A new age is on the horizon – one where age itself is accepted and valued in the modern workforce. One driver of this change is pure economic necessity, as a result of falling birth rates, skills shortages, the expense of hiring new recruits, and the need for experience. Another is the maturing of an unusual generation for whom stereotypes are taboo.
Today’s older people are healthier, better educated and more materialistic than their forebears. And, perhaps most importantly, the older generation “doesn’t want to be old”, says Sara Rix, senior policy adviser for the AARP, a US advocacy group for the over-50s.
Carin Eriksson, managing director for Sweden’s Institute for Personnel and Corporate Development, adds: “People are not of their age group anymore. We are more individualistic. It is not age that dictates behaviour; it’s other things.”
Even in traditionalist Japan, attitude changes are imminent. “The lifestyle for older people has changed,” says Kimiko Inoue, a consultant with Mercer HR Consulting in Tokyo. “They want individual happiness.”
There is no ‘one-size-fits-all’ approach that works for all countries, or even all companies, in bringing this workforce back into the fold. But here’s a sample of how three different countries are finding their way.
Sweden recently increased the age to which employees have the right to work to 67, and the Government wants to find other ways to keep people working later in life.
“We are searching for incentives to make it more profitable both for employers and employees,” says Jan Gronlund, state secretary in the Ministry of Industry, Employment and Communications.
Sweden’s unemployment rate has dropped significantly in recent years, but a particular problem has been a trend towards workers easing from state-supported, long-term sick leave into early retirement. This sharpens the double-edged sword of drawn down state pension funds and limits the country’s economic growth. “There’s nothing wrong with early retirement, but we must make it easier to come back into working life,” Gronlund says.
The Swedish pension system has recently undergone significant reforms, which may provide an impetus to work longer. “Many are shocked at the low pensions they will receive, and know they will have to work longer,” says Carin Eriksson of the Institute for Personnel and Corporate Development.
Individual businesses are giving other reasons to work longer. At the local bank, Forenings Sparbanken, generous retirement packages, offering as much as 72 per cent of the final salary as a pension, gave many workers more reason to go than to stay, leading to the potential loss of a skilled and experienced part of the workforce.
HR was tasked with developing a strategy to make staying in work more appealing. Gunvor Bodlander, HR director for strategy and manpower, led a taskforce that interviewed employees across the company. It was clear from the responses that flexibility, interesting work and spare-time would help delay retirement.
In January 2003, the company launched its ’55+’ programme, to incorporate those three elements. It includes:
– An hour each week of exercise of the employee’s choice during work hours
– Annual health check-ups after the age of 55, including tests for age-related conditions, such as prostate cancer for men and dwindling bone density for women
– Older workers will have individual training and development plans so that they can continue to grow and learn business-related skills
– Training supervisors and managers to lead older workers
– Three extra days off each year for workers over 58 if they continue to work full-time
– An ‘easing off’ plan for those over 58 who want more time for themselves, working 80 per cent of a full-time schedule, for 90 per cent of their salary, earning their pension at 100 per cent.
About a quarter of the workforce is 55 or older, and Bodlander says that one of the programme’s aims was to change attitudes at all levels about older workers’ place in business. “We want them to stay,” she says. “We need their competence. They are necessary for our business.”
Here’s a sign of the times: the acronym AARP used to stand for the American Association of Retired Persons. Not any more. The organisation that lobbies for people over 50 now uses only the acronym, taking the phrase ‘retired persons’ out. “Nearly 50 per cent of our members are in the workforce,” says AARP’s Sara Rix.
Age discrimination has been illegal for some time in the US, but the emphasis is on protecting people aged 40 and older from adverse employment actions. The law makes it illegal to ask candidates’ ages on job applications and in interviews, among other provisions. Even candidates for early retirement have certain protections under federal law, explains John Di Nome, a partner in the labour and employment group in international law firm Reed Smith.
When an employee is offered early retirement, they have 21 days to review the plan, the right to see an attorney, and even after they’ve signed the agreement, they have seven days to revoke, Di Nome says. If two or more employees are being offered early retirement, the amount of time allotted to decide goes up to 45 days, and they still have seven days to revoke their agreements after they’ve signed them.
Di Nome contends that not counting far-flung pockets of resistance, “age issues have been removed as a cultural issue from the workplace. There’s not a culture of age discrimination.” But Rix is not so sure. She says ageism is not viewed as negatively as racism, for instance, but the ageing of the ‘baby-boom generation’ – those born between 1946 and 1964 – poses many implications. “The boomers are not going to go quietly,” Rix says. “Boomers have had everything, and they expect everything, and they’re going to expect work opportunities in the future.”
