In a guest post, Stephen McNair argues that the public spending cuts in the UK will disproportionately affect older workers – and that the Government urgently needs to combat this.
The UK Government’s plans to shift the balance of employment from the public to the private sector have not paid sufficient attention to the age profile of the public sector workforce. As a result they are likely to be discriminatory against people over 50 (unlawful under recent regulations) and unlikely to achieve their stated objective.
Older workers in the public sector
The Office of Budget Responsibility’s Budget forecast predicted a reduction of 490,000 in public sector employment in the short-to-medium term. However, public sector employment is unevenly distributed by gender and age, which means that the reductions will be indirectly discriminatory against two groups protected by equality legislation. For those aged between fifty and sixty, some 40% of the workforce is in the public sector – the highest concentration of any age group.
The temptation for public sector employers will be to enforce “early retirement” as the most painless way of downsizing (ironically, a strategy which private sector employers have generally abandoned in recent years). Most of those who lose their jobs will have little experience of private sector work and culture, their skills and knowledge base is unlikely to be readily transferable, and the economic case for retraining them for entirely new roles in the private sector is weak. Furthermore, they are more likely to live in regions where private sector employment is already scarce and unemployment rates high, and because of their age they are more likely to have domestic commitments which make them less geographically mobile.
They are thus much more likely than younger people to become unemployed, some for many years. Some of those nearer to normal retirement age may opt for early retirement, but redundancy payments and public sector pensions are not generous for an average middle ranking public sector employee leaving 5 or 10 years early.
The long-term impact on older workers
In the long term the market will drive change, and in the last decade we have seen some very positive developments. There is clear evidence that most people in their 50s would like to work longer, and rates of participation in the labour force have continued to rise throughout the recession. However, this rise mainly reflects employers retaining established and trusted employees, while age discrimination against older job applicants remains very widespread.
It is well established that those who need to re-enter the labour market after 50 almost always have to accept demotion in pay, status and quality of work. Such discrimination may be unlawful, but is very difficult to identify or challenge (and a record of bringing action for discrimination does not improve employment prospects). When the Learning & Skills Council reviewed the experience of 10,000 people who completed retraining programmes for the long term unemployed (in 2007, before the recession), it found that age on its own, or in combination with other kinds of disadvantage, significantly increased the difficulty of finding employment.
The need for a shift in Government policy
Despite this, the Government does not propose to treat older people as a priority group in the new Work Programme, where providers will be paid on the basis of results in terms of sustainable employment. While many working in these agencies are committed to prioritising older people, they have much less experience of finding work for unemployed, middle ranking, often white collar, public sector workers. There are other groups who are much easier to find work for, and without a significant incentive, providers are likely to prefer to concentrate on the “low hanging fruit” – especially since by the time older people are referred for support they will have already been unemployed for some months, by which time morale, motivation and self confidence have fallen, leaving much ground to be made up.
The risk is that the current policy is likely to be lead to large scale and wasteful long term unemployment for people who are currently active and productive contributors to the economy in the public sector. Most wish to continue to contribute, and have done nothing to deserve spending their 50s and early 60s living on benefits and fruitlessly seeking work of any kind.
At the very least, I think the Government should recognise that age is a significant factor preventing people getting back to work after 50. It could do this by earmarking specific support for those over 50; by supporting retraining programmes; and by reducing the time before eligibility for the Work Programme.