Fuller Working Lives Hertfordshire LEP Skills & Employment Programme Board Simon Wilkinson DWP Thursday 10 th November 2016
Contents A. Why are we concerned about FWL? B. What is the labour market status of the 50+ population in the UK and Hertfordshire? C. Why do people leave the labour market early? What are people’s attitudes to work over 50 ? D. E. What are the challenges for employers and the cost to business? F. What can employers do and what are some options for LEPs? Department for Work & Pensions 2
A. WHY ARE WE CONCERNED ABOUT FWL? Department for Work & Pensions 3
At the current rate of labour market exit, the supply of workers will not meet the demand required… • By the mid 2030s, people aged over 50 will comprise half the adult population in the UK . 3 • Between 2014 and 2024, the number of people aged between 16 and 49 will fall by over 200,000, while the number of people aged between 50 and State Pension age (SPa) will rise by 3.2 million (ONS). 1 • Average age of labour market exit lower than it was in the 1950s and is not keeping pace Source: 2014 life expectancy from ONS, Average age of exit from LFS quarter 2 with increases in life expectancy. The increasing trend in the older population highlights the key role that older people will continue to play in the labour market, and the importance of enabling older workers to remain in and return to the workforce. Department for Work & Pensions 4
…and there are benefits to individuals and the economy of FWL Individuals • 12 million people currently of working age are heading towards inadequate retirement incomes. • DWP analysis suggests that around a third of people who stopped work aged 50 to SPa between 2008 and 2010 saw their household income drop by more than half. Economy • There are 3.6 million 50-64 year olds not in work (ONS). DWP currently spends approx. £7bn p.a . on main out of work benefits for those aged 50-SPa. o As of November 2015, 44% of ESA claimants were aged 50+. • Adding 1 year to working lives could increase GDP by 1% per year after 5 years (equivalent to £17bn in 2014), and adding 3 years would increase GDP by 3.25% per year by the early 2030s. Department for Work & Pensions 5
B. WHAT IS THE LABOUR MARKET STATUS OF THE 50+ POPULATION? Department for Work & Pensions 6
The over 50 population is split into three distinct groups, with flows between them… Employed Level (50+): 9.7m Rate: 70.3% (50-64) 10.4% (65+) Economically Unemployed Inactive Level 50+: 0.3m Level (50-64): 3.3m Rate: 3.6% Rate: 27% …each with different policy levers and approaches required. Source: LFS (Feb-April 2016) Department for Work & Pensions 7
Labour market statistics for 50-64 year olds in The Hertfordshire Region LEP area Employment Inactivity 162,800 employed 42,900 inactive Employment rate of 78.1% Inactivity rate of 20.6% • East 72.8% • East 25.3% • England 69.9% • England 27.6% Unemployment January – 2,700 unemployed December 2015 Unemployment rate of 1.6% • East 2.5% • England 3.4% Department for Work & Pensions 8
Those in employment make up the biggest group… 100% Employment rate over time – Men and women 2 90% 80% 75.0% 69.5% 70% 63.9% 60% Rate 50% 41.8% 40% Employment rate gap M 50-64 F 50-64 27.7% 30% 20% 11.0% 10% 0% 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 The employment rate for ages 50-64 is 70.5% compared to 83.0% for 25-49. 1 This is a similar case for the employment • rate for 65+ which is 10.6%. • Although, employment levels of ages 50+ are rising, they are not at the levels seen in the 1970s. 3 • Key sectors for employment of over 50s are: • Women: health and social work (26%), education (18%) and retail (12%) • Men: manufacturing (16%); construction (12%); transport & storage (9%) • The proportion of those employed that are in part time work increases as age increases. • 12.9% of 50-64 population are self-employed Department for Work & Pensions 9
Department for Work & Pensions 10
Comparing employment rates across other LEPs in the region Department for Work & Pensions 11
C. WHY DO PEOPLE LEAVE THE LABOUR MARKET EARLY? Department for Work & Pensions 12
