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Flexible working in an ageing society

Issues for the older workforce - and the rest of us

Outlawing age discrimination and introducing policies for flexible retirement are goals of the UK government.  According to Minister of State for Pensions Malcolm Wicks:

"There are too many men and women in their 50s and early 60s who would like another job, but because of age discrimination find it almost impossible to get one. There’s something ridiculous about being told at 53 or 54 that you are too old when you have another 30 years of life ahead.

"That kind of ageism can be as debilitating and cruel to the individual as being told you can’t have a job because you are black or because you have a disability. This kind of discrimination is going to be outlawed in 2006.
We are making progress, but too many people are out of work in that pre-retirement period.

"There is an anchor question here, about the retirement age at work – not when you can get the state pension. That is whether we should be much more liberal about when we are expected to retire. We need to move to a situation where there is far more flexibility about people making choices about when they work and when they retire in their 60s or maybe later"
(Speech at Future East conference in late 2004)

Too many people are indeed "out of work in the pre-retirement period".  And the cost to companies and the UK economy is high. 

According to a report The Economic Contribution of Older People, published by Age Concern, GDP is from £12 billion up to £30 billion lower than it might be otherwise because of the under-employment of older people. 

An ageing population

The underemployment of older works is happening at a time when society as a whole is ageing:

  • average life expectancy now is 76 for men and 80 for women
  • by 2050 this is expected to be over 80 for men and over 85 for women
  • by 2021 there will be more people over 80 than there are children under 5
  • In twenty years time there will be two million fewer adults aged between 16 and 50 and two million more between 50 and state pension age.

It has been said that we are now moving from a 3 -generation to a 4-generation society.  That is, one where it is becoming normal rather than the exception for 4 generations of the same family to be alive at the same time.  People in their 60s and 70s are increasingly depended on by elderly parents, rather than being themselves at the top of the generational tree.

Couple this with a pensions crisis where many people now under 60 will not have enough income after retirement, there is an overwhelming economic need for people to rethink what retirement means for them.

Is working forever what I want?

The implication of this is that people need to work longer, and postpone retirement.

At the same time, few people want to work flat out beyond the current retirement age.  In fact, workplace surveys usually show that older staff are very actively thinking about working differently - either scaling down their work, working different hours, or spending one or two days per week working from home.

There has also been an increasing trend, often profiled in the weekend supplements, to downshifting - stepping out of the rat race to do what you really want to do, though it means earning less money.  It may mean cashing in on a valuable property and moving to somewhere where property prices are cheaper, and leading a more simple - but more fulfilled - life.

In many ways new technologies make this option more possible.  Contacts both with markets and family can be maintained over greater distances.

What are older workers doing now?

Currently around one third of people between the ages of 50 and state pension age are not working.

Within this age group, one can expect employment rates to be somewhat lower due to people taking early retirement and due to acquired disability or long term illness.  However, this does not account for the extent of economic inactivity.  Nor should we make easy assumptions that people who have retired and people with disabilities do not want to do any work, and effectively exclude them from the labour market.

Older people are more likely to be doing part-time or temporary work than any other age group part from the youngest age group (16-24) of students and school and college leavers.

A clear majority (77% of men and 91% of women) indicate that they are working part-time out of preference rather than because they cannot get a full-time job. 

So there is demand for part-time working.  But in most forms of employment, it is hard to make the transition to part-time work from a full-time post.

Older workers are also more likely than other age groups to be self-employed.  This may in part be explained statistically by the number of employees in this age group who take early retirement, but it does not explain the whole picture. 

What it shows is that many older people are using their skills and experience to run their own enterprises.  But recent research shows that lenders are usually reluctant to invest in new ventures started by the over-50s.

What will the new legislation do?

The new Age Discrimination legislation is the UK's response to a European Directive on Equal Treatment in employment.

The government has made it clear that legislation to ban age discrimination will take effect from October 2006, although it is not yet entirely clear how exactly it will work.

However, following an extensive consultation process and a recent decision about the future retirement age, it seems likely that the legislation will :

  • ban any discriminatory procedures in recruitment on the grounds of age - this includes workers at any age, not only older workers
  • outlaw age-related harassment in the workplace on the lines of current gender equality legislation
  • outlaw workplace benefits that are age-related (which could be bad news for some older workers)
  • set a default retirement age of 65 - so outlawing arbitrary earlier retirement ages, and also giving the worker at 65 the "right to request" to continue working beyond this age.  As with the recent parental flexible working rights, the employer is obliged to consider this request.
    But there is no right to request flexible working associated - just a right to request continuing to work.

These provisions are thought not to go far enough by campaigners, but are thought to be potentially very costly by employers' organisations.  Due to the loose ends lawyers are outwardly furrowing brows, while inwardly beaming with delight at a potential new income stream.

Flexibility says...

It's a first step.  Effectively it will introduce a flexible retirement age.  But this does not mean that employers will address flexible retirement issues.

Some barriers are being removed, but it will take more than this legislation to encourage discouraged older workers to re-enter the workforce, and to make people approaching retirement want to continue working.

Greater flexibility in working arrangements should be part of the equation, but that is also not the whole answer.  Pensions provision needs also to move into a new era of flexible retirement, so that workers know they will not be penalised in any way for continuing to work or by adopting flexible working practices towards the end of their working lives.

But in any area of life, governments will only do so much.  Employers can take the lead in making themselves the "employer of choice" for older workers, by enabling working patterns that meet the needs of this section of the labour market.


Flexibility says:
Don't wait for the legislation!

The UK is set to make new legislation outlawing age discrimination in the workplace in October 2006.

It is not yet entirely clear what the legislation will do, although the fundamentals of it have been consulted on, and are outlined in this article.

However good the outlawing of age discrimination and fading away of compulsory retirement, we are sure the legislation is not the whole answer to meeting the needs of older workers.

Key to this is greater flexibility in working patterns, which is likely to be recommended as good practice but not backed up as a legal right.

But there is no need to wait for legislation to adopt good practices with regard to recruiting and retaining older workers.  Establishing good practice now will mean you face no nasty surprise in Autumn 2006.  And it will also enable employers to capitalise on the skills and experiences of an under-valued section of the workforce.


Malcolm Wicks outside

Pensions Minister Malcolm Wicks -  supports flexible retirement




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