Are We Ready for an Older Workforce?

Up until the middle of the last century, when a worker retired the expectation was that they would not live for long. Sadly, but in a minority of cases, that circumstance is still true. What is much more normal though is that employees will have a longer period of life when they finish work. In 2011, those born in 1946 will be 65 years old. They are the oldest of the cohort called babyboomers and many of them will be retiring. Considering the average UK life expectancy is now is nearly 80 years, we can expect this demographic to be in retirement for around a decade and a half. One of our country’s biggest challenges in society is how to fund pensions, healthcare and social security for an increasing proportion of people over the age of 60 or 65 relative to the people who are working in the population.

One of the Government’s answers to this conundrum has been to phase out the default retirement age (DRA), giving older workers the option of working longer. Organisations will no longer have the right legally to end the employment of their older workers. This relieves some of the pressure on the state and also economically benefits the employee. The individual can retain earning their income and taking benefits from their employer, although these benefits are likely to change over time and there is the opportunity to continue contributing to their pension fund, if they are in one, and benefit from any tax efficient opportunities that may also exist in the future. By not drawing their state pension, these people can take advantage of drawing it later and at an enhanced rate.

If employers are smart about how they use more mature employees and allow these individuals the flexibility they need to carry on working, it will also ease the strain on our medical services. For instance, the smartest organisations will allow their older employees to work from home as well as in their normal office space, thus reducing the amount of commuting, which increasingly takes its toll on both mind and body as we get older. The individual thus expends less energy and is able to stay in work more easily. Being able to continue working in a way that is better aligned to our health, mentally, psychologically and emotionally, should see a reduction in the amount of need by this part of the working population for GPs and subsequent specialist health services.

Another advantage to allowing older workers to work for longer is that public and private organisations alike continue to benefit from these individuals’ skills—skills such as maths and engineering that are worryingly a dying art amongst younger generations. Some well-known international companies have struggled to find graduates in particular disciplines who meet the exacting standards that they require. However, people can’t work forever so what are we going to do about the skill shortages when the babyboomers finally do retire?

The loss of these critical skills will be managed partly by greater investment (such as further investments in apprentice schemes), trying to rebalance the teaching of key numeracy-based subjects, targeted immigration into the UK economy and/or movement of key jobs out of the UK and into other economies.  Some of these solutions are more acceptable than others politically when looking at sustaining the UK’s economy.

What the organisations themselves can do to help the Government tackle this issue of skills shortages is to ensure that their older workers transfer their knowledge to the younger individuals within the company before retiring. By encouraging, facilitating and perhaps even formalizing mentor relationships between the different generations, employers will be benefitting themselves in the long-term, not to mention the wider labour market and society as a whole. Let’s not forget that older individuals can also learn a lot from their younger counterparts. The best mentor relationships provide the opportunity for reciprocal learning. If I want to learn from you about aspects of the business or technological skills, you may want to learn from me other business related and relevant skills which might be to do with presentations and verbal communications for example. The benefit of this type of relationship is not just the time and the space created by two people with differing backgrounds and life experience; it also provides an excellent opportunity for different points of view to be exchanged.

It’s all very well to speak about keeping older employees on, allowing them more flexibility in their work and appointing them as mentors to their colleagues, but in reality, this is going to cost employers more, as mature workers are typically and understandably not capable of as intense levels of productivity as their younger peers. What organisations can do to counterbalance this decrease in cost-efficiency and keep costs as low as possible is to be more creative and innovative. Instead of having an elder individual work five days a week, give them half a day per week for a month to go and do some voluntary work in the community. This is about gradually changing someone’s day job. It’s not something that can or should be done overnight. Support the worker as they make this transition and they’ll not only get used to it, but they’ll enjoy it. You’ve retained what the employee has to offer and extended their working life without making unrealistic demands on their level of productivity and therefore your budget.

Are we ready for an ageing population? Not yet, but the