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An Ageing Workforce: the Employer’s Perspective

Barnes H, Smeaton D, Taylor R
Report 468, Institute for Employment Studies, October 2009

a report for the Nuffield Foundation

Against a widely recognised background of workforce ageing, skills shortages, an early retirement culture and the prospect of a pensions crisis, prolonging the labour market participation of older workers has become a key policy objective in the UK. Work-life balance policies and flexible employment can provide the means of prolonging labour market engagement.

This study assesses the range of schemes introduced to prevent early exit (whether voluntary or involuntary) and to facilitate the employment of staff to pension age and beyond. To what extent is a preventative framework deployed, and under what circumstances do employers struggle to be progressive? The project was designed to explore how effectively and comprehensively different types of employer (eg by size and sector) are responding to workforce ageing. In addition, the study set out to identify progress and ascertain where scope for improvement remains, highlighting whether, where and why employers encounter difficulties, in order to suggest policy solutions.

Recruiting older workers

Drawing together the results of the qualitative and quantitative analysis, we found that overall around half of all employers had implemented a formal policy of equal opportunities in relation to age. The impact of such policies on day-to-day recruitment practices is harder to assess, since less than two-fifths of employers in the Workplace Employment Relations Survey (WERS) monitored their recruitment outcomes for age discrimination.

• Survey analysis findings indicate that a formal pro-age orientation is more common in large, unionised workplaces. Use of teams in the workplace is also associated with pro-age policies, possibly reflecting the benefits of age diversity in relation to work styles, perspectives, skills and experience in close-knit working groups.
• There is a strong gender dimension to the incidence of pro-age policies. Industries dominated by men – manufacturing and transport – were among those least likely to operate equal (age) opportunities policies with distinct implications for the prospects of men as they age.
• Opportunities for the recruitment of older workers are also constrained by the employment relations strategies deployed in around one-fifth (21 per cent) of establishments which operate internal labour markets, filling vacancies from within when possible. Younger workers, at entry level, have a distinct advantage in these circumstances.
• The absence of formal equal (age) opportunities is not necessarily a reflection of poor age-related practice, however. Depth interviews with employers of various sizes in a wide variety of industrial settings found that they recognised a range of benefits associated with the recruitment of older workers including: loyalty, reliability, time-keeping, numeracy, customer focus, customer matching and managerial/supervisory skills. Most had recently recruited staff in the 50-plus age group, either because they were age neutral, had a need for specific traditional skills more commonly found among older workers, or due to more general skills shortages which caused employers to cast their net as widely as possible.
• The majority of employers were familiar with the age discrimination legislation although they varied considerably in the extent to which they understood the detail of it and how proactive they had been. The small group of employers that only had a vague knowledge, or were less engaged, tended to be newer companies with a younger staff profile.
• Most had actively engaged in some way with the legislation, either reading literature sent them by head office or attending seminars run by ACAS or local solicitors. Some felt that they had been implementing age-positive policies before the legislation was introduced, particularly the medium and larger employers with qualified HR staff rather than directors with a HR role. They had taken on the ‘spirit of the law’ and were involved in the ‘Employers Forum on Age’, had incorporated discussions on age into their induction and training programmes or produced leaflets on equality to raise awareness amongst staff. For others, engagement was driven primarily by legal concerns.
• This positive picture of employers readily recruiting older workers was counterbalanced by a number of reservations expressed by employers. Firstly, where employers were motivated to recruit from all age groups due to skills shortages, the prospect that opportunities will retract for older workers arises during less buoyant conditions. There is also a distinct risk of occupational channelling when employers are pro-age primarily in order to match staff profiles with their customer base. Some employers were also adamant that the physical requirements of their operation precluded the recruitment of older workers. There was also a sense from some employers that for older workers to be recruited, they must be notably better than average to stand a chance.

