Older workers and the recession

Older workers and the recession

Taking account of the long-term consequences

Introduction

This briefing explains why the TUC strongly disagrees with those who say that older workers are keeping younger people out of jobs and say that, at a time of high unemployment, older workers should 'stand aside'. We also explain why we believe that the Government has been right to prioritise employment programmes for young people, but it is time to address the unemployment of older workers as well.

Solidarity across the generations

One of the foundations of the trade union movement is the fact that workers supporting each other can achieve more than individuals can do for themselves. Claims that one group of workers can only do well if another does badly strike at the heart of the principle of solidarity

It is not so long since people argued that women in paid work were keeping men out of jobs and that this was unfair. Today, we can all refute that claim:

• Women workers need the wages - their families could not survive without them. And women value their careers every bit as much as men do.
• Businesses need to recruit the best person for the job if they are going to succeed in highly competitive markets. Blocking women's employment cuts employers off from half the best people.

Very similar arguments apply to older workers. Unions have fought hard for decent pensions so that all workers can look forward to the enjoyable retirement that was once the preserve of a few. But there are many people for whom work is part of what makes their lives enjoyable or who still have goals they have not achieved even though they are over 50. Given the state of many pension schemes, an increasing number of older workers cannot afford to retire at present. And of course there are large numbers of older workers who are the best person for the job they are doing.

Labour market programmes and the priority for youth

In this recession policy makers have been particularly concerned about the position of young unemployed people. Remembering the 1980s recession, which created a 'lost generation', the Government has been determined to prevent this happening again.

This is a very different case from the argument that older workers should 'stand aside' for young people. The evidence that this recession threatens young people more than any other group is strong:

Unemployment and long-term unemployment rates, June 2009[1]

	All working age	16-17	18-24	25-49	50+
Unemployment rate (per cent)	7.8	30.5	17.3	6.0	4.3
Long-term unemployment rate (per cent)	3.2	8.2	6.5	2.5	2.1

That is why the TUC has supported the introduction of the Guarantee for Young People and the fact that most of the jobs created through the Future Jobs Fund will be set aside for young people. The first priority has been urgent action to defend young people leaving school and college.

Now that those policies are in place, we need to consider the position of other age groups.

Why we need to design support for older unemployed people

There is evidence to show that older workers who lose their jobs are likely to find it difficult to find new employment. A recent report using the English Longitudinal Study of Ageing (ELSA) looked at changes in people's labour market position between 2002-03 and 2004-05. People under pension age who were not in work in 2002-03 were less likely to be working than non-working in 2004-05 by a factor of more than ten:

Percentage of men and women under state pension age moving and not moving between working and not working between 2002-03 and 2004-05[2]

Working, working	60.0 per cent
Working, not working	10.0 per cent
Not working, not working	27.5 per cent
Not working, working	2.4 per cent

Of course, in a study of people in this age group, we would expect to find many people who would have chosen to leave paid work during this period, but the fact that only 2.4 per cent of people in the study who were not working in the first period were working in the second is very suggestive. When asked what they expected to do at a later date, 29.7 per cent of those not in paid work said they would be in employment, which again strongly suggests that a large amount of older people's unemployment is involuntary.[3]

Indeed, even if we just look at those who moved from paid work to not working, we find that 8.5 per cent of this group described themselves as 'unemployed', not retired. Altogether, a quarter used some other descriptor than being retired.[4]

Further studies using the ELSA have amplified these findings, concluding that 'those who re-enter work are much more likely to have only been out of work for a relatively short period of time. This is particularly true for men. Those who have been out of work for a long time are very unlikely to start working again.' For every year that elapses since they were last in employment, women are 8.8 per cent and men 24.3 per cent less likely to return to work.[5]

Early retirement and social exclusion

When the evidence on whether older people outside the labour market actually return to employment is brought into debates one sometimes hears the response 'lucky blighters, we'd all like to retire at that age.' It is one thing to retire early with a decent pension, it is entirely another to have to retire, before one planned to and with only a low income.

The TUC has been concerned for some time that there are large numbers of older people who have not really chosen retirement and face poverty and exclusion as a result.[6]

In 2000, a Cabinet Office study quoted research showing that 40 per cent of retired men and 20 per cent of retired women had retired earlier than they expected, and that, in two thirds of cases, this was initiated by the employer. Even seemingly voluntary retirement may be the result of having very few other choices - another survey found that half of those retiring early said it was their choice, but only a quarter said they had voluntarily accepted a good deal. The study concluded, 'it is not safe to assume that any more than one-third of the increase in worklessness in this age group is due to fully voluntary early retirement.'[7]

Another study of 'detached' men aged 50-64 found that a majority described themselves as disabled or retired; only 31 per cent thought of themselves as 'retired from work altogether.' There was a clear status differential - former white collar and managerial workers were more likely to see themselves as early retired, former blue collar workers were more likely to see themselves as disabled or unemployed.[8]

The ELSA has shown that non-employment among older people is not only often involuntary, it can lead to poverty and isolation. Although not as important a factor as age, health or family relationships, a report for the Social Exclusion Unit found that multiple exclusion among older people was linked to unemployment and suggested that unemployed people aged over 50 but under retirement age should be a 'target for policy action.' Unemployed people had a higher risk of exclusion than any other group of older people on four of seven dimensions of exclusion, and the second highest risk on two:

The risk of exclusion (seven dimensions) by main activity status (per cent)[9]

	Social	Cultural	Civic	Services	Neighbourhood	Financial	Material
Retired	15	10	10	12	14	10	15
Employed	8	10	12	3	11	4	3
Self-employed	10	12	11	2	8	7	6
Unemployed	29	22	24	8	31	27	21
Permanently sick or disabled	18	24	22	30	23	31	12
Looking after home or family	10	14	12	9	13	15	10
Semi retired	10	8	12	0	12	4	7
All old people	12	11	12	9	13	10	11

As the report noted, employed older people 'may have greater access to friends and cultural activities and may be more likely to have access to financial products.'[10]

Time for change

The case for action to help older workers who become unemployed is very strong on social inclusion grounds. Unfortunately, we cannot just rely on existing Jobcentre Plus services.

