Third Age Employment Network - Archived News October 2004

Last year the UK’s over 50s had the highest disposable income in Europe. Datamonitor estimate it amounted to £267 billion in total and that the average 50-64 year old had almost £16,000 worth of disposable income. For over 65s the figure was lower – averaging out at £10,550.

Of course ‘averages’ distort the picture and disguise the real polarisation in incomes and circumstances which apply the across the 20 milllion people who make up the UK’s over 50s.

Datamonitor’s report points out many advertisers continue to ignore the over 50s. Their loss….

In the year ending April 2003, the UK recruitment industry saw its turnover increase by nearly 7% to £24.5 billion. According to the REC/Pricewaterhouse Coopers Recruitment Survey 2004, the volume of both permanent and temporary recruitment increased and profit margins also improved.

Recruitment fees for ‘permanent’ staff accounted for only 10% of the industry’s total turnover. The number of permanent placements (650,000) increased by just under 10% compared with the previous year. At the same time the number of ‘temps’ increased by nearly 6% to 1.5 million.

The survey found recruitment agencies are now relying more on the internet than local paper advertising and that they see ‘shortage of skilled candidates’ as the biggest threat facing their business in the coming year. Although ‘competition’ and ‘legislation’ were also seen as significant threats.

Despite those fears the industry is forecasting their turnover will grow by 8% this year.

Replying to a question from TAEN at the launch event for the survey, a spokesperson for the Recruitment and Employment Confederation (REC) agreed the industry could, and should, do more to tailor their services for older jobseekers and disabled jobseekers.

Despite all the exhortations from the Government that people should work longer and retire later, the majority of UK businesses remain reluctant to recruit and employ older workers. Recent surveys by Spring Personnel and Elizabeth Hunt, reveal that nearly two thirds (63%) of UK companies are not planning to actively recruit from the over 50 age group.

Calling on British industry to reconsider, Spring Group CEO, Richard Barfield said: “How is the UK Government going to reach its goal of keeping people in employment until they are 70 when the majority of companies are not planning to employ people over 50? Unless employers can be persuaded of the benefits of using older people in the workforce then the pensions black hole of £57 billion is going to get bigger.”

Barfield also pointed out that employing older people could also help in industries facing a skills crisis. According to recent research 80% of people working in the IT
Industry are under 45. This at a time when the number of under-25s entering the industry has halved since 1995.

“Unless companies start realising what older people have to offer in terms of skills, experience, loyalty and mentoring and do their best to retain or recruit from the over 50s, then many industries like the IT sector will be facing a skills crisis,” said Barfield.

According to Spring Personnel’s survey, employers in the London and the South are least likely to target the 50+s.

Researchers at Kingston University in Surrey are looking for 20 older workers living in the South East to take part in focus group sessions to discuss issues to do with age discrimination and work. Participants will be paid a small fee for their contributions.

The researchers are also looking for others who would be willing to be interviewed on these subjects or who are prepared to fill out a questionnaire that is posted on their website.

Just seven weeks into his new job as Secretary of State at the Department of Work & Pensions and already Allan Johnson is busy trying to signal he has a mind of his own when it comes to pensions.

He has already conceded it may be time to shift the Government’s focus away from reliance on means tested benefits and now he has admitted that women’s pensions are a “national scandal”. In fact he says he’s so concerned about them that he’s even prepared considering moving to create a ‘citizen’s pension’, so that women receive the same benefit as men, irrespective of how long they’ve worked.

Entitlement to the current basic state pension is based on national insurance contributions. Men have to notch up 44 years worth and women 39 years worth of contributions to qualify for the full basic state pension. The problem is that the work breaks many women have to take (or took) to bring up children, or care for parents, family or friends means they do not achieve a full contribution record. As a result only 50% of women get the full basic state pension.

According to research by the Association of British Insurers, 83% of retired women have a monthly income of less than £1000 whilst for retired men the figure is 58%.

At a time when the 3 main political parties are trying to outdo one another in their promises to cut back jobs in the civil service, new figures show the number of civil servants actually went up by 12,000 in the 12 months up to April 2004. The increase of 2.8% took the number of civil service jobs from just over 511,000 to nearly 524,000.

