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3.0 OLDER WORKING LIVES

Older Working Lives

• Scotland's working population is ageing: The largest group of older workers are aged 50 to State Pension Age ( SPA-59 for females and 64 for males) *, 68.9% of this group are in employment accounting for 19.6% of all people in employment. ⁴² The average age of the Scottish working age population has increased from 37 in 1991 to 38.9 in 2005. This is projected to rise to 39.6 in 2044. ⁴³
• Working beyond state pension age is becoming more common: There are 72,000 people in Scotland of state pension age and over, 7.7% of whom are still working. ⁴⁴
• Flexible working is key to older employment: Older workers are more likely to work part-time than younger age groups. Among those who work beyond SPA, the majority of both men and women work part time. Self-employment is more common amongst older workers compared to younger age groups.
• Older workers are not a homogenous group- there are considerable variations in the aspirations, opportunities and experiences of different sub-groups, between rich and poor and women and men.

The ageing of Scotland's population has had a significant influence on current debates on working lives. Research evidence concludes that one consequence of these changes will be that the 'experiences and outcomes of older workers will have a growing influence on the performance of the labour force as a whole'.⁴⁵ The evidence on the participation of older workers in the economy concludes that older workers will inevitably come to be viewed as an increasingly important source of labour and skills and therefore crucial to the future of the Scottish economy.

Characteristics of an ageing workforce

In Scotland, the broader demographic evidence highlights the fact that we are facing an ageing workforce. We are seeing a:

• Rise in the average age in the working population: the mean age of those in the working age population is gradually increasing. Figure 35 shows the increase in the mean age of those in the working age population. This process began in the 1980's. Between 1991 and 2005 the mean age rose from 37 to 38.9 years. This trend is expected to continue until it peaks at 39.8 by 2022.

* Currently 60 for women and 65 for men. From 2010 the female state pension age will be gradually increased to 65 by 2020.

Planning for a Scotland with an Ageing Population OLDER WORKING LIVES

• Rise in absolute numbers of older people in the workforce: Between 1997 and 2005, the number of people aged 50+ in employment rose from 481,000 to 631,000.
• Rise in the proportion of employees who are older: In recent years, there has been an increase in employment among older people. We have seen increases in employment rates for men aged 50 to 64 from 69% in 1984 to 71% in 2005 and an increase for women aged 50 to 59 over the same period from 54% to 67%.

Figure 35: Mean Age of Working Age Population, Scotland, 1981 to 2044

Source: Mid Year Population Estimates- GROS& GAD Projections (2004 Based). Compiled by Scottish Executive Labour Market Statistics Branch.

A typology of older workers?

It is recognised throughout the evidence that the characteristics of the older population are diverse, with different needs and aspirations. As such their experience and expectation of work in later life and throughout their life course are different.

Three distinct groups of workers, each with a different set of attitudes and choice in work and retirement have been identified in research ⁴⁶ into the older workforce:

• Choosers: These are likely to be professional workers, typically with high incomes and qualifications, who have had the most positive experience in work throughout their life course and who enjoy what they do. They are likely to consider staying in employment after retirement.
• Survivors: For this group, who typically have low income and routine jobs. Income is the main reason for continuing to work. For this group change is pushed upon them and is often a negative experience. Most 'survivors' are working full-time and still paying off a mortgage. For this group, retirement is more likely to represent financial hardship.
• Jugglers: Jugglers appear to have chosen to combine with other roles and are most likely to consider work after retirement if it is flexible enough to balance with other commitments. For this group the social benefits of work are important.

Patterns of 'Older' Employment

Figure 36 shows; there has been a general increase from 63% in 1984 to 69% in 2005 in the overall employment rate for those aged 50 to SPA. In recent years the participation of older workers has increased at a faster rate.

Figure 36: Employment Rate, 50 to State Pension Age, Scotland 1984 to 2005

Source: Compiled by Scottish Executive Labour Market Statistics Branch.

The employment rate for men in that age group decreased between 1984 and 1995 and recovered from 1996 onwards to a similar figure to 1984. The increase in overall employment rates for older workers has been driven by increase in the employment rates for women of that age group. The employment rate for older women aged 50 to 59 has increased from 54.1% in 1984 to 66.9% in 2005. This increase has significantly narrowed the gap between male and female labour market participation in the 50 to SPA group. This increase is likely to be linked to the ageing of birth cohorts of women who had higher employment rates earlier in life than earlier cohorts.

