If working longer is the most likely solution, how will this affect the employers of these ‘older workers’ and how could they respond to the ageing of the workforce. Firstly, who are ‘older workers’? The Age Discrimination in Employment act applies to individuals aged over 40 years and the committee for Economic Developments New Opportunities for Older Workers identifies older workers as 45 years pus (Lockwood, 2003). We shall assume that the older worker is categorised as 45 years and above and that the older baby – boom generation will just be reaching 6s5 years around 2010.
It has been established that there are certain attitudes and beliefs surrounding the employment of older people, which has arose from the 1970s. Litrature today suggest that older people are more than able to do the jobs which young people do, if not doing them better. With their wealth of life experience and wisdom which only comes with age, complements any older worker, and some of the skills which older workers posses are essential for the role of supervisor and manager, for example, how to handle people in a diplomatic way, they have very god judgement and they have the ability of spotting problems before they blow up (Economist, 1999). Fig. 1, illustrates the qualities which the ageing workforce can bring to organisations. In addition Harris
and Cole (1980, cited in Victor, 1994) state that empirical evidence suggests that older workers are more productive than younger workers, they may not be able to complete physical jobs but for the majority of jobs this is unnecessary because of labour
Fig. 1, Qualities an aging workforce encompass saving equipment. So the first response that managers of organisations must battle with is the stereotyping of the older workers. Ashbridge (2003) believes that challenging attitudes will be the largest challenge facing employers and that demographics will force a change in attitude. Research suggests that employers shy away from employing the older person, as many people believe they are paid more and are less productive, the fact is that generally older workers are paid more because they are worth more to the organisation, their education standards are generally higher than graduates of today (Economst, 1999)
It is important that employers invest in all their workers through training and development, but not always essential in some jobs. However, with an ageing workforce training and development is vital. As the employees reach retirement age employers tend not to invest in them with marketable skills as they may feel they are not worth investing in for the fact that they are near to the end of their working lives. Nonetheless, retention rates of older workers are higher than them of young people (Lockwood, 2003), for the reason that young people tend to switch jobs frequently (Economist, 1999), therefore, it is the older workers that will offer the best return on training in the long term.
There is a variety of alternatives to retirement for older workers, Reday-Mulvey and Taylor (1996) suggest the gradual retirement scheme, which is also known as phased, partial or part-time retirement, which is present in Denmak, France, Germany, Luxemburg, Spain and Italy. Employers and Trade Unions are slowly beginning to realise that retiring employees can in fact result in an inseparable loss of expertise and skill, consequently, adopting gradual retirement into the organisation allows employees to reduce their working hours, draw part-time pay and partial pension. This permits organisations to use the time left with the employees to use them to train up new workers and serve as mentors, in addition they offer flexibility that other workers may not give as in most circumstances they do not have the commitments which younger workers may have.
Another approach that is used in America to tempt older workers to carry on working is ‘bridge ‘ jobs. This creates a gradual transition from full-time work to retirement, again, this allows the older worker to carry on working and also allows the employer to use the skills of the older worker. Quinn, (1999, cited in Economist, 1999) found that nearly half the men and women who were in full-time jobs in America moved on to bridge jobs in middle age, and both the best paid and the worst paid carry on working (Economist, 1999).
What is evident is the differences between Britain, America and many European countries. America and the European countries have already started to cater for the ageing population, whereas Britain is slowly lagging behind. Older workers in Britain do not have as many choices as workers in other countries. The Inland Revenue prevents people from drawing any form of pension while working part-time (Reday-Mulvay, and Taylor, 1996), therefore, the only option is to work or retire. In some cases retiring is sometimes more financially beneficial as most retired people are much better off when they are retired than they would have been at an earlier age (Hicks, 1998), therefore, this gives them the disposable income which they need to spend in their leisure. Employers should be working with trade unions and the government to try to find a solution to these problems through reform of current legislation. Hicks, (1999: 7), suggests some directions for reform,
- Slowing of reversal of trends towards longer periods of retirement
- Wider choice for individuals about the life course, not least by removing both artificial incentives that now favour sudden and early retirement and disincentives to choice built into existing programmes
Employers along with Trade Unions make it hard for themselves to employ older workers. For example, financial schemes which reward long service make it disproportionately costly to keep on older workers and pension schemes which are based on defined benefits make it expensive to employ older workers (Economist, 1999). It would then make sense to rewards workers on performance and productivity.
