Solving an age-old dilemma of bias

The birth certificate tells it straight. I am exactly halfway between my
student days and state pension age. Celebrate says the "glad to be
grey" brigade. But a look at the employment scene adds to the mid-life
crisis. While I can expect to live for another 35 years, on current trends I’ll
be lucky to spend half of these in paid work. Almost one in three British men
aged 50-64 is jobless – a generation ago the figure was just one in 10.

Though partly due to rising real incomes, enabling some to voluntarily swap
the office for la dolce vita, the vast majority of jobless older men would
prefer to work. Most are either located in areas where jobs are scarce, have
less up-to-date skills or, like their female counterparts, are victims of age
discrimination.

Complaints about this are not confined to life’s Victor Meldrews. A quarter
of people recently surveyed by the CIPD felt most employers don’t want to
recruit or promote the over-40s. Ten per cent of those aged 45-54 thought they
had been rejected for a job in the previous year because considered "too
old" – a finding that squares with what employers say. According to a
large NOP poll carried out for the Government, 30 per cent of companies admit
to taking age into account when hiring staff. Still more promote, train and
fire on the basis of age.

Successive governments have resisted calls for legislation to outlaw such
employer practice, preferring instead to promote the economic benefits of age
diversity in the workplace. Having agreed to the EU’s general
anti-discrimination directive, the UK must by 2006 regulate to ensure employers
do not treat people unfairly on grounds of age. Ministers have wisely
established an advisory group on how best to proceed, involving the CIPD among
others. However, critics question the wisdom of regulation, arguing age is a
good proxy for a person’s actual or potential employability and thus unequal
treatment is usually fair and economically efficient rather than prejudicial.

The latter argument sounds plausible until one takes account of what
economists call "statistical age discrimination". This occurs when
employers treat individuals crudely in line with a perception of the
employability of people in their age group. What matters is that individuals are
not assessed on their merits.

This widespread practice is unfair and inefficient. It provides a rationale
for a framework of regulation that combines minimum legal standards to
eliminate crude age discrimination with scope for flexibility in cases where
there are reasonable grounds for unequal treatment – which is precisely what
the EU directive allows. The impending regulation is therefore good news for
all like me on the threshold of "the third age".

By John Philpott, Chief economist at the Chartered Institute of Personnel
and Development

Comments are closed.