Despite this increased participation of women in the labour market, a number of factors can be identified which disadvantage older women in the labour market: ⁴⁷

• Higher incidences of part-time working with lower hourly earnings, progression and terms and conditions
• Broken career patterns due to more caring responsibilities
• Lower life-time earnings
• Concentration in low paid sectors of the economy

Figure 37 shows that

• The employment rates for our older population are broadly consistent with the UK as a whole.
• Those aged beyond state pension are more likely to work part-time (64.2%) and to be self-employed (25.2%) compared to those below SPA.
• Average time in their current job is 13.7 years for those aged 50 to State Pension ages and 15.2 years for those beyond SPA in employment.
• The great majority of people working after 50 are still in permanent employment. 96% for those aged 50 to SPA and 92.1% for those older.

Figure 37: Older people in the Scottish & UK labour market

Source: DWP (2006) Older Workers Statistical Information Booklet.
^a Just over 5% of the SPA and over 65 live in medical and care institutions. They are not included in these figures.
^b No data available for those aged SPA+ because only individuals in employment are asked to provide details of their educational qualifications.
^c The unemployment rate is the number of ILO unemployed (unemployed, ready to start work in a fortnights, having looked for work in the last four weeks) as a percentage of the total labour force.
^d Not in employment and either not seeking work or not available for work.

Employment rates for the older population vary across Scotland. The employment rate is higher in rural areas possibly due to links with higher incidence of agriculture and self employment. Figure 38 shows the spatial differences between employment rates for each of the Local Authority areas in Scotland in 2005. The levels of highest employment for people aged 50 to SPA are in Shetland Islands (85.8%), Orkney Islands (78%) and East Dunbartonshire (79.2%). The lowest levels of employment amongst the same age group are in East Ayrshire (57.7%) Glasgow City (58.8%) and Inverclyde (60.5%).Levels of high worklessness (unemployed or economically inactive) for people aged 50 to SPA are in Inverclyde (39.5%), Glasgow City (41.2%) and East Ayrshire (42.3%). People in the same age group who live in East Dunbartonshire (20.8%), Eilean Siar (23.7%) and Aberdeenshire (23.5%) are less likely to be workless.

Figure 38: % People aged 50 to SPA by economic status and local authority area, Scotland, 2005

Figure 39 shows occupation groups by age. Those aged 50 to SPA are more likely to work in the managerial and professional roles (explained by their length in service), but less likely in Sales and Customer Service occupations than the total working population.

Figure 39: Employment by Age Group and Occupation Group, Scotland, 2005

Source: Annual Population Survey 2005 (Jan to Dec)

In terms of industry of employment, Figure 40 illustrates that those aged 50 to SPA are more likely, than the working population as a whole, to be working in public administration, education and health but less likely to be working in distribution, hotels and restaurants.

Figure 40: Employment by Age Group and Industry Group, Scotland, 2005

Source: Annual Population Survey 2005 (Jan to Dec)

Older People and their jobs

The forms of employment taken up by older workers have changed since the 1980's with an increase in non-standard and more flexible forms of employment such as part-time work and self-employment.

The incidence of part-time working increases with age for both men and women. Part-time work is an important bridge between full-time work and retirement. The evidence highlights that the majority of older workers in the UK, 85% of men and 94% of women working part-time choose to do so, and that preference increases with age. ⁴⁸ Established gendered patterns of working persist into older age, with older women more likely to work part-time than older men.

As shown in figure 37, in spring 2006, 20.7% of people aged 50 to SPA worked part time. This substantially increases after state pension age when 64.2% of people aged SPA and over worked part-time. ⁴⁹

Recent research has also shown that self-employment is also important for older workers, particularly among older men. Figure 41 shows that older workers are more likely than younger age groups to be self employed. In 2005, 13.8% of people aged 50 to SPA were self-employed compared to 7.2% of those aged 25 to 34. The magnitude of the effect is stronger for men. This rise in self-employment among is also linked to the rise in the numbers of mature entrepreneurs - ?Generation 'M'. This is predicted to increase, as older individuals increasingly set up businesses on their own. ²¹

Figure 41: Self-Employed as a Proportion of all those in Employment by Age Group, Scotland, 2005

Source: Annual Population Survey 2005. Compiled by Scottish Executive Labour Market Statistics Branch.

