Over 50 and unemployed: The silent scandal hitting the economy

More than a million people over 50 have been pushed out of work, costing the UK economy billions – according to a new report published by Prince Charles’ charity on Thursday. Research for Business in the Community indicates that long-term joblessness is, proportionally, much higher amongst older workers.

In this article, Keystone’s leading Employment lawyer, Jacqueline McDermott explains the reasons for this shocking issue, as well as what its implications.

Despite the introduction of age discrimination legislation and the abolition of the default retirement age, Research for Business in the Community’s recent report shows that long term unemployment among the over 50s is in fact, higher than among the under 50s.Reasons for those over 50 being forced out of work are varied. Some are forced out due to ill health or having to care for relatives. Lack of willingness on the employer’s part, to consider flexible working arrangements is also likely to be a contributing factor.The report also states that the over 50s are twice as likely to be made redundant than the under 50s. The higher rate of forced redundancy for the over 50s is a cause for concern and suggests that employers are unwilling to find continued employment and reluctant to invest in retraining this age group.Once forced out of work, the over 50s struggle to get back in, with long-term unemployment higher amongst this age group than any other. The position seems to be even worse for women as employment rates are 11% higher for men over 50 than women. As a result women are likely to remain worse off in retirement than men and reliant on their partner or spouse for income in retirement, if they have one.What does this mean?

For the individual:

• To reflect changes in life expectancy the State Pension Age (SPA) will rise. The SPA for women will rise to 65 in 2018 and for both genders it will then rise to 66 by 2020, 67 between 2026-28, 68 by the mid-2030s, and 69 by the 2040s.

• By exiting the workforce before State Pension Age, individuals lose a number of years’ income and pension contributions while also being too young to claim any income through the State Pension with potentially disastrous implications for their long-term financial wellbeing.

For the economy:

• The lower employment rates amongst the 50-64 age group are estimated to cost the UK over £88bn in terms of lost economic output in 2014.

• Over the coming decades the UK’s “working age” population is expected to rise by just 3% compared to a rise of over 39% for those aged 65 and over.

• The researchers estimate that if the skills and abilities of the 50-to-64 age group were fully used and their employment rate matched that of people in their 30s and 40s, UK GDP would be £88bn higher this year, equivalent to 5.6% of GDP.

What consequences do we face?The data is quite clear. Action needs to be taken! Many employers value the skills and experience of older workers and even proactively recruit them. However, it is clear that age discrimination against the older generation still remains and the potential economic and social effects are serious.Along with this comes the risk of discrimination claims for those employers who target older workers in redundancy situations, whether consciously or otherwise. The same problem faces those who refuse to consider flexible working requests fairly and reasonably. This is likely to become a bigger issue for employers with an aging workforce and a rising State Pension Age. How can we combat the problem?The age discrimination laws and the abolition of the default retirement age do not appear to be working well enough. The introduction of the right for all to request flexible working is only a right to request it and employers can refuse it.

The report calls for action to make it easier for employers to retain older workers including a call for the Government to consider wage subsidies and tax incentives and to ensure that older workers receive ongoing training and support along with opportunities to engage with new technologies.They have also called on the Government to strengthen the Right to Request Flexible Working and for employers to consider a wide range of flexible options including compressed working, job sharing, working from home and split shifts.It is, therefore, vital that all businesses review their employment policies and practices in these areas, as well as ensuring their managers are properly trained.