Supporting older workers to stay in good-quality employment could unlock huge economic potential, according to a report published today.
The Centre for Ageing Better, an independent charitable foundation, revealed that older workers who become unemployed remain so for longer than people of other ages, suggesting that there has been too much Government focus on employment opportunities for young people, in particular those not in education, employment or training (NEETs).
It claimed that employment rates for younger workers were rising at the same time as the number of older people in the workforce has increased.
The report highlighted that a quarter of people between 50 and state pension age are out of work, and while overall numbers of workers aged over 50 have increased in the last decade, there is still a sharp decline in economic participation rates after the age of 55, which means a reduction in tax revenue for the Government.
The Centre said that halving the “employment gap” between people in the 50 to pension-age group and those in their 40s would increase National Insurance receipts by 1% to just under £3 billion, and GDP by 1% up to £18 billion.
It argued that this would also reduce the amount being collected in welfare benefits for those between 50 and state pension age who are out of work, and give older people longer to build up retirement savings.
Low and middle earners were the most likely to have to work beyond state pension age, according to the report. This was often because of financial necessity, with 1.8 million lower and middle-income households struggling to save for retirement.
The report listed a number of actions that can be taken by Government and employers to support better quality work for older people.
These include access to flexible working hours and workplace adaptations so employees can manage caring responsibilities or work around health conditions.
It also called for employers to offer older workers more opportunities for development and progression at work, pointing out that – within the OECD – only Turkey and Slovenia have lower levels of on-the-job training for older workers than the UK.
Patrick Thomson, senior programme manager at the Centre for Ageing Better and the report’s author, said older workers are “integral” to the future of the UK economy.
“Being in work is a way of redistributing income via the tax system for all. It reduces the welfare bill and promotes savings and financial independence in retirement,” he said.
“But despite this negative stereotypes towards older workers are still widely held. Ageism and misperceptions of older workers contribute to both employers and employees failing to take early preventative action.”
He added that many employers were nervous about employees’ potential caring responsibilities and health conditions that increased with age, and that these employees needed more support
“Older workers offer a solution to the fiscal challenge of our longer lives. We therefore need policy solutions that support and enable this increasingly important segment of the workforce,” said Thomson.
The report also called for action to be taken now so Generation X (born between 1965 and 1980) don’t face the same challenges as they age.
It said this generation will be the most likely to work longer due to financial necessity, with the majority of workers of this age having to cope without defined benefit (or final salary) pension schemes, as well as a rising state pension age.
Finally, the report suggested that women are more likely to bear the brunt of inequality against older workers, having taken time out of the workforce to raise families, and therefore impacting their lifetime earning potential.
Robert Gordon, CEO of Hitachi Capital UK, said the Centre’s findings echoed a recent study his company completed with the Centre for Economics and Business Research.
He said: “The Centre for Ageing Better report highlights the tax-raising potential of this group and the contribution that could make to GDP, and our own research went a step further and showed that the over 50s are actually stimulating employment.
“Businesses owned by over-50s now employ more people than those run by younger individuals and this gap is only set to widen in the coming years. By 2024 the over-50s will make up the majority of the UK’s self-employed workforce and so supporting older entrepreneurs is key to driving growth and employment in the UK economy. As today’s report shows, increasing participation of older workers doesn’t negatively impact on younger workers.
“Keeping experience gained over a lifetime in the workplace could help combat areas of low productivity, as long as employers put in place processes to help garner and share these skills. This segment of society is a source of prosperity and it is essential that businesses and Government alike find more ways to support their economic ambitions.”