Chapter 5: Working in the 100-year life
154.The three-stage model of life created in the 20th century of ‘education, work, retirement’ is no longer suitable with the prospect of careers that may span over 60 years.204 We need to think in much more multifaceted terms: more of us will have a multistage career, where we will need frequently to change what we are doing and what we are learning to make this possible. This need for a shift in thinking becomes more profound in the context of technological change and advancement, the total impact of which we cannot yet precisely predict. We have received evidence that showed while both employers and employees recognise the benefits of having age-diverse teams, most employers are failing to plan for an ageing population.205 We therefore turn our attention to how a new, multistage model might be conducted.
Pay progression
155.By historic standards, youth unemployment is low. The UK’s youth unemployment rate of 11.2 per cent in July to September 2018 was lower than the rate of 15.1 per cent for the European Union as a whole, although this ranges from 6.2 per cent in the Czech Republic and Germany to 37.5 per cent in Greece.206 However, many young people face worrying problems with pay progression. The incomes of younger people have fallen more than for other age groups since the financial crisis a decade ago.207 Research from the Intergenerational Commission suggests that cohort-on-cohort pay progress has stalled, with the oldest cohort of millennials recording earnings at age 30 only slightly higher than the cohort born 15 years before them.208 It states that pay progress was declining even before the crisis, and that one of the roots of the decline is a slowdown in the rate of skills improvement.
156.Despite the public perception that young people move around frequently between jobs, this is not borne out by the data. Kate Bell, Head of Rights, International, Social and Economics Department at the TUC, suggested that one of the reasons young people’s pay progression is so poor is that job-to-job moves have diminished substantially, even though “moving job can often be the best way to increase”209 pay. She also stated that a lack of a sense of security in their current living situation, such as the inability to get onto the property market, might be holding young people’s progression back. Other potential reasons for this lack of pay progression that have been suggested are the concentration of young workers in low paying jobs, a lack of access to skills development and that young people are particularly vulnerable to insecure work.210
Figure 4: Median real weekly employee pay (CPIH-adjusted to 2017 prices), by age and cohort: UK, 1975–2017
Source: The Intergenerational Commission, A New Generational Contract: The final report of the Intergenerational Commission (May 2018): https://www.resolutionfoundation.org/advanced/a-new-generational-contract/ [accessed 30 January 2019]
157.It is not clear whether—or indeed, how—policy should seek to encourage young people to change jobs more often. These are questions of personal choice. However, low paid workers should have opportunities to progress into higher-paying roles without having to leave their employer. This re-emphasises the importance of in-work training and continuing education. In their 2014 Policy Report, the CIPD recommended that employers should increase opportunities for progression by ensuring that people on low pay know who to have meaningful discussions with about pay progression, and by routinely asking employees if they want to progress and setting up skills packages to enable progression with an organisation.211
158.We have also received evidence that older workers had experienced a lack of pay progression; we heard from Age UK that low- to middle- income older workers have also seen poor income growth in the last eight years.212
159.We do not doubt that stagnant pay progression presents a worry at every age, but we have seen that slow pay progression is a particularly acute concern for young people, and that this might have serious consequences for their progression through life. YouGov conducted a survey of 1,422 young workers aged 21–30 for the TUC in May 2018.213 They found that in the preceding year alone, 41 per cent had to ask their family or friends for financial help due to a shortage of money. More than one fifth of respondents had put off starting a family, and over a quarter had put off changing careers again due to a shortage of money.214 The nature and quality of work is important throughout the lifecourse, not least to ensure good outcomes for people later in life, both in terms of financial security and health.
160.The evidence we received from the Government acknowledged that younger generations are not experiencing the same earnings progression as seen by previous generations. It does not suggest any particular policy response to this trend, although it does mention that the DWP has a large randomised control trial on how to support those in low-paid work to progress through Universal Credit. This report has since been published and found mostly small or insignificant effects in earnings progression.215
161.Slow pay progression is a particularly acute concern for young people. This is a real challenge, as slow pay progression can have serious consequences for progression through life. Business’ best practice for encouraging pay progression should be shared. Acting on the recommendations proposed for lifelong learning will aid progression through the lifecourse.