The biggest single rise was at the Inland Revenue with an extra 3,500 posts – mostly created to cope with changes in Working Tax Credit and Stamp Duty. However there were also nearly 2,100 additional staff taken on by the DWP – most of whom went into Jobcentre Plus.

Gordon Brown announced 40,000 civil service job losses in the Budget – with the DWP and Inland Revenue due to take amongst the biggest hits. If its still ‘last in, first out’ some of the new staff will barely have had time to take off their coats before they’re back sitting on the other side of the desk at their local Jobcentres…

A new report (Office Life 2004) from the recruitment consultancy Office Angels claims today’s office workforce is more age diverse than ever before. The report is based on a survey of 1500 office workers aged 18-65.

It says ten years ago offices were dominated by the 25-40 age group, they accounted for almost half of all workers. Today, they only account for 40% of the workforce. A third of today’s workers are aged between 41 and 55 there is a higher proportion of over 55s in offices than in previous decades.

According to Paul Jacobs (MD of Office Angels), “We are seeing increasing numbers of older workers wanting an office job. They are keen to learn new skills and progress their careers even at this later stage in life. IT skills for example are now commonplace and the older generation accepts that they have to move with the times in order to compete in today’s marketplace.”

The notion of ‘job for life’ no longer exists with office workers expecting to have five to ten different jobs during their working lives.
Just over half (52%) don’t want to work past the Statutory State Pension Age but 33% expect to work up until it.
97% of office workers are making their own provision for retirement with just 3% counting on a state pension to support them.
Almost half (48%) of office workers cite work-life balance as their primary concern in today’s fast-paced working environment.
Almost half (49%) of office workers say they suffer from work related stress and claim it affects their behaviour at home.

TAEN has published its response to the Turner report in the form of a 6 part action plan. Patrick Grattan (TAEN Chief Executive) comments, "Adair Turner's Pension Commission Report says that we shall have to work longer and retire later as part of the solution to pension problems. It is not his remit to say how to achieve this. The Government have not said so either.
If we don't tackle this properly we risk millions of fed-up people being forced to work on in low paid, low skilled jobs, widening inequality, low productivity and little improvement in savings. This won't benefit workers, businesses, government or families."

Job change advice for all ages. Longer working life only works if people can get variety, change, a fresh start. Career advice isn't only for the under 25s. 40% of adult career advice should be for the
over 40s (currently 10-15%).
New skills for new jobs. Longer working life only works if we gain new skills throughout a 40+ year span. Training for work isn't only for the under 30s. 40% of adult new qualifications and apprenticeships should be for the over 40s. (currently 0-17% depending on programme)
New ways of working with variety, flexibility and choice. Action is needed by employers (including Government as an employer) and workers on job design to suit all ages and work-styles to fit a longer working life. End age biased work decisions through Age Discrimination legislation.
Reshape retirement. End Fixed Retirement Ages which contradict later flexible retirement.
Create clearer incentives to work and delay the State Pension and remove the disincentives to work built into occupational pension schemes. None of the current incentives are simple or clear enough.
Set a target to raise the employment rate of over 50s from 70% to 76% compared to the current 82% for under 50s; and a target of 2 million people over State Pension Age in work (1 million now).

The gap between men and women’s pay in 2003 was wider than previously thought. According to new figures published by the ONS (Office of National Statistics) the gap was actually 19.5% - rather than 18% as previously estimated.
The new figures also show that the gap has not been narrowing as quickly over the past 6 years either. It only dropped by 1.7% in that period, rather than the 2% previously estimated.

Tony Blair has said that the money saved by getting more people off Incapacity Benefit (IB) and into work will be used to help fund increased spending on pensions. In a speech to centre left leaders in Budapest he said, “In the UK today we have a big debate about how we can provide pensions for people for the future. And we will probably have to spend more as a government supporting pensions in future.

But that will mean we will have to spend less, particularly in areas where there are people who could work but who presently languish on benefits.”

Commenting later he said there were a lot of people on IB who want to work, who could work and the government had to give them the same help it gave to other people to get jobs.

There are over 2.7 million people on IB, half of them are aged over 50. The cost of IB is estimated to be around £10 bn a year.