Key reasons for leaving the labour market early are known to be “push” factors such as health and caring or “pull” factors such as reasonable terms to retire early. • Reasons for early labour market exit are complex and many factors are often involved. • The most common reasons cited in research are ill-health, difficulty in returning to work after redundancy, caring responsibilities, financial circumstances and incentives to retire, and factors relating to the nature of work. • It is estimated that 1.4 million people aged 50-69 who left their job in the last 8 years did so for involuntary reasons such as caring, health or redundancy. • BSAS (2015) asked respondents who were retired the reasons why: • 39% of retired people say they retired because they wanted to • 20% due to ill health • 11% due to employers policy on retirement age and • 11% due to losing their job/being made redundant. Department for Work & Pensions 13
E. WHAT ARE PEOPLES ATTITUDES TO WORK OVER 50? Department for Work & Pensions 14
Attitudes to working longer are changing for individuals… People are leaving the labour market earlier than in the 1970s and 1960s despite higher life expectancy. Although attitudes to working later show signs of change. Over 50s’ attitudes • Only 15% of non-retired over-50s expected to stop working altogether between 60- 65; • Almost half (48%) of respondents still want to be working between 65-70; • 39% would prefer winding down gradually with part-time work and 17% would like to take on a less demanding job for a period of time before stopping altogether; • 1 in 5 retirees (23%) wish they had worked longer – often citing missing social interaction (38%). • Over half of DWP polling respondents said that they had changed their expected retirement age over the last few years. 56% among women, compared with 43% for men. Department for Work & Pensions 15
… and employers. The view of employers • Over three quarters of employers believed the experience of workers over 50 was a main benefit of having them in their organisation • 65% highlighting the reliability of older workers • Nearly a third said workers over 50 were easier to manage than younger workers (54% said they were equally easy to manage) • 54% value the role older workers play as mentors • One in five said older workers were more productive . • 87% of employers reject the idea that the skills of older workers are unsuitable for their business • However – perceived and real evidence of bias, persists for e.g. in recruitment. Source: Employer Attitudes to Fuller Workging Lives, 2015 Department for Work & Pensions 16
E. WHAT ARE THE CHALLENGES FOR EMPLOYERS AND THE COST TO BUSINESS? Department for Work & Pensions 17
Challenges for employers in an ageing society • The number of young people leaving education won’t be enough to fill the jobs a growing economy will create • Shortages of skilled labour in ageing society • Older workers will be critical to employers if they want to remain competitive, fill vacancies and retain skills and experience • Presents challenges - overcoming ageism – flexible work, age diversity • Provide opportunities and options to change careers • 3Rs: Retain, Retrain, Recruit Department for Work & Pensions 18
The cost to business The premature loss of older workers can lead to: • Skills shortages • Loss of knowledge and experience • Lost opportunity for mentoring of younger employees. • Higher recruitment costs • Increased staff turnover - higher training costs and loss of output • Workforce does not reflect the client base your business There is no systematic evidence that older workers are less productive than younger workers There is no evidence that increasing the employment of older people displaces younger people from the workplace – the reverse is true Department for Work & Pensions 19
A. WHAT CAN EMPLOYERS DO & WHAT ARE SOME OPTIONS FOR LEPS? Department for Work & Pensions 20
And what can localities do to drive fuller working lives? • Local Enterprise Partnerships – the future of local growth • Older workers/Fuller Working Lives in strategic economic plans (e.g. LEPs, LAs) • Local employer conferences to drive employer engagement with an awareness of the issue • Encouragement of healthy workplaces with appropriate flexibilities • Media activity to challenge any misconceptions about older workers and later life working Department for Work & Pensions 21
What can employers do? • Conduct an age audit • Consider flexible working practices • Introduce intergenerational mentoring • Introduce apprenticeship programmes/training for older workers • Adopt age-specific wellness programmes • Consider workplace adaptation • Offer a career review • Help employees prepare for retirement Department for Work & Pensions 22
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