Insecurity of the job market
162.We heard numerous times about worries that the labour market was becoming less secure. It is helpful, when thinking about insecure labour conditions, to define and differentiate between commonly used terms.
Box 3: Common job market terms
|
Flexible working: A way of working that suits an employee’s needs, for example having flexible start and finish times, or working from home.216 Insecure employment: Includes low-paid self-employment, workers on zero-hours contracts and insecure temporary work, for example agency, casual or seasonal work. Sometimes referred to as atypical employment. Gig economy: A labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs. Instead of a regular wage, workers get paid for the ‘gigs’ they do, such as a food delivery or car journey. Workers in the gig economy are not entitled to sick pay. |
163.There was a widespread feeling among the Contact Group participants that zero- and low-hours contracts created a problem of insecurity. Younger people are disproportionately affected by insecure work, such as zero-hours contracts. There are an estimated 3.7 million people in the labour market in some form of insecure work.217 15–24 year olds are substantially more likely to be in temporary work than other age groups218 and 36 per cent of people on zero-hours contracts are aged 16 to 24 years, compared to 11.4 per cent for all people in employment.219
164.Zero-hours contracts might work well for some young people, such as students who want part-time work. We heard that there is a lack of quantitative evidence surrounding those who want or are forced into zero-hours contracts. This is partly because it is a relatively new form of employment, but also because it is very hard to track people down.220 Ian Brinkley, Interim Chief Economist at the CIPD, suggested that “probably both” business’ and employees’ desire for flexibility has driven the growth of zero-hours contracts and that in averaging out four surveys on zero-hours contracts, “you probably have something close to a third saying that they do not want to be on them, and two-thirds who say they are indifferent or suit them very well.”221
165.Certainly, the flexibility that such atypical employment offers is attractive to some, and therefore we should not look to abolish such contracts completely. 19 per cent of those on a zero-hours contract are in full-time education and around 63 per cent of workers on zero-hours contracts do not want to work more hours.222 Yet we have heard that young people often want much the same outcomes as other workers.223 Our concern is the implications they might have on some young people’s progression through the lifecourse. Research submitted to us by the Young Women’s Trust highlighted the potential suitability of this work in addition to other vocations, such as studying, but that this type of employment was not as secure as a full-time career.224 The lack of security offered by this type of employment on a sustained basis means that people have less access to training and development and there is no steady source of income. This last consequence results in limited access to mortgages, and difficulty in getting into the private rental sector market.
166.Insecure employment is concentrated in the younger part of the age spectrum. While this may not be a problem if insecure work is performed alongside studies, it poses a problem when it accounts for a young person’s only source of employment.
167.We heard that workers currently in the ‘gig economy’ are often compulsorily pushed into self-employment. Professor Stephen Machin, Director at Centre for Economic Performance, LSE, suggested that one striking feature of the good employment performance since 2008 had been “that almost all of the increase in the number of jobs has been in self-employment positions” and told us that:
“Part of that is the increase in the number of people in the gig economy in, if you like, this hinterland between self-employment and employment, this independent contractor status, which has become increasingly hazy. This is a very important feature of the way the labour market has been evolving over time, with lots of people now classified as self-employed who may not have been classified as self-employed in the past.”225
168.The House of Commons Work and Pensions Committee completed two inquiries in 2017 on ‘atypical’ work. The Committee concluded that many companies in the gig economy were using existing laws to “propagate a myth of self-employment”, and that the “apparent freedom companies enjoy to deny workers the rights that come with employee or worker status fails to protect workers from exploitation and poor working conditions.”226 The Committee suggested that there should be an assumption of the employment status of ‘worker’ by default, meaning the rights and protections that come with this status could be enforced. These rights include receiving the National Minimum Wage and the statutory minimum level of paid holiday.
169.We endorse this recommendation, from the perspective that it will particularly benefit young people. Looking across the lifecourse, insecure work means that young people cannot benefit from employee contributions towards their pensions. Young people would also miss out on pension contributions obtained through auto-enrolment on pension schemes with an employer. This poses the risk of long-term insecurity: today’s young workers will be tomorrow’s retirees. This is but one of the negative consequences of such workers being given ‘self-employment’ status.
