How can policy encourage employers to more actively recruit, train and develop older workers

1. How can policy encourage employers to more actively recruit, train and develop older workers Sam Mercer Director - Employers Forum on Age

2. Before we start a word or two about the EFA… • Independent not for profit employer-led forum • 250+ members from all sectors – many UK FTSE 100 • Recognised as the leading authority on age and employment issues in the UK – agenda setting • Represents employers’ views to Government and others – key lobbying areas – age laws! • Supplies members with quality advice, practical products & access to age best practice

3. What generates positive action on age? • Awareness of demographic issues • Skills shortages • Low unemployment • New ways of working • Pensions crisis • Recognition of business benefits • Fear of age laws in 2006 • Corporate Social Responsibility

4. 80 70 60 50 % 40 30 20 10 0 Legislation Tribunal claims Population Skills shortages Employee Customer demographics pressure profile Very important Somewhat important Neutral Somewhat unimportant Very unimportant Cranfield School of Management/Eversheds SurveyAge at Work September 20051070 responses (representative sample)

5. Business benefits: how effective? • Access a wider talent pool • Reduce costs (budget available for use elsewhere) by: • Lowering recruitment and training costs • Increasing return on investment • Retaining corporate knowledge • Improved productivity • Identify new markets and get closer to customers • Be an employer of choice in an increasingly competitive labour market • Build a reputation as an ethical and intelligent employer

6. What acts as a disincentive to employers • Unworkable age discrimination laws • Risk averse advice from employment lawyers • Complicated pension provision • Insurance costs • Access to training • Workplace culture • Lack of understanding amongst unions/employee representatives

7. Age laws & employment lawyers • Workable age laws • What would be the impact of removing mandatory retirement ages? (reduced recruitment opportunities for older workers or greater opportunity for older employees to keep working • Risk averse employment lawyers • Lack of case law and clear guidance makes this an employment lawyers paradise. • Policy solution: careful review in 2011 of the need for the default age, clear guidance in the meantime on what employers can and can’t do under new age laws

8. Complicated pension provision • Occupational pension schemes fall under the Age Regulations (although many aspects of schemes are exempt). New laws mean an employee must be able continue to accrue pension benefits, this may have cost implications for employers with DB schemes. • Employee/r fear/resistance to pension fund changes (e.g. raising pension age) • Flexible Retirement (drawing pension and salary while still working for the same employer) • Very complicated and difficult to communicate • DTI guidance is misleading • Policy solution: Nothing, a bit of time to let pensions settle down

9. Cost of insurance • Under new Age Regulations employees have to be given the same benefits irrespective of their age. Insurance generally costs more as you get older (medical, critical illness, life cover etc.) Some benefits are not available to employees over 70. • It will be risky for employers to attempt to objectively justify the provision of different benefits to employees at different ages (current employer practice). • What does this mean? • Employment opportunities after the default retirement age 65 could be reduced if employers are unable to discriminate against older workers. This could mean fewer people being given the opportunity to work post 65 • The removal of employee benefits for all employees irrespective of age • Policy solution: An exemption for insurance

10. Access to training • The Government currently funds NQVs and Modern Apprenticeships only for people under the age of 26. • There is some dispute over the term ‘access’. The Government argues that places are available (at a cost) on training courses for older candidates, others argue lack of funding means they are not accessible to less well off older individuals. This calls into question whether Government funded training does or doesn’t fall under the Age Regulations • In the meantime employers fear employing people on schemes (Modern Apprenticeships in particular) for fear of being liable for discrimination • Policy solution: A review of Government funding of vocational training

11. Workplace Culture • Age is the most common form of discrimination in the workplace • Age Stereotypes are common currency • People just don’t think age discrimination is that bad • Policy solution: more effective awareness raising, information and education

12. Unions • Conflicting agendas • Vested interests • Mixed messaging e.g. end of retirement a good or bad thing? • Young v old? • Policy Solution: For unions a potential opportunity for reinvigorating membership?

13. What will be the impact of getting it wrong • Driving ageism ‘underground’ • No change in opportunities for older people • Employee benefits being cut e.g. insurance, medicals no longer being on offer • Risk averse employers throwing out the ‘baby with the bath water’ • Less generous pensions • Fewer people working post 65

14. Reality Check: Who really needs help? • Employment rates for older workers are currently increasing despite rising unemployment. They have risen from 66.3% in Spring 1999 to 70.9% in Spring 2006 • Yet employment rates of younger people (16-24) employment rates are dropping from 61% in Spring 1999 to 57% in Spring 2006. • Should we in fact turn this debate on its head and argue Government does not need to introduce further policy interventions to improve employment opportunities for older workers but should in fact be looking at the other end of the scale?