Managers of organisations could look at creating alternate career paths for their older staff if there is a need to bring in younger employees. IBM Belgium set up a company called SkillTeam that re-employs any of their early-retired employees who want to carry on working for a longer period. An employee who joins the SkillTeam at the age of 55 for example on a five year contract would work for 58% of their time over the period, for 88% of their previous IBM salary. This allowed IBM to retain the intellectual capital that they would have otherwise lost if they had retired altogether (Economist, 1999).
Research on recruitment by Totaljobs.com found that out of 8,000 jobseekers interviewed, 40% claimed they felt they had been rejected from being successful in their interview because of their age (Shawcross, 2004). However, not all employers of private organisations are overlooking the older workers. B & Q, Asda and Tesco are providing schemes to encourage people over 50 years old to apply for jobs. One in six of Teso’s staff and one in five of B & Q staff are over 50 years old. Asda has launched the ‘Goldies’ scheme to encourage people aged over 50 years to apply to their stores. It is believed by these stores that older workers and younger staff work well together and that the combination works well at their stores (Arp.org.uk, 2003). Recruiting young staff is vital for private organisations both now and in the future, however, the effective retention, motivation and development of older workers should be of equal importance.
It has been identified that there are eight strategies that managers of private organisations could consider regarding the ageing of the workforce,
- Attempt to remove the ‘stigma’, attitudes and beliefs regarding older people / workers
- Ensure training and development needs are met
- Consider phased, partial or part-time retirement
- Consider gradual retirement
- Consider legislation regarding part-time work and part-time employment
- Remove long service reward schemes and replace with rewards based on performance and productivity
- Create alternate career paths
- Create specialised schemes for older workers
It is estimated that by 2010 employees over 45 years old will make up 40% of the workforce in the United Kingdom’s economy (lg-employers.gov.uk, 2004). The baby - boomers will be at the peak of their prime earning years with few children and fewer young people to employ. The fiscal challenge ahead of us is enormous and something must be done to avoid the adverse consequences. It has been suggested that this demographic occurrence will force employers to wake up to the fact that they will have to start employing older workers (Ashbridge, 2003). When there are no more young people in the workforce available to employ, employers should start to seek the unconventional or alternative forms of employment like older people. There are private organisations as well as various other countries which are pathing the way to employment of older workers, for example, Asda, B & Q and Tesco, however, the fact remains hat the attitudes and beliefs that older people are not up to completing most jobs satisfactorily and effectively is still prevalent within the British society. This in tow with legislation which restricts early retires from working part-time whilst drawing a partial pension only makes it harder for employers to retain staff as sometimes people will be better off drawing their pension early rather than to carry on working.
References
Arp.org.uk, (2003), Older workforce, Arp.org.uk, Online Available
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Ashbridge, J. (2003), Older workers enter the new age of fairness, The Sunday Times, November 2nd 2003.
Devenport, M. (2000), Demography: Stark choice over immigration: Populations are getting older in many countries, BBC News, Online Available
http://www.news.bbc.co.uk
[Lecture notes]
Hicks, P. (1998), The policy challenge of ageing populations, OECD Observer, June – July 1998, No. 212, pp. 7 – 11.
Lg-employers.gov.uk, (2004), The older workforce, The Employers Organisation for Local Government, Online Available
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Lockwood, N. R. (2003), The ageing workforce: the reality of the impact of older workers and eldercare in the workplace, HR Magazine, Dec 2003, Vol. 48, No. 12, pp. 1 – 11.
Penycate, J. (2000), The age wave, The Money Programme BBC, 30th April 2000
[Lecture notes]
Reday-Mulvay, G. and Taylor, P. (1996), Why working lives must be extended, People Management, May 1996, Vo. 2, No. 2, pp. 24 – 25.
Shawcross, F. (2004), You are never too old to work, The Bolton Evening News, March 19th 2004.
The Economist, (1999), A full life, The Economist (US), September 1999, Vol. 352, No. 8135, pp. 65 – 70, Online Available
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The Economist, (1999), Let old folk work, The Economist (US), September 1999, Vol. 352, No. 8135, p. 23, Online Available
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Victor, C. H. (1994), Old Age in Modern Society A Text Book of Social Gerontology, London: Chapman & Hall.
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