170.Denying workers the rights that come with worker status fails to protect them from exploitation and poor working conditions. This disproportionately affects younger people. There should be an assumption of the employment status of ‘worker’ by default, in order to make the rights and protections that come with this status enforceable, without interfering with the rights of those who genuinely wish for self-employed status to adopt it.
171.On 17 December 2018 the Government published its Good Work Plan, following up on the work of the Taylor review and responding to the consultation the Government conducted on employment status. Following the consultation, the Government has taken up many of the recommendations and has committed to bring appropriate legislation forward. The Government has said that it has also commissioned independent research to find out more about those with uncertain employment status, which will help us to understand how best to support them when bringing forward legislation.227 However, the Good Work Plan does not include any timetable setting out when this research will be conducted and when they plan to bring forward legislation.
172.Non-standard, insecure work has become more common since the financial crisis in many countries. The Resolution Foundation conducted a cross-country comparison of policy responses to an increase in insecure work. Some countries act to minimise either the existence of insecure work or the negative consequences; thus, France and Norway have implemented restrictions on non-guaranteed hours, while Australia has increased the cost of such work. The Resolution Foundation concluded that “specific employment restrictions appear the most common and straightforward way of limiting non-standard work.”228
173.The timetable should be released for when the research commissioned into those workers with uncertain employment status will be published and when it will make a decision on bringing forward legislation.
Flexible working and mid-life career reviews
174.In Box 3, we distinguished insecure, atypical working from flexible working. Several written submissions suggested that longer working lives would only be possible if there were more flexible and part-time opportunities for people.229 Increased provision of flexible working is important for intergenerational fairness for a number of reasons. Firstly, as the length of people’s working lives increases, strategic workforce planning through flexible working arrangements can help older workers stay in the workforce for longer.230 Secondly, as older generations age, middle generations may find themselves as ‘sandwich carers’, with caring responsibilities for both older and younger generations necessitating flexible working patterns.231 Thirdly, as a new generation of workers enter the labour force with increased technological knowledge, flexible-working arrangements may become the norm. Quality part time or flexible work is in high demand, 232 but there is a lack of understanding surrounding flexible working by both employers and employees.
175.Kate Bell from the TUC told us that it is not only the existence of rights to request flexible arrangements that is important, but rather whether people are aware that such rights are “a reality in their workplace and how they can be empowered to actually ask for them.”233 Lina Bourdon from the FSB suggested flexibility is more widely accepted and offered by small businesses.234 Their informal arrangements often work well and in some cases are necessary for the viability of such small businesses. The CBI told us that there is greater awareness among employers, but for many it remains “quite scary” and that because of the variations in flexible working requests, “there is a bit of myth busting and awareness raising”235 to do. More managers need to develop the ability to consider flexible working arrangements. We heard that many CBI members are taking action as a direct consequence of gender pay reporting.236 If so, a similar measure could be introduced for flexible working, in order to raise awareness amongst employees and reassure employers.
176.The right to request flexible working was introduced in the Employment Act 2002237 and expanded in the Children and Families Act 2014.238 The statutory right to request flexible working entitles employees who have been continuously employed for 26 weeks to apply for a change relating to their hours, times or location of work. The Prime Minister has asked employers to “make flexible working a reality for all employees by advertising all jobs as flexible from Day 1, unless there are solid business reasons not to.”239 We also heard from civil servants that the Government has convened a flexible working task force that takes as its starting point “to look at recruitment and then follow on with other aspects of the employment life cycle.”240 On 14 January, the task force launched its campaign to encourage UK employers to advertise jobs as flexible by using the strapline “Happy to talk flexible working” in job advertisements, regardless of level or pay grade.241
177.The Government should work with employers to ensure that more jobs are advertised as flexible. The public sector is leading the way in flexible working. Wherever possible, public sector jobs should be advertised as flexible.