Paving the way is AARP’s Best Employers Over-50 programme. Employers who want to be considered for it must describe their practices in recruiting, workplace culture, training and development, alternative work arrangements, health benefits, pensions and retirement plans and benefits. The selection process involves a detailed assessment of each company’s application by an outside consulting firm, a review by external judges and a due diligence process.
In an August analysis of the top 50 best practices, Mercer Human Resource Consulting offered the following examples: job mobility, phased retirement options, rehiring retirees as both full-time and temporary workers, partnering with local colleges to get skills in scarce specialities, flexible schedules and job sharing, career-long learning and targeted benefits.
“We’re hoping this programme will assist other employers,” Rix says. “We’re quite excited about it.”
An ageing population, a low birth rate, an increase in mergers and acquisitions, and the end of Japan’s ‘bubble economy’ are among the factors forcing the Government and businesses to rethink the country’s labour and pay structure. At the same time, says lawyer Kengo Nishigaki of global law firm Baker & McKenzie, Japanese companies are being forced to focus on cost cuts.
Japan’s tradition of basing pay on seniority makes keeping older workers at work a less-appealing option for employers, despite a culture of great respect for age.
Some companies that have allowed their workers to stay on beyond retirement age often cut their pay, sometimes by as much as 50 per cent. Some organisations have even tried to reduce the wages of employees who hit 55, although one such instance resulted in a Supreme Court ruling that company management could not impose disadvantageous working conditions to increase company profits.
The practice of cutting workers’ pay if they stay on past retirement will probably not change, particularly with an increase in retirement age in the pipeline, Nishigaki predicts. However, reforms hinge on older workers staying in the workforce for longer.
According to the Japan Institute for Labour Policy and Training: “An attitude of ‘active ageing’ must be adopted and steps taken to ensure that older workers are able to play an active socio-economic role. To accomplish that, motivated and able workers should be permitted to continue working regardless of age.”
Mandatory retirement ages have traditionally been left to individual companies to set, usually at 60. However, in July, the Japanese parliament enacted amendments to national law that will require companies to keep their employees up to the age of 65 by 1 April 2013.
Other moves to create age-free recruiting include a requirement that between April and March 2006, 30 per cent of all jobs listed and accepted at the Government’s Public Employment Security Offices must be non-age specific. This would represent an increase of nearly 18 per cent from 2002. Nevertheless, public and private sectors can still set maximum age limits when recruiting for particular positions, Nishigaki says. He cites a June case in which the Tokyo District Court ruled that such limits were “reasonable and enforceable”.
Most new recruits are graduates. Little mid-level recruitment occurs outside a company’s workforce because vacancies are filled internally, and workers are moved from one position to another, typically without developing any specialities. Nishigaki says Japanese workers tend to stay with one company for their entire careers.
Labour experts are calling for a revamp of the ‘pyramid’ system of pay to reflect skills and more labour-relevant factors instead of seniority. That will require a dramatic restructuring. “Typically, workers do not have special skills, and their experiences are limited to their employers,” Nishigaki says.
Mercer Human Resource Consulting’s Kimiko Inoue says her clients are concerned about how much older staff should be paid. The answer may lie in redefining their roles by cutting back on their responsibilities, which then makes pay cuts appropriate. An exception might be the rare worker with specialised skills, whose continuing responsibilities deserve pay levels to match.
Training older workers to achieve new competencies will also be important, both for the business and for the workers themselves, Inoue says. Such training “keeps these workers younger,” she adds.
In the meantime, temporary and contract work offer the most earning potential for workers in later life who have lost their jobs or who want to work after retirement.
– AARP: www.aarp.org
– Baker & McKenzie: www.bakerinfo.com
– Institute for Personnel and Corporate Development, Uppsala University, Sweden: www.ipfuppsala.se
– Japan Institute for Labour Policy and Training: www.jil.go.jp/english
– Labour Market Policies in the Era of Population Aging: Japan’s Case, Katsuhiko Iwata, Japan Institute for Labour Policy and Training
– Reed Smith: www.reedsmith.com
– Staying Ahead of the Curve 2004: Employer Best Practices for Mature Workers, Mercer Human Resource Consulting
GO TO www.personneltoday.com/26132.article for Levelling the playing field for over-50s in Europe