Evidence from a range of research highlights consistent findings about the positive experience older workers bring to employers. Older workers:

• Work better in teams
• Are less likely to leave
• Have lower rates of absenteeism
• Have better interpersonal skills

As well as the benefits that older workers bring to employers, a recent study of the well-being of people aged 50 to 75 found that those who were employed had higher levels of well-being than those who were unemployed or retired. The highest levels of well-being were found in those who were working after state pension age. ⁵⁰

For some people leaving the labour market can result in poverty, insecurity and social exclusion, which in turn can lead to ill-health, depression and disenchantment. ⁵¹ Work is an important way of engaging with people, building social networks and overcoming social exclusion. ⁵²

The increased availability of flexible working arrangements can affect the labour market participation of older men and women by: ⁵³

• Allowing older workers to remain in their existing employment by downshifting in some way, either through reducing their hours and/or amending their working roles.
• Providing opportunities for 'bridged' employment between career occupation and retirement.
• Encouraging those not currently working because of their caring responsibilities, health issues or unemployment to return to the labour market.
• Recent research ⁵⁴ into employers (such as the one highlighted) who have adopted flexible retirement policies has shown that retaining older workers can:
• Reduce recruitment and training costs of new workers
• Retains skills and experiences
• Improves staff morale and loyalty
• Promotes greater diversity in the workplace and is more reflective of customers/client profiles.

Still Working? State Pension Age and Beyond

Beyond state pension age, there is less attachment to the labour force compared with younger ages across the life course. As figure 37 indicates, just over 92% of this age group are economically inactive. However, a proportion of the labour force in Scotland continue to work beyond State Pension Age ( SPA). Figure 42 shows the employment rate for those at SPA ages and over from 1984 to 2005. The employment rate for people in this age group was 7.7 % in 2006, 86.9% are economically inactive due to retirement.

Figure 42: Employment rates for those at SPA age and over from 1984 to 2005.

Source: Labour Force Survey (March to May Quarter each year). Compiled by Scottish Executive Labour Market Statistics Branch.

Research suggests ⁵⁵ that financial hardship is an important reason to continue working, such as the absence of an occupational pension, low income and still paying a mortgage. Amongst males continuing to work beyond SPA, pension provision was the main reason for continuing to work and for women being separated or divorced were more likely to be working beyond SPA. Having more educational qualifications were also associated with working beyond SPA while having none was associated with leaving work. Part-time opportunities are particularly important to propel working beyond SPA ages. Working beyond the SPA ages is strongly associated for those working in the years preceding SPA.

Economic Inactivity

Figure 43: Proportion on those aged 50 to State Pension Age Not In Employment by Reason, Scotland, 2005

Source: Annual Population Survey 2005. Compiled by Scottish Executive Labour Market Statistics Branch.

Despite the growth in employment rates among older workers many still leave the labour force ahead of the State Pension Ages. It is in their 50s that people begin to leave the labour market permanently.

• In 2005, a total of 244,000 people aged 50 to SPA were not working in Scotland.
• Of that group, 46,000 people were economically inactive due to being in retirement, 23.1% of men and 13.9% of females, accounting for 19.1% of that age group.

Figure 43, shows that the main reason for not working is due to being sick or disabled (52.7%) and this is the main reason for both males and females. This compares to 39.9% for people aged 35 to 49 who do not work. This reason is one of the most common 'pushing' factors cited in the evidence and is most associated with low retirement age and exit from the labour market.

The lower a person's retirement age, the more likely it was that they would have left work because of illness or disability ⁵⁶ and this is especially significant for those in their 50s
and early 60s. Men and women in lower social class groups are especially likely to cite health-related reasons for leaving work ahead of SPA. The likelihood of someone leaving work through ill-health or disability after the age of 50 re-entering the labour market is slim, and declines rapidly as the length of unemployment increases.

This evidence coincides with the increased levels of incapacity claimant benefits which increased with age as shown in figure 44. Older people are more likely to claim these benefits due to the likelihood of being sick and/or disabled and thus out of work.

Figure 44: Working Age Benefit Claimants by Age Group and Client Group, Scotland, August 2005

Source: Work and Pensions Longitudinal Study, Department for Work and Pensions. Compiled by Scottish Executive Labour Market Statistics Branch.

Unemployment is low in this age group compared to younger age groups. 6.9% of people aged 50 to SPA are unemployed compared to 20.5% of 25 to 34 year olds and 27% of 16 to 24 year olds.

Retirement Pathways

An important part of the labour market experience of older workers is the transition from work to retirement.

The Pension Commission Report (2004) estimates that trends in mean age of retirement in the UK have been decreasing since 1950, but the trend of earlier retirement has been reversing over the last eleven years since 1995:

• On average men retire later than women.
• For women, the most frequent retirement ages are 59-61 while for men they are 64-66.
• The estimated mean retirement ages in 2004 are 63.8 for men and 61.6 for women ⁵⁷.