178.We have heard support for the idea of a ‘mid-life MoT’ at the age of 50 as an opportunity to receive guidance ahead of retirement.242 John Cridland’s Review of the State Pension Age recommended a ‘mid-life MoT’ in people’s late 50s and 60s to support the gradual transition to retirement. This would act as a trigger to encourage people to take stock, provide holistic advice to prepare for the transition and help workers to make realistic choices about work, health and retirement.243 Specifically, the review recommended that the National Careers Service should develop, test and implement a national mid-life MoT programme and that the devolved administrations should consider similar arrangements. The Government stated that at present “DWP are only at the stage of considering the [MoT] policy and possible delivery implication of the mid-life MoT recommendation” and that work was happening cross-departmentally.244 The National Careers Service currently delivers mid-life career reviews via employers, but this relies on employers taking up the offer.
179.Dr Anna Dixon, Chief Executive of the Centre for Ageing Better, said that in very early case studies of the mid-life MoT, most employers who offered such support were larger employers who had the capacity to provide such a service. She highlighted that these organisations will reach their employees, but “the question is how we ensure that the people who are most likely to benefit from that sort of conversation get access to it.”245 Mid-life MoTs must engage with people whose employer would not offer a mid-life review. This might be achieved through contacts such as the NHS health check.
180.We also heard that such initiatives were most successful when they were part of an ongoing process, rather than a substitute for regular career reviews. We concur with Emma Stewart MBE, Chief Executive and Co-Founder of Timewise, who told us that mid-life MoTs were “really about trying to instil the culture within an organisation that goes beyond any specific legislative requirement, in order to make sure those conversations can be had on a regular basis.”246 Reviews should be part of a continuous responsibility of the employer, rather than a one-off event. The Independent Review of the State Pension Age final report remarked that there is often no natural trigger point which encourages people to think about the sorts of questions which need to be answered in mid-life.247 A mid-life MoT might provide this.
181.Earlier in this report we recommended that financial education was important to equip young people with sufficient financial knowledge to make informed decisions. Maintaining this financial knowledge is important at all stages of the lifecourse. Age UK reported that the MoT presents an opportunity for discussions on pensions and saving provision, to ensure a secure retirement.248 In a similar manner to teachers’ signposting students to sources of financial advice, employers might point participants to further sources of information such as Pension Wise.
182.Mid-life MoTs can play an important role in preparing people for a longer working life. Mid-life MoTs cannot be a one-off, discrete event, and are most effective when viewed as part of a process of good management. The Government’s efforts to encourage mid-life MoTs are in danger of missing those most in need of support, including individuals who work for employers that lack the capacity to provide mid-life MoTs and those outside the workforce. On the other hand, providing a single statutory MoT at a fixed age to every employee would lack flexibility and might lead to waste. If MoTs are to be introduced effectively, the Government needs to give a good deal more thought to how they should operate.
Ageism
183.There are an increasing number of older workers in employment; over the past three decades, employment rates among those ages 50 to 64 have risen from 66 per cent of men and 47 per cent of women in 1992, to 76 per cent of men and 68 per cent of women in 2018.249 Moreover, as Figure 5 shows the increasing UK employment rate for those over 65. Whilst this is still low, at a little over 10 per cent, it has doubled in the last quarter century. This rise in employment rate is undoubtedly a positive, as employment brings with it many social and economic benefits. Yet, we have heard much evidence to suggest that ageism is still rife in the labour market, particularly in hiring decisions, and that this is a barrier to greater numbers of older people remaining in or seeking to re-join the labour market. The DWP found that there were almost one million individuals aged 50–64 that are not in employment but state that they are willing to, or would like to, work.250
Figure 5: Age 65+ UK Employment Rate, 1992–2018
Source: Office for National Statistics, ‘Dataset: A05 NSA: Employment, unemployment and economic inactivity by age group (not seasonally adjusted)’: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/datasets/employmentunemploymentandeconomicinactivitybyagegroupnotseasonallyadjusteda05nsa [accessed 30 January 2019]