Currently the Government is piloting its Pathways to Work scheme in 7 areas in the country. The pilots currently give focused back-to-work help to those going onto IB, together with a £40 a week employment credit paid directly to them. Later this year the pilots will be extended to those who have been on IB long-term.

The big question is what combination of carrot and stick the Government will use to try and substantially reduce the number of IB claimants.

The Government has announced that companies which employ only their owner will no longer have to buy employers’ liability compulsory insurance (ELCI). The Minister for Work, Jane Kennedy, said the move could benefit hundreds of thousands of limited companies where the owner is the only employee. There are estimated to be around 300,000 such companies across the country.

The Association of British Insures estimates the average saving for each company might amount to around £250 a year.

The amending regulations will be introduced later this year and will come into force early in 2005.

The latest British Chambers of Commerce (BCC) Quarterly Economic Survey shows a loss of confidence amongst firms in both the manufacturing and service sectors. The survey showed the business climate is becoming more difficult and this is having an impact on the hiring intentions of firms.

Commenting on the survey David Frost, Director General of the BCC said, “We have a major concern that business confidence is falling in the service sector which has a vital role to play in sustaining economic activity and job creation. Manufacturing performance is just about adequate, but given the recent poor official figures, the sector is also facing some very serious risks and challenges.”

Fewer firms in both the service and manufacturing sectors are planning to take on new staff than did in the previous quarter.

Bob Dylan famously wrote that ‘you don’t need to be a weatherman to see which way the wind’s blowing.’ So when it comes to pensions, the options spelled out by the Pensions Commission (chaired by Adair Turner) can’t have come as much of a surprise to anyone who has been watching the story unfold. Given that on average we are living longer, healthier lives - working longer, saving more, paying increased taxes or accepting that pensioners in future will be poorer in comparison than they are today are the 4 options clearly laid out in Turner’s authoritative interim report.

No politician, especially one seeking re-election from an increasingly ageing electorate, is going to advocate the last of those options. So some combination of the other three will have to be used to fix whats wrong with the UK’s present system.

The report’s widely praised analysis certainly can’t have revealed much that would have been a surprise to the Government, although they will be uncomfortable with its criticisms of the increasing reliance on means tested benefits and the current state pension arrangements.

The report dismisses the idea that we are in the midst of a pensions crisis. Instead it says we face a pensions challenge in 15-20 years time when those currently in their 40s and 50s reach state pension age – only to discover they have not saved enough for a financially comfortable, extended old age. A situation that will become worse for succeeding generations unless the system is reformed. It says decisions on reforming the UK’s pension system need to be taken in the next two years but warns there is no ‘magic bullet’ to fix it.

This interim report gives no recommendations for what should be done. We have to wait a year for those until its final report is issued. Will it recommend that workers and employers are compelled to save into occupational pensions – a system which seems to work well in Australia ? Or that a ‘citizen’s pension should replace the current state pension system ? Our guess is that it won’t.

Whilst Adair Turner wants a year to consider what needs to be done, TAEN has come up with its own action plan for tackling some of the major issues raised – especially those related to working longer. These will be unveiled and discussed at our Annual Conference this week (click here to read more).

On Tuesday Adair Turners’ Pension Commission will issue its interim analysis of the pensions crisis. On Thursday TAEN’s Annual Conference will pick up on some of the expected major themes in the report.

TAEN’s Valuing All The Workforce conference on Thursday 14th will consider the interplay of ‘age’ with other strands of ‘diversity’ and set out a joined-up plan of action with meaningful targets for action by Government, employers, intermediaries and individuals to tackle :

A first class line-up of speakers has been arranged - including Lord Peston (House of Lords Select Committee on Economic Affairs), David Willetts (Conservative Party), David Yeandle (EEF), Julie Mellor (EOC), Naina Patel (PRIAE), Stephen Haddrill (DTI), Paul Keen (JC+), Richard MacMillan (Adecco UK) and Patrick Grattan (TAEN).

The conference is being sponsored by Adecco UK Ltd and takes place at the Law Society, London from 10.00 a.m. to 4.00 p.m.

According to recently published research commissioned by the law firm Eversheds, one in three workers said they had been the victims of age discrimination. But the survey of nearly 2200 employees in UK organisations found younger workers were more likely to feel they had been treated unfairly because of their age and experience than older workers. 60% of 16-24 year olds felt they had been the victims of ageism, compared with 47% of workers aged 45+.