Flexibility and the older worker

• The survey analysis identified a strategic approach to managing an ageing workforce, defined by the number of pro-age policies an employer implemented. Strategic age management policies were more commonly associated with larger organisations, a higher density of professional staff, unionised workplaces and higher proportions of women in the workforce. The probability of an employer actively pursuing strategic age management policies was significantly reduced in workplaces with: a high density of blue-collar staff or older workers aged 50 and over, and staff working in the hotels, restaurants and construction sectors.
• Most employers interviewed had almost no experience of an employee asking to reduce their hours or change the nature of their job simply because they were older. This tended to be assumed to represent a lack of demand on the part of the workforce. This was particularly true in blue-collar occupations where the assumption was that the (largely male) workforce wanted to maximise hours and earnings rather than reduce them.
• Those employers who were able to offer flexibility to staff generally did so informally or on a case by case basis and there was no monitoring. However, they did not view age as important in their decision making. More important was the nature, demands and costs of a particular role. Reflecting the survey findings, blue-collar staff working shifts in construction and manufacturing had little flexibility. Even employers at the flexible end of the spectrum, where formal policies appeared to be embedded, argued that there were some roles for which flexibility was simply inappropriate and several were able to provide examples where they had refused requests for flexible working for operational reasons.
• Employers varied in their views on what constituted legitimate reasons for employees requesting flexible working. Some were clear that they would do their best to accommodate requests if they were a result of caring or health needs but not for reasons deemed to be inappropriate. Others, however, did not differentiate between the reasons why flexibility might be needed and care, childcare, a long commute, or simply being ‘not a morning person’ were all seen as legitimate reasons for changing someone’s hours.

Managing health issues among the older workforce

WERS analysis highlighted the risk factors that can precipitate mental ill-health and musculoskeletal disorders in particular. More widespread knowledge and awareness of the working environments which can trigger ill-health may lead to the wider adoption of preventative interventions.

• Professional, managerial and other jobs characterised by high levels of autonomy, most notably in male-dominated working environments, are associated with a higher incidence of stress and other mental ill-health. These jobs are typically well paid and interesting and often functionally flexible but can, nevertheless, be stressful and associated with unmanageable workloads. The health sector, ironically, stands out as being more unhealthy than other sectors.
• Having control over start and finish times and other flexitime arrangements can, however, partly offset the impact of more adverse working conditions. Teams can also spread the pressure provided team members are not co-dependent to effectively perform their tasks.
• In terms of musculo-skeletal disorders, risk-enhancing characteristics include: a larger proportion of older staff, use of performance-related pay, shift working, long hours and multiple but repetitive tasks.

The employers in the qualitative research spanned a wide range, both in terms of the extent of work-related health risks, and the availability and use of preventative health measures. We found that:

• Retention of older workers with health problems depended on the demands of the work, in terms of both hours and content, and on the extent to which employers were able or willing to modify these to take account of individual health needs.
• Larger employers tended to have more day-to-day experience in dealing with ill-health issues among the older workforce, but despite this, line managers often struggled to meet particular situations flexibly because of operational and regulatory demands, so sector and industry type may be more important factors than size.
• Older workers in skills shortage areas or with tacit knowledge are recognised as a valuable resource and employers are keen not to lose them, but this does not apply in sectors with a lower skills base and no shortage of suitable applicants.
• Small firms clearly face greater pressures in responding to issues such as ill-health, and can find it particularly difficult to absorb the costs of long-term sickness or to manage the workload in the absence of the person concerned.
• Because some of these situations are not encountered very frequently, especially in small employers or younger companies, there is potentially a major role for increasing information about how health issues for older people in the workplace can effectively be managed.

Managing retirement

• Some employers in the qualitative sample had little or no experience of their staff retiring. Those with no experience tended to be small businesses with few staff and thus low numbers who reached retirement age or relatively new businesses with a young workforce. Many of this group had little knowledge of the recent changes in policy and legislation or of how the retirement processes might operate for them if they ever did have an older employee.
• In contrast to these organisations, larger and more established employers with an older workforce were more familiar with the retirement process and had policies in place which they understood as meeting the requirements of the legislation. A small number simply had no normal retirement age; staff just carried on.
• Few of those we interviewed saw the recent age discrimination as having had a major impact on their policy and practice in relation to retirement. This was partly attributable to the timing of the research, as the proposal referees had anticipated, but a more important factor appeared to be that the employers in the sample either tended to be age-aware and have implemented appropriate measures well in advance of the legislation, or to have a younger age profile and be largely unaware of the requirements of the legislation. Awareness of other employment legislation, such as the Disability Discrimination Act also appeared to be low among this group. This polarisation in the sample should also be borne in mind when considering their (largely positive) views on the possible abolition of the normal retirement age.
• Only a few employers in our sample enforced retirement at 65. These tended to be larger employers with access to legal advice who had interpreted the legislation in a particular way or employers in particular sectors, such as teaching, with a history of early retirement. Some attributed this policy to age discrimination legislation. They assumed a deterioration in functioning of older workers and saw enforced retirement as a way to avoid having to implement performance measures with this group.
• Many employers would be happy to see the compulsory retirement age abolished although they did not always have management experience of older workers. Some were positively disposed towards this change because they had experience of a friend or family member successfully working after 65. These decisions were often seen to be job specific, with most office jobs viewed as unproblematic but jobs involving heavy manual labour or where safety was a factor being seen as less suitable.
• Many employers were either employing someone over state pension age or had done so in the recent past. Those with significant numbers were often employers with skills shortages who had gone to some lengths to accommodate them or those with a high degree of flexibility such as short shift patterns. Other employers did not receive many requests from staff to continue and the formal letter was not always enough to signal to employees that they had a choice. As with flexible working, employers expressed concern that they could not accommodate all requests to continue if a large proportion chose to do so.
• Several organisations, often those which enforced their normal retirement age, had ways of employing people after state pension age, usually through hiring back ex-employees as consultants, contractors or bank/agency staff. In some occupations this appeared to be a normalised practice for staff and employers.

