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About the P&I Team Briefings Home | Responses | PFI Index | Policy Guide
THE AGEING WORKFORCE Briefing No 53
Communications

 

 

 

The Ageing Workforce Briefing No 53

Introduction

The government plans to implement the European Employment Directive, which includes provisions to combat age discrimination. However the legislation relating to age discrimination will not come into force until 2006.

This briefing paper therefore examines the issue of the ageing workforce, including age discrimination, the Rutherford case and the benefits of an older workforce.

Demographic Timebomb

Scotland, in line with the rest of the UK, is facing the problem of an ageing population whereby the greatest increase in population growth will occur among those aged 55 or more.

This will result in a diminishing proportion of younger, economically active citizens and a growing proportion of older, retired people in the future. The so-called 'dependency ratio' is likely to increase. The debate centres most pointedly around questions of how to finance the spiralling cost of pensions, health care and social support, especially with fewer people working and paying taxes.

The maintenance and care of the older generations will be a more significant issue once the numbers increase rapidly. This why some have called it a 'timebomb'.

Some commentators fear that this will lead to a reduction in the GDP and a lowering of the standard of living. However other commentators are not so pessimistic, believing that productivity may improve and that encouraging more elderly workers back into employment may be beneficial to both employers and employees.

Age Discrimination

It has been estimated that only 63.4% of older workers in Scotland (those aged between 50 and retirement age) are either in employment or are actively seeking it. Age Concern has raised the issue that too many older workers have been out of the workforce for years before they retire. This may in part be due to age discrimination.

For those out of work there is the problem of finding suitable training opportunities to make them attractive to employers as well as a general concern over age discrimination during recruitment. For those in employment access to training and development opportunities may be restricted, as some employers believe that they will not get sufficient 'payback' from older workers before they retire.

Another concern for those in employment is that of older workers being the first ones in line for redundancy and dismissal if an organisation is looking to lose staff.

Although the Westminster Parliament will not pass legislation on age discrimination before 2006 there may be some role for the Scottish Executive to act sooner. This is due to the Scotland Act 1998, as its definition of equal opportunities was defined widely enough to include the grounds of age. This Act places duties on certain office-holders and public authorities to pay due regard to the equal opportunity requirements.

The Rutherford Case

One concern for older workers was that under the Employment Rights Act 1996, ex-employees couldn't bring unfair dismissal claims if they are over the normal retirement age for their employment position. If there is no normal retirement age they cannot bring a claim if they are over 65.

The Rutherford case involves a 67-year-old man who was made redundant. He argued that the bar on older employees bringing unfair dismissal claims and receiving redundancy payments was indirectly discriminatory, and therefore invalid.

Eventually he won his case by proving that he was victim to indirect sex discrimination, in that as far more men over 65 continue to work than women, then to compel him to retire at 65 is clearly sex discrimination. The tribunal found that the age bar amounted to unlawful sex discrimination and was ruled invalid.

This has now opened up the issue of more flexible retirement dates for employees, allowing them to remain at work past the normal retirement age, if they so wish.

Benefits of an Older Workforce

Many organisations are now starting to realise the benefit of employing and retaining older workers. As the population ages there will be fewer workers, so attracting and retaining older workers will become a necessity for many organisations.

Also, by encouraging more elderly people into employment this will help offset the problems of an increasing dependency ratio.

Recent surveys have revealed that older workers are more loyal (resulting in a drop in staff turnover), perform better in appraisals and have sickness levels no worse than younger colleagues.

One method of retaining older workers is to offer flexible retirement dates as well as more flexible working hours. This allows employees nearing retirement to reduce their hours while the employer still retains their organisational knowledge and skills.

With an increasing life expectancy a lengthy retirement period is often unattractive and, to many people, not financially viable. However by making it easier for them to retain their employment, even on a part time basis, this will help workers prepare for retirement, enhance their pension rights, maintain self-esteem and contribute to the economy.

One method could be by letting employees receive part of their company pension while working part time. Currently this is prohibited by pensions legislation but the government, in the Pensions Green Paper, are considering allowing this to happen (See P & I Briefing No. 52).

This will help companies who may otherwise lose experienced employees to competitors if the employees were wanting to reduce their hours.

 

Action for Branches

Unless the Rutherford case is reversed, this will provide branches with a starting point in negotiations to retain older workers who do not wish to retire. Branches should:

  • Include age discrimination within equality policies, and
  • Raise the issue of flexible working and retirement dates.

Age Positive Website

www.agepositive.gov.uk

Campaign against age discrimination in Employment

www.caade.net

Loretto, W. & White, P.

The beginning of the end of early retirement? (2002)

 

Contacts list:

Dave Watson - d.watson@unison.co.uk

@ The P&I Team
14 West Campbell St
Glasgow G26RX
Tel 0845 355 0845
Fax 0141-307 2572

Top of page

 
Further Information

Age Positive Website
www.agepositive.gov.uk

Campaign against age discrimination in Employment
www.caade.net

Loretto, W. & White, P.
The beginning of the end of early retirement? (2002)

Contacts list:

Dave Watson -
d.watson@unison.co.uk

@ The P&I Team
14 West Campbell St
Glasgow G26RX
Tel 0845 355 0845
Fax 0141-307 2572