The Age and Employment Network's (TAEN) Survey of Jobseekers Aged 50+[11] compares the results of surveys of older unemployed people in the period January-September 2008 and October 2008-May 2009: effectively, before and after the recession. In addition to the increasing numbers of older unemployed people contacting TAEN (which might be expected during a recession) there are some messages that are definitely unsettling:

• The proportion saying that they were seen by employers as too old, too experienced or over-qualified rose from 63 per cent to 72 per cent - the TAEN report notes that these are often seen as symptoms of ageist attitudes.
• A very large majority of respondents had sought help in getting work, from Jobcentre Plus, but also from private employment agencies, professional bodies and friends and family. The proportion saying that the help they got was 'not very good or poor' rose from 46 per cent to 53 per cent.
• A very large majority had heard of the age discrimination legislation and a substantial majority said they understood the rights it gave. Unfortunately, the proportion saying it helped older people to find work fell from 13 per cent to 10 per cent. The proportion disagreeing rose from 31 per cent to 45 per cent.
• TAEN noted that the surveys suggested that 'difficulties are routinely experienced by those who seek to return to work in their 50s and 60s.'

What needs to be done?

The comments reported by TAEN paint a picture of people becoming more desperate as the recession deepens. The dissatisfaction with Jobcentre Plus services is particularly worrying.

Since the New Deal 50 Plus was effectively wound up there has been no distinctive employment support for older unemployed people. The Flexible New Deal, which is replacing the current programmes, should (in theory) offer a different approach for older workers, as it is supposed to provide a personalised package of support, tailored to meet the individual unemployed person's needs. Unfortunately, the new programme is being introduced on a contracted-out basis, and there is a danger that providers may respond to the increased 'flow' of participants and reduced job opportunities by standardising provision to control their costs.

We have outlined the evidence that suggests a large proportion of older workers who become unemployed will become long-term unemployed people. For them the Welfare Reform Bill, currently being debated by Parliament, contains a significant threat. From 2010, initially in a number of pilot areas, but eventually nationally, people who are unemployed for over two years will have to take part in a scheme to be known as 'work for your benefits.'

Currently the Government plans to make this a compulsory work experience programme, in which participants will be forced to work for a rate of pay of less than a third of the minimum wage. Unions are concerned that this is unfair and largely pointless - employers are very unimpressed by a CV that includes a stint in a job that wasn't worth paying even as much as £2 an hour for. Older unemployed people, already facing age discrimination, will gain even less than other groups.

There is a remarkable contrast with another policy, also being introduced by the Government: the Future Jobs Fund. The FJF offers a job guarantee - the Government is offering substantial subsidies (much larger than in previous employment programmes) to employers who take on unemployed people in a real job for six months and pay them at least the minimum wage. The Government has put aside enough money to fund 150,000 jobs.

The only snag is that these guaranteed jobs are mainly on offer to under-25s, and there won't be enough subsidies to meet the likely level of demand. Nonetheless, the Future Jobs Fund points to a way of rescuing the 'work for your benefits' scheme from the ignominious end it currently deserves. A guarantee that every unemployed person who was still on JSA after two years would be offered a real job, paying at least the minimum wage, would offer real hope for older unemployed people - the promise that their careers would not end with years of unemployment, harried from pillar to post by a vengeful system.

Jobcentre Plus employment programmes need to age-proofed - customised to address the needs of the over-50s. Turning the worst feature of the Welfare Reform Bill into a Job Guarantee for the long-term unemployed would be an excellent start.

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[1] LFS data, UK.

[2] 'Labour market transitions', Carl Emmerson and Gemma Tetlow, in Retirement, health and relationships of the older population in England: The 2004 English Longitudinal Study Of Ageing (Wave 2) James Banks, Elizabeth Breeze, Carli Lessof and James Nazroo (ed.s), IFS, 2006, table 3A.1. Downloadable from http://www.ifs.org.uk/elsa/report06/app3.pdf.

[3] Ibid, table 3A.3.

[4] Ibid, table 3A.5.

[5] Extending working lives', James Banks and Gemma Tetlow, Living in the 21st century: older people in England The 2006 English Longitudinal Study Of Ageing (Wave 3), James Banks, Elizabeth Breeze, Carli Lessof and James Nazroo (ed.s), IFS, 2008, pp 20 & 38. Downloaded from http://www.ifs.org.uk/elsa/report08/ch2.pdf on August 6, 2009.

[6] See, for instance, our 2005 report, Ready Willing and Able, http://www.tuc.org.uk/extras/over-fifties-unemployment.pdf.

[7] Winning the Generation Game, Performance and Innovation Unit, pp 21 & 22.

[8] Moving Older People into Jobs, C Beatty and S Fothergill, Sheffield Hallam University and TAEN, 2004, pp 4 & 7.

[9] The Social Exclusion of Older People: Evidence from the first wave of the English Longitudinal Study of Ageing Final Report, Matt Barnes, Annelies Blom, Kate Cox, Carli Lessof, and Alan Walker, SEU, 2006, table 3.6, downloadable from http://www.communities.gov.uk/documents/corporate/pdf/143564.pdf.

[10] Ibid, para 3.1.5.

[11] July 2009, available at http://taen.org.uk/uploads/resources/24104_Taen_50_plus_survey.pdf.