Implications for policy

Discretion vs rights

• There was little evidence of employers advertising the fact that adaptations to working practices were a possibility even where modifications were willingly implemented in response to individual need. Employers and managers showed a clear preference for responding to changing needs on a discretionary, case by case, basis rather than instituting more standardised rights in the lead up to retirement.
• Managerial reticence in relation to institutionalised flexibility reflects a host of operational obstacles, including shift working, team working, the need to cover specific locations and hours, inflexibility associated with small staff numbers and other business exigencies. Even apparently ‘good’ employers, who did accommodate particular needs, indicated that they would manage non-standard arrangements only for what they perceived to be a worthwhile reason and provided they were not inundated by requests. Under these circumstances it is perhaps not surprising that few employees make such requests.
• The Flexible Working Regulations extension (2007) broadened the right to request flexible or reduced hours to carers of dependent adults if the older parents were living with the carer. There is support for extending the right further to allow all older workers opportunities to downshift as they approach retirement age. Individuals may be more prepared to ask for changes if they feel they have the right to make such a request (while recognising that an employer can refuse on business grounds.

Improved communication

• Employers need to communicate that alternative working arrangements are a possibility and that staff have some degree of choice, and scope to make changes, in the run-up to the default retirement age. Alongside the requirement to write to staff in the year before the default retirement age, good practice might therefore also include routine consultation with staff once they reach, perhaps 60, to establish health and other needs and to alert staff to the possibility of alternative working arrangements, implications for pensions, and the possibility of pension drawdown to support choices.
• Government also needs to better communicate to individuals their rights to and eligibility for flexibility, opportunities for pension deferral, and the option of pension drawdown.
• With adequate two-way communication, supported by legislated rights, employers and employees can better consider their range of options, and thereby make informed preparations for the future.

Health at work

• In keeping with findings from other studies, secondary analysis of WERS indicated that workplaces with larger proportions of staff aged 50 had a heightened incidence of absences due to work-related ill health (WRI). This implies a need to take steps to ensure that workplace practices and the organisation of work is adapted to prevent WRI which may lead to early labour market withdrawal.
• The Black Review has recently emphasised the importance of occupational health services to prevent job loss. Findings from the study suggest that much work is needed to implement the range of measures proposed following the Black review, including; a national centre for working age health and well being and a challenge fund to encourage local workplace health initiatives. Any take-up of employer led initiatives will be starting from a very low base and will depend upon a widespread change of attitudes. Health is still largely regarded as a private, individual matter and not a concern for employers, beyond specific work environment factors.

Lifelong learning – whose responsibility?

• While most employers had positive views of the skills, reliability, and work ethic of older people, some felt that the physical demands of their available jobs were incompatible with the recruitment of older workers. Older workers were also regarded as a potential health risk in a number of instances. Other employers had experienced a number of absences attributable to physical demands which were generally seen to become increasingly challenging with age. In terms of policy, therefore, individuals need to be provided with opportunities and, perhaps, financial support, to undertake training and learning in preparation for career change particularly if their jobs involve challenging physical work.
• Small organisations can rarely offer alternative jobs or redeployment and, as a consequence, responsibility for lifetime employability tends to fall to individuals. Improved information and advice on lifelong learning, career alternatives, training requirements, availability of grants, and where courses are offered, would be invaluable for older workers in this position.
• Being prepared and taking steps years in advance of jobs becoming difficult or tiring would promote smooth transitions to alternative occupations. To this end, employers can play a role by supporting their staff either financially or in terms of leave of absence to enable them to prepare for the future.

An Ageing Workforce: the Employer’s Perspective, Barnes H, Smeaton D, Taylor R. Report 468, Institute for Employment Studies, 2009.
ISBN: 978-1-85184-422-7. [PDF price: £free]

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