8 March 2010
Rt Hon Yvette Cooper MP
Secretary of State for Work and Pensions
Social Market Foundation/TAEN (Age & Employment Network) Conference
Canterbury Court, Kennington Park Business Centre, SW9 6DE
Monday 8th March 2010
[Check against delivery]
It is a great pleasure to be here today.
The issue of older people and employment is important for all of us. Older people are playing a larger role in our economy and workforce, and with a growing number of older workers in the labour market, it is right that we make sure that we are doing everything in our power to make this work for everyone.
Today, I want to start by looking at the impact of the recession on older workers and at what more we need to do to help older workers during the recovery.
Secondly, at the additional challenges faced by older workers who are planning their pensions and retirement.
And finally, at the longer term opportunities and challenges in the modern labour market from an ageing society.
It is worth starting by reflecting on what happened to older workers during previous recessions when they were hit very hard.
Look at what happened in the early eighties. Between 1979 and 1985 the employment rate among women between 50 and State Pension Age dropped by 3.5%.
Among men it was 17.5%.
Older workers were far more heavily affected than younger workers at that time. So whilst we often talk about a lost generation in the 1980s because of the massive impact on youth unemployment, in fact the real lost generation was the over fifties who lost their jobs and never went back.
Particularly in manufacturing, we saw people often in their early fifties losing their jobs and never working again.
Some became long term unemployed. Some went onto long term sickness benefits. Some took early retirement. The impact on their lives, but also on their pensions and their communities was profound.
In the nineties the figures are less severe. Women’s employment rates actually increased between 1990 and 1993, but men’s employment fell by 8.2%.
This time around women have again done better than with employment rates actually rising very slightly at 0.3%, while men’s employment has dropped 2.6%.
Since the nineties recession, we’ve also seen growing numbers of older workers staying in work for longer. Indeed the employment rate for 50-69 year olds has increased from 45% in 1993 to over 55% in 2009.
But of course, like everyone else older workers have been hit by the global recession.
As you will know, the overall impact of the recession on unemployment and inactivity has been much less than everyone predicted this time last year.
The claimant count stands at 5% compared to 10% in the eighties and nineties recessions, despite the sheer scale of the global contraction.
And the number of people claiming unemployment benefits is around half a million lower than predicted last year.
This reflects the £5bn extra investment we’ve put into helping people get back to work, as well as a more flexible labour market and the deliberate decisions of employers and employees to tighten their belts to protect jobs.
The impact on the over 50s has been significantly less too.
The unemployment rate for older workers remains lower and they have seen a lower increase than other age groups too.
Unemployment in the 50 to the State Pension Age range stands at well under a third of that for 16-24 year-olds.
Nor have we seen a big increase in the numbers on long term sickness benefit or in early retirements either. So more older workers are staying close to the labour market even if they lose their jobs.
Perhaps most welcome of all, more older workers are getting back into jobs than in previous recessions.
Today, half of all older workers are getting back into work within 3 months compared to just 37% in 1992 and 83% get back into the workforce within 12 months compared to 71% in 1992.
It is worth reflecting on why the impact has been less than in previous recessions.
For a start the decisions employers and employees have made to keep people in work have protected many older workers from redundancies.
Secondly, we haven’t seen the sharp and unsupported restructuring that took place in the 80s and hit older workers harder. And indeed it may be that the skills and experience of older workers are being valued more in the labour market than they were in previous recessions.
In addition the support available – and the tighter constraints on things like sickness benefits – we are also doing more to keep older workers closer to the labour market than in previous recessions.
We have after all put a lot of extra support in place.
Job Centre Plus is providing much more intense help alongside stronger conditions to seek work compared to previous recessions.
We are also investing an extra £5bn in increased help for all ages including the over 50s too. That means extra support through the flexible new deal for the long term unemployed, extra training and recruitment subsidies, and in the areas with highest unemployment the Future Jobs Fund.
Just recently, I met a group of men in the North East who had been helped through the Future Jobs Fund, which is creating 50,000 jobs in areas of the highest need. These men told me they had struggled to find work, to retrain, and also to be taken seriously by employers who were looking for younger staff. But the Future Jobs Fund had given them a way back in.
I know the £5bn and the Future Jobs Fund were controversial – paid for by extra borrowing and additional discretionary spending to support the economy. But I strongly believe it was the right thing to do. These programmes are making a big difference, including supporting many older workers back into jobs. I don’t think it would be right to leave people to sink or swim. And they are also helping the country save money in benefit payouts too.
In fact, there are some half a million fewer people claiming benefits today than we forecast this time last year. The revised Budget forecasts mean we will save more than £10bn over the next 5 years in benefit payments – as well as getting the extra tax receipts generated by having more people in work.
So our response has been right.
From what we have seen during this recession, older people have not been as severely affected as some of the younger groups.
So the government has been right to push additional support for the under 25s during this recession. As the work done by Danny Blanchflower has shown, they are typically hit more severely than other age groups and the scars last for longer.
