Catch-55 – our failure to keep older people at work

Michael Skapinker, commentator at the FT, credits a reader with the wittily apt ‘Catch-55’.  The term sums up the dilemma faced by older workers who, with longer lives, later pensions and possibly second families need to work well into old age.  The problem is, once you hit 50, employers do not want to recruit or keep employing you.

In spite of the OECD issuing dire warnings about falling birthrates and the need to keep older people working, Catch-55 is stubbornly persistent.    In the UK the government, employers’ organisations and all the noble institutes concerned with work exhort employers to value their older workforce.   The argument is an economic one:  the birthrate is declining in Europe, we need to keep older people to use their knowledge and skills; companies who retain older workers are more profitable ……. And of course lots of companies pay good money to belong to organisations which promote the inclusion of older people.

And yet progress towards including older people in the workforce limps along.  The Institute of Fiscal Studies indicates that in the UK only 44.4% of the 60 to 64 age group are working (compared with a total participation rate of around 70%) albeit up from 37.5% in 2001.   (Notably there is a gender difference with women’s participation falling faster during their 50s than men of the same age.)  As an international comparison  some countries, The Netherlands for instance,  has increased participation in this age group from 17.5% to 37.9% over the same period.  Policies and campaigns have been introduced in OECD countries,  but progress is slow across most economically developed nations.

What is happening?  Of course, the economic crisis has affected the situation, but it is worth looking at other issues which may be halting advances.  There is a body of research developing which suggests that the economic argument used by governments to promote the retention of older workers is simply not effective in a world of increasing birthrates (UK), economic recession, cost reduction and the immigration of younger, skilled workers.

But what else may be going on?   One HR manager told me that of the ten people she recently ‘helped to leave’ eight of them were over 50.   Why this group went was, she said,  a mix between the need to introduce fresh blood, change of strategic direction, personality issues and ‘delayering’ – removing ‘not sufficiently value add’ managers.  Another organisation’s Diversity & Inclusion lead was shocked to see that 10% of all women employees left the organisation once they reached their 50s.    The story the organisation told itself, she reported, was that women left because they were in the ‘sandwich’ generation looking after grandchildren and elders.   In some cases that was true but further research showed that many were talented women faced the double whammy of age and gender – a ‘reinforced glass ceiling’.

Yet another practitioner reviewed the over 50s access to training and found that they did not access training at the same rate as younger groups.  On further investigation it appeared that managers did not think they were good investments and blocked requests.  This finding is backed up by OECD research which indicates that in 2011 11.6% of people in the 55 – 64 working age group accessed training.  Relative to young people (using 1.0 as the base point, people in the older age group had a relative training rate of 0.66 falling short of the ideal of keeping skills up to date).  The OECD does not speculate as to why this is the case.  Union contacts have told me that among less well paid groups, women over 50 did not leave voluntarily but are  ‘managed out’  (shorthand for using company disciplinary or sick absence procedures) owing to the onset of  health problems, often menopausal related.

We know too that there is unconscious bias operating and I will return to that subject in greater depth in a future blog.   A point worth considering is the older people’s participation in the labour market in the UK  runs at roughly the same rate as people with disabilities – a group who face significant barriers to entry into the labour market.

But there is a question that worries me:   I find it difficult to square the age/economic argument circle with ensuring that there is advancement and retention of talented younger people.   This is not to say that I believe in the infamous ‘lumps of labour’ fallacy which suggests that available jobs are inflexible and that if you remove older people (or whichever group you are looking at) from the labour market you will allow younger people to enter it.   But within economically constrained organisations who seek profitability from internal cuts and ‘delayering’  – removing costly older employees – is economically rational even for those organisations which espouse age inclusion.   Nor does the economic argument work  at the less skilled end of the labour force where replacement of an older person is easy.

So what to do?   Some forward thinking organisations offer people the possibility to ‘step down’ and take a lower level job or work part-time.  Needless to say the initiative sat languishing with little take up.  So what else: compulsory job rotation, with an expectation that you will move on within three years?  Go it alone and build your own business?  Associate arrangements?  Preferred supplier status?  A new consultancy called Silverbacks Associates Inc?   And what about the easily replaceable unskilled older worker?   Whatever the answer is Catch-55 is real and is not going away.

Age Slides

Sources:

OECD http://www.oecd.org/els/emp/ageingandemploymentpolicies.htm

Institute of Fiscal Studies, English Longitundinal Study of Ageing http://www.ifs.org.uk/ELSA

Age slides based on Table E8 ELSA (Wave 5)

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