The report highlights that it is unlikely that society or individuals will wish to choose an increase in retirement ages which is greatly more then the proportional to future increase in life expectancy. The Commission predicts that this will partly and should be left to individuals who will to a degree make their own balance between saving level, retirement ages and incomes in retirement. However it predicts that the increase in employment rates for the over 50's is set to continue due to less generous pension provision and fewer tax payers for each person drawing upon state resources.

It is apparent from the evidence that whilst older workers face a common transition, they are on the other hand, a diverse group and are as varied as the rest of the labour force.

Research into work and ageing contrasts economically inactive older worker with total choice and control to those with virtually none at all. Between these extremes there are a variety of experiences and expectations. The baby boomers for example are more likely to have greater expectations about the nature of employment after 50 and about suitable lifestyles in employment. ⁵⁸

Research on work and ageing shows that many factors have an important influence on when people retire. A combination of 'push' and 'pull' and a wealth of other inter-related factors are cited as factors influencing movement out of employment.

Researchers at University of Surrey ⁵⁹ have identified the following factors:

• Feeling Valued at Work: workers who believe they are making a positive contribution in their jobs, are more likely to stay in work. These people live longer, and have active lives after formal retirement.

• Social environment: the social networks that are linked to work are important to most people. They are more likely to stay in work if they get on with colleagues and there are opportunities for social interaction.
• Control: many older people have developed ways of working which suit their personal styles and strengths and value the opportunity to have their say in how the work is organised and carried out.
• Flexibility: where employers offer opportunities for flexible work for example part-time phased reduction in hours or responsibility) people stay in work longer. Most people who would consider working beyond retirement age would only do so on a flexible basis.
• Health: those who do are more likely to continue in poor health and to have lower incomes after retirement. Early assessment of risk and appropriate action can reduce the likelihood of people becoming sick and disabled in their 50s.
• Personal 'mission': for many people, work is focused on a cause or a long term sense of purpose, such as contributing to the community, caring for others, or professional reputation. This can be one of the main reasons for remaining in work or staying 'active' in a voluntary role.
• Caring responsibilities: during their 50s and 60s many people find themselves with growing responsibilities for elderly parents and sometimes for grandchildren or dependent parents. Evidence suggests that caring roles will become increasingly influential over people's life choices as individuals will have both children and elderly relatives to care for. It means that people in their 50s represent a pivot generation with both care and work roles and that carers may be inclined to leave work if they are unable to balance work and caring.

Tomorrow's Working Lives

A declining population and ageing workforce brings with it questions about the future of the Scottish labour market.

"An increase in 2% in employment among the 50 and over age groups would more than offset the initial decline in the absolute size of the working aged population up to 2015"⁶⁰

Recent evidence is showing that the demand for more flexible and non-standard forms of employment will increase amongst older workers and the general population. Looking forward, the evidence highlights that, changing demographics are likely to have a continued impact upon the expectations and perceptions of current working patterns.

A study by the Work Foundation ⁶¹ into people's aspirations about ways of working highlights the way in which changing demographics is having an impact on the expectation of their working lives: Increasing amounts of two income households mean there needs to be some way of managing childcare, eldercare and housework and the evidence concludes that there is support for making flexible working practices available to all throughout the life course.

For example, the study showed:

• 84% thought employers should offer part-time work to those near retirement age in order to retain them
• 88% of employers should offer flexible working to everyone
• 92% should invest money in changing working practices
• 9% thought employers should keep working the same way they have always done.

The evidence highlighted a generation gap:

• younger age groups were more likely to want to work flexibly at the start of their career.
• whereas older age groups were more likely to want to work flexibly when they have older children.
• Younger workers are much more likely to want to stop working when they reach 60.
• Older workers over the age of 55 are more likely to be working full-time than not working at all.

In line with trend analysis ⁶² we can predict that employers will increasingly look at non-traditional groups such as older workers. The proportion of people in the Scottish Labour market should remain constant or fall only slightly. This is because people from abroad will be entering the labour market and more women and older people will be entering or staying in the labour market.

The evidence is telling us:

• There is likely to be an increased supply of people wanting to work part-time and flexibly especially after state pension ages.
• Unlike immediate predecessors, today's over 50s believe they will work into their 60s due to current pension situation.
• People increasingly believe that organisations need to respond to changing demographics and child/eldercare responsibilities.
• Retirement is less likely to be based on past traditional models, but more on a transitional approach, where people might continue to be active in the labour market and in the community in different ways.

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