Apologies for cross-posting

In the face of rapid population ageing and the trend towards early
retirement, there is a need to promote better employment opportunities for
older people. Much has been said about the need for reform of old-age
pensions and early retirement schemes but this may not be sufficient to raise
employment rates for older people significantly or to reduce the future risk
of labour shortages. Both governments and firms will need to take active
measures to adapt wage-setting practices to ageing workforces, to address the
extent to which other welfare schemes act as pathways to early retirement, to
tackle age discrimination and to improve the job skills and working
conditions of older workers. In addition, older workers will need to change
their own attitudes towards working longer and acquiring new skills.
Relatively little is known about what countries have been doing or should be
doing in these areas. 

This report on the United Kingdom is part of a series of around 20 OECD
country reports that are intended to fill this gap. Each report contains a
survey of the main barriers to employment for older workers, an assessment of
the adequacy and effectiveness of existing measures to overcome these
barriers and a set of policy recommendations for further action by the public
authorities and social partners.

Main findings of the report

The report acknowledges that, compared with many other OECD countries, the
United Kingdom has been far from complacent in addressing the barriers to
employment faced by older workers. The government has sought to eliminate
disincentives to continue working embedded in public and occupational pension
arrangements. It has sought to change employer attitudes through its Age
Positive campaign and Code of Practice on Age Diversity in Employment. In
terms of active labour market programmes, New Deal 50 plus and Experience
Works are unique initiatives among OECD countries and should be commended.
The government is also supporting training through the Employer Training
Pilots and various lifelong learning initiatives and skill-improvement
programmes are available to help all workers, including older ones. The
government has not been acting alone. Non-governmental organisations such as
Age Concern, the Employers Forum on Age and the Third Age Employment Network
have made valuable contributions to the policy debate surrounding older
workers. Trade unions, through the Union Learning Fund, are helping to
promote training more generally. 

Partly reflecting these measures as well as the recent strong performance of
the UK economy, the proportion of people aged between 50 and 64 that work is
higher in the UK than the averages of both the EU and the entire OECD area.
Nonetheless, this ratio is higher still in Denmark, Iceland, Japan, New
Zealand, Norway, Sweden, Switzerland and the United States, indicating that
more can be done to improve employment prospects among older workers in the
UK as well.  The share of older men who participate in the labour market, at
72%, is still around 7 percentage points lower than in the mid-1980s. And
there is scope to bring the participation rates of older women further in
line with those of older men. Moreover, many older workers withdraw from the
labour market well before reaching the State Pension Age. Enabling older
people to continue working is important because it represents a positive
policy response to the challenges to economic prosperity posed by ageing
societies. In the UK, the ratio of the population aged 65 and over to the
population aged between 20 and 64 is projected to rise from 27% in 2003 to
just under 50% in 2050. The OECD projects that unless there is a substantial
increase in labour force participation, especially among older people,
available labour resources will remain broadly stagnant in the UK over the
next 50 years. This could lead to rising labour shortages and a pronounced
slowdown in economic growth. 

Recommendations for reform

To remove the barriers that many older workers face to carry on working, the
OECD calls on the UK authorities to adopt a co-ordinated and comprehensive
package of measures, including:

*       Further pension reform is required to simplify the system and
encourage later retirement while ensuring adequate incomes in retirement: The
OECD argues that the current two-tier State Pension system and the array of
means-tested benefits are overly complex and may have adverse effects on
incentives to work and save. It suggests that the simplest approach would be
to provide a higher basic universal State Pension. It also suggests that this
should be accompanied in the longer run by an increase in the State Pension
Age in line with rises in life expectancy since this would encourage greater
labour market participation of older people and could help meet part of the
cost of increasing the basic State Pension.

*       Take further steps to prevent disability-related benefits being used
as a "de facto" early retirement scheme: According to the OECD, the UK
continues to record a higher rate of people moving onto disability benefits
than most other OECD countries. While recognising that past reforms have met
with some success, it argues that additional measures should be taken to stem
these inflows. To help people already on benefits return to work, the OECD
recommends "activation" measures such as extensive rehabilitation programmes,
work training, fostering of appropriate work opportunities and other types of
training courses. It points out that some of these measures are currently
being tested on a pilot basis and urges the government to implement them
nationally as soon as practicable if they prove to be successful.

*       Measures to increase the willingness of employers to hire and retain
older persons: The OECD urges the government to move forward with anti-age
discrimination legislation, including the abolition of mandatory retirement
ages unless objectively justified. It also recognises that there is a need to
inform employers about the implications of such legislation while continuing
to promote age diversity in the workforce.

*       Strengthening older workers' employability: According to the OECD,
various aspects of the New Deal 50 plus programme could be enhanced, in
particular, by increasing the transparency of the potential financial
benefits available under New Deal 50 plus and by enhancing take-up of the
training grant. It suggests that improved co-ordination among the various
active labour market programmes on offer could also help improve outcomes for
all but especially those at risk of long-term unemployment such as the older
unemployed.

This report is published in English only. However, a French translation of
the Executive Summary and Recommendations has been included in this volume.

In the same series:
Belgique, Czech Republic, Finland, Italy, Japan, Luxembourg, Norway, Spain,
Suisse, Sweden

If you would like to browse the publication, go to
http://oecdpublications.gfi-nb.com/cgi-bin/OECDBookShop.storefront/EN/product
/812004181P1 

and at the bottom of the page click on Also available as: E-book (PDF Format)



More information about the older workers project can be found at
www.oecd.org/els/employment/olderworkers
 


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