184.Research by Professor Dominic Abrams, Dr Libby Drury and Dr Hannah Swift for the Equality and Human Rights Commission (EHRC) showed that “ageism is the most commonly experienced form of prejudice in the UK, with almost one in three people (26 per cent) reporting being unfairly treated because of their age.”251 Age UK found that approximately one third of workers over 55 have experienced discrimination at some point.252 This is borne out by several personal written submissions which contained personal experience of people over the age of 50 struggling to find work and facing what they perceived as ageism in doing so.253 The Centre for Ageing Better identified that older workers are more likely to stay unemployed for the long-term, and in response called on the Government to do more to tailor employment support to older people.254 Care England suggested that “one of the biggest challenges of this era is to move to a system that is age neutral and where ageism is seen to be as unacceptable as racism, homophobia or any of the other equality categories” and that the EHRC was not countering ageism sufficiently.255
Box 4: EHRC definition of ageism
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Age Discrimination Age is one of the nine protected characteristics under the Equality Act 2010. Under the Equality Act, ageism is therefore being treated differently because of your age in one of the following situations:
ECHR guidance says that an employer can make a decision based on a person’s age, if they can show that it is objectively justified. In order to show that a decision is objectively justified, an employer must be able to show that there is a good reason for doing what they are doing, and that what they are doing is proportionate. Stereotyping about a person’s age to make a judgement about their fitness or ability to do a job is illegal. |
Source: Equality and Human Rights Commission, ‘Age discrimination’: https://www.equalityhumanrights.com/en/advice-and-guidance/age-discrimination [accessed 30 January 2019], Equality and Human Rights Commission, What Equality Law Means for You as an Employer: When You Recruit Someone to Work For You (April 2014) p 15: https://www.equalityhumanrights.com/sites/default/files/what_equality_law_means_for_you_as_an_employer_-_recruitment.pdf [accessed 20 March 2019]
185.Some of our Contact Group members felt that older people staying in work reduced the number of jobs on offer for younger people. However, we have received evidence that there is no fixed number of jobs and that older people working longer did not reduce the number of jobs for young people.256 This is the so-called ‘‘lump of labour fallacy’. We heard that remaining in the workforce helped older workers by maintaining confidence and preventing loneliness. The difference between the perception of members of the public and the statistical reality might play a part in fuelling the ageism that exists in the workplace. Research into ageism shows that it can also affect younger people,257 but it tends to be in areas other than hiring decisions.
186.Professor Abrams, Dr Swift and Dr Drury concluded that ageism in the workplace can be a substantial barrier to individuals’ propensity to live long and full working lives.258 The Women and Equalities Committee’s report on Older people and employment concluded that:
“Ageism remains a significant problem within British society and is affecting the ability of people to continue working into later life, despite long-standing laws against age discrimination. Discrimination in recruitment is a significant problem and the public sector is not leading the way in the retention of older workers when it should be.”259
We endorse this conclusion.
187.The Women and Equalities Committee’s report also concluded that the EHRC are failing to enforce the law on age discrimination and must be clearer that prejudice, unconscious bias and casual ageism in the workplace are all unlawful under the Equality Act 2010.
188.We have heard various positive examples of businesses that champion the inclusion of older workers, through conversations about flexibility and adaptation. Professor Abrams, Dr Swift and Dr Drury’s research suggested that age discrimination can be reduced through increased contact between generations.260 The workplace is a potential space for such intergenerational contact, featuring working towards common goals and cooperation. Positive contact in the workforce and beyond can help to reduce ageism in society more widely.
189.Notwithstanding the increase in employment of older people, ageism remains a problem within British society and is affecting the ability of some people to continue working into later life, despite long-standing laws against age discrimination. Discrimination in recruitment is a particular problem. More should be done to recruit and retain older workers.
206 House of Commons Library, Youth Unemployment Statistics, Briefing Paper Number 5871, March 2019
208 The Intergenerational Commission, A New Generational Contract: The final report of the Intergenerational Commission (May 2018) p 10: https://www.resolutionfoundation.org/app/uploads/2018/05/A-New-Generational-Contract-Full-PDF.pdf [accessed 15 January 2019]
211 CIPD, Pay progression: Understanding the barriers for the lowest paid (October 2014) p 31: https://www.cipd.co.uk/Images/pay-progression_2014-understanding-the-barriers-for-the-lowest-paid_tcm18-10970.pdf [accessed 15 January 2019]
213 TUC, Stuck at the start: young workers’ impressions of pay and progression (June 2018) p 5: https://www.tuc.org.uk/sites/default/files/Stuck%20at%20the%20start-%20young%20workers%20progress%20and%20pay.pdf [accessed 14 February 2019]
214 Stuck at the start: young workers’ impressions of pay and progression, p 4
215 Department for Work and Pensions, Universal Credit: In-Work Progression Randomised Controlled Trial (September 2018), p 9: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/739766/summary-universal-credit-in-work-progression-randomised-controlled-trial.pdf [accessed 22 January 2019]
216 HM Government, ‘Flexible working’: https://www.gov.uk/flexible-working [accessed 31 January 2019]
218 OECD, ‘Data: Temporary employment’: https://data.oecd.org/emp/temporary-employment.htm#indicator-chart [accessed 6 March 2019]
219 Office for National Statistics, ‘Contracts that do not guarantee a minimum number of hours: April 2018’: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/contractsthatdonotguaranteeaminimumnumberofhours/april2018 [accessed 6 March 2019]
222 House of Commons Library, Zero-hours contracts, Briefing Paper Number 06553, August 2018
226 Work and Pensions Select Committee, Self-employment and the gig economy (Thirteenth Report, Session 2016–17, HC 847)
227 HM Government, Good Work Plan, Cm 9755, December 2018, p 10: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/766167/good-work-plan-command-paper.pdf [accessed 21 January 2019]
228 Resolution Foundation, Atypical approaches: Options to support workers with insecure incomes (January 2019) p 7: https://www.resolutionfoundation.org/app/uploads/2019/01/Atypical-approaches-report.pdf [accessed 21 January 2019]
229 Written evidence from United for All Ages (IFP0018), Centre for Ageing Better (IFP0049), CIPD (IFP0050), International Longevity Centre (IFP0051)
232 Q 75 (Emma Stewart MBE). Emma Stewart MBE, CEO and Co-Founder of Timewise, told us that of the six million job vacancies that Timewise track every quarter, only 11 per cent are advertised as flexible.
236 Ibid.
237 Employment Act 2002, section 47(1)(a)
239 HM Government, ‘Prime Minister announces new drive to end the gender pay gap’ (October 2017): https://www.gov.uk/government/news/prime-minister-announces-new-drive-to-end-the-gender-pay-gap [accessed 1 February 2019]
241 CIPD, ‘Government and employers unite to kick-start flexible working’: https://www.cipd.co.uk/about/media/press/flexible-working-taskforce [accessed 11 March 2019]
243 Department for Work and Pensions, Independent Review of the State Pension Age, Smoothing the Transition: Final Report (March 2017) p 17: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/611460/independent-review-of-the-state-pension-age-smoothing-the-transition.pdf [accessed 18 January 2019]
247 Independent Review of the State Pension Age, Smoothing the Transition: Final Report, p 100
248 Age UK, Creating a ‘Career MOT at 50’: Helping people keep working and save for later life (October 2017): https://www.ageuk.org.uk/globalassets/age-uk/documents/reports-and-publications/reports-and-briefings/active-communities/rb_oct17_creating_a_career_mot_at_50.pdf [accessed 21 January 2019]
249 Office for National Statistics, ‘Dataset: A05 NSA: Employment, unemployment and economic inactivity by age group (not seasonally adjusted)’: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/datasets/employmentunemploymentandeconomicinactivitybyagegroupnotseasonallyadjusteda05nsa [accessed 26 March 2019]
250 Department for Work and Pensions, Fuller Working Lives: Evidence Base 2017 (February 2017), p 7: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/648979/fuller-working-lives-evidence-base-2017.pdf [accessed 20 March 2019]
253 Written evidence from Catherine Harris (IFP0001), Christine Williams (IFP0005), Alison Peel (IFP0009)
256 Q 71 (Dr Brian Beach, Dr Anna Dixon, Professor Jacqueline O’Reilly), Written evidence from Centre for Ageing Better (IFP0049)
258 Ibid.
259 Women and Equalities Committee, Older people and employment (Fourth Report, Session 2017–19, HC 359)