However, there are three additional reasons why we should also pay particular attention to the over 50s, and why I am keen for us to provide extra help for older workers during the recovery.
The first is that older workers do still find it much harder to get new jobs if they lose work. Although things have improved compared to previous recessions, it can still be really difficult, and really demoralising for older workers who do still face age discrimination in the workplace, and may be less likely to have up to date qualifications when seeking new work.
The second is the additional impact on their pensions. If they lose contributions at an important time it can affect their quality of life and that of their families for many years, as well as putting more pressure on the public finances if they need pension credit or additional support.
And thirdly, older workers are still more likely to drop out of the labour market altogether, including to take early retirement or to look after grandchildren or ageing relatives if they can’t get back to work.
That is why today I am announcing an extra £10 million in the coming fiscal year to provide exactly the kind of tailored support that older workers need.
In practical terms:
- we will provide further training for Jobcentre Plus advisers so that they are better equipped to help older workers
- we will provide extra time for advisors to talk to older people – for example, supporting professional customers or helping people to think about how they can best present their skills and experience to a prospective employer
- we will also widen access to Work Trials, which is particularly useful for those who have retrained and want to try out a new field of work
- there will be new specialist Back to Work support available
- we will launch a new National Guidance Initiative to get employers to adopt a more flexible approach to work and retirement
- and we will help the over-50s facing significant barriers to employment get early access to the six-month offer – which includes opportunities for recruitment subsidies, training, volunteering and additional help to become self employed.
This means that from Day One of their claim, older workers can get early access to a particular training programme.
We are also deliberately increasing support as the economy recovers. And for very good reasons.
In past recessions, much of the worst damage was done not during the recession itself, but in the months and years after as the economy was recovering.
In the nineties unemployment rose for a year after the recession ended, and the number of older people on long term sickness benefits soared for several more years. In the eighties unemployment itself rose for many years after recession finished.
We must not let that happen again.
That is why now is not the time to cut back on support for the economy and support for the labour market. Quite the reverse. If we are to help older workers avoid becoming another lost generation, we need to increase the personalised support and help they get, not cut it back next year as the Opposition would like to do.
That is why we are spending £2bn in this financial year and another £3bn in the coming year. We have taken the decision to support the recovery and we are not prepared to put that at risk by cutting back now.
We also need to ensure recognise just how important the impact of the recession is to older workers in terms of pension provision.
In previous recessions, if a company went bust it could have a huge impact on older workers as they would have little time left to make up the lost contributions.
People today take for granted the better pension protection that this Government put in place to guard against under-funded schemes.
That provides huge reassurance to the public.
And even in the worst case scenario, proper assistance is also available through the pension protection fund that guards 90% of the entitlement.
We are also doing far more to help women and other people who face disadvantages in labour market.
We have made huge progress on gender equality.
In fact, from April the changes we have introduced will establish far greater equality for women across the Basic State Pension within a single generation.
As a result, 90% of women aged 50 now will qualify for the full basic state pension when they reach state pension age. That compares to just half today – so we will have helped almost half a million extra women by 2025 – some by as much as £4,500.
In the longer-term, we are planning to provide much-needed help for low and mid-range earners through auto-enrolment. This would work by getting people to save through a good quality workplace scheme or the new National Employment Savings Trust (NEST).
But we also need to make sure that older workers can stay in labour market – not being forced to – but in a way that gives them more choice about how and when they retire.
Indeed, half of all those who retired between the ages of 50 and 69 would have preferred to work longer if they could have accessed flexible or part time work.
Older people want to work longer, but they want to do other things too, like spending time with their grandchildren. Most people’s lives today don’t fit into the outdated model where you work full-time, taking on ever increasing responsibilities until you drop off a cliff and into retirement.
That is why we are looking at ways to help people to take advantage of more flexible ways of working and retiring.
And that is also why we want to look again at fixed retirement ages, which are increasingly out of kilter with many older workers’ expectations.
In fact, we have already scrapped fixed retirement ages at DWP. And by April, every other government department will have followed our lead.
Employers such as Asda, Wetherspoons, Marks and Spencer, and the Co-op group are already taking the benefits of employing older workers without the need for a fixed retirement age.
In the modern workplace, more and more people are building portfolio careers and then gravitating toward more flexible working patterns later in life. So we need to look again at how employment and pensions should evolve.
Nearly 1.4 million people already work past the State Pension Age and if more people want that choice – and the research indicates that they do – then I believe it is up to us to create the right conditions to make it happen.
I would also argue that it is unfair to suddenly impose conditions to say that people in their late 50s and 60s have to work an extra year to get the Basic State Pension.
That immediately costs men £8,000 and women £5,000 at a time when people have already made their plans for retirement and calculated what they need.
However, we also have to find ways to give older workers more choice to work for longer – without forcing them to. Equally, we need to let younger workers know that they will have to work for longer to support themselves in the future and we have set out our plans to do that.
Older workers are far too important to our economy for us not to want to keep them involved and engaged in the workplace.
So we have to rethink they way we approach both work and retirement to make sure that we have the flexibility to play a full role in our future society.
