012. Back

92   Central Government (DoH, DWP and DCLG), written evidence.  Back

93   The Saga Group. Back

94   ILC-UK; Age UK; Q 135. Back

95   ILC-UK; QQ 515-516 (Dianah Worman, Chartered Institute for Personnel Development (CIPD)). Back

96   Q 465; TUC. Back

97   Central Government (DoH, DWP and DCLG), written evidence. Back

98   Bernard H. Casey and Robert Lindley, Older worker policy in the United Kingdom: a case of schizophrenia, Institute for Employment Research, University of Warwick, August 2012. Back

99   TUC.  Back

100   Q 155 Back

101   Q 277 Back

102   Carers UK. Back

103   Carers UK; Q 517 (Dr Craig Berry, Pensions Policy Officer, TUC); QQ 524-5 (Caroline Waters, Director of People and Policy, BT); Central Government (DoH, DWP and DCLG), written evidence. Back

104   CBI. Back

105   B&Q; Q 530 (Professor John Philpott, Economist and labour market research analyst, former director of Employment Policy Institute and former Chief Economic Adviser at the CIPD), Q 688; Q 531. Back

106   Central Government (Department for Work and Pensions) further, further supplementary evidence. Back

107   Q 687; Central Government (DoH, DWP and DCLG), written evidence. Back

108   Home Instead Senior Care; Central Government (Department of Health and Department for Work and Pensions), further supplementary written evidence. Back

109   Q 517 (Dr Berry); Low Incomes Tax Reform Group (LITRG) and Tax Help for Older People; Older People's Commissioner for Wales; Vale Older People's Strategy Forum. Back

110   TUC. Back

111   Institute for Fiscal Studies, Releasing Jobs for the Young? Early Retirement and Youth Unemployment in the United Kingdom, July 2008,.  Back

112   Q 639 Back


 
previous page contents next page


© Parliamentary copyright 2013