Worryingly, four out of ten senior managers and 20% of HR professionals involved in the survey thought the age discrimination legislation coming into force in October 2006 only applied to older workers.

Audrey Williams of Eversheds commented, “Our research shows that age discrimination is alive and kicking in UK workplaces - one in five workers is aware of a recruitment decision that has been influenced by age, not surprising when only 18% of organisations have instigated a ban on using age as a factor in recruitment. Currently business is not ready for this (age) legislation and organisations have a significant hill to climb to ensure that they don’t fall foul of the law when it comes into force.

Evershed’s research shows there is very little understanding of what age legislation is likely to mean in practice. For example, 70% of HR professionals failed to understand that using the term ‘experienced’ in a recruitment advert could be viewed as discriminatory to younger workers when the legislation is in place. Using such terms as ‘graduate’, ‘mature’, ‘lively’ and ‘rising star’ in job adverts could also put an organisation in danger of breaching the legislation.”

The survey also revealed that 75% of workers don’t want a compulsory retirement age.

David Willetts, the shadow work and pensions secretary, says a future Conservative
Government would privatise Jobcentres. It would follow the lead taken by the Australian government and hand contracts to get the unemployed into work to the private and voluntary sector.

“Jobcentres aren’t working.” said Mr Willetts, “Voluntary groups and some of the commercial contractors can do a much better job.”

The Conservatives have already promised to scrap Labour’s New Deal programmes for the unemployed and to use the £1 billion savings generated by these moves to help pay for increases in the basic state pension.

David Willetts is one of the speakers at TAEN’s Annual Conference in London next week.

Another of the speakers at the Conference will be Paul Keen the Regional Director for Jobcentre Plus in the North West - so it should make for a very interesting discussion...

The Office of National Statistics (ONS) has published a new report on the UK’s population trends. It contains a wealth of interesting and useful information and many of the trends it identifies are going to have a major impact in the future.

It predicts that next year (2005) the total UK population will pass 60 million and by 2031 will reach 65.7 million, some 865,000 (1.3%) higher than previously predicted back in 2002.

The working age population (currently defined as 16-64 for men and 16-60 for women) is projected to rise by 1 million from 36.8 million in 2003 to 37.8 million by 2010. It will reach 40 million by 2022 – primarily as a result of the change to the state pension age for women to 65 which is gradually introduced between 2010 and 2020.

The working age population will become much older. In 2003 there were 2.3 million more working age adults aged under 40 than above 40. By 2010 there will be just 0.5 million more under 40 and by 2020 there will be 1.4 million more over 40 than under it.

The number of people over state pension age (SPA) will increase by 10.4% between 2003 and 2010 – from 11 to 12.2 million. It will reach 12.5 million by 2020 (impacted by the rise in SPA for women) and reach 15 million by 2031. It is expected to peak at 18 million by 2060.

The support ratio (the number of people of working age supporting each person of pensionable age) was 3.34 in 2003. This is projected to fall to 3.11 by 2010, will rise slightly to 3.19 by 2010 before declining quickly to 2.57 by 2031. By the 2060’s it is expected to be down to 2.15.

The average (mean) age is expected to rise from 39.4 years in 2003 to 43.6 years by 2031 and reach 45 around 2050.

Life expectancy at birth is expected to rise from 76.2 years in 2003 to 81 years in 2031 for men, and from 80.6 years in 2003 to 84.9 years in 2031 for women.

We should expect to see further revisions as population trends are notoriously difficult to predict and projections for increases in such items as life expectancy have generally been too conservative.

The ONS report on Population Trends looks backwards as well as forward and contains population statistics at regional level as well.

In 2003 the South West had the largest net gain in internal migrants with 33,000 more people moving into it than moving from it. Other regions with relatively large net gains of internal migrants were the East Midlands (21,000), the East of England (18,000) and Wales (15,000). These net gains reflect inflows of older people into these regions and increase the relative ageing of the regions’ populations.

London had the largest net outflow of people moving within the UK with 110,000 more people moving out than moving in. The only other region to show a net outflow was the West Midlands with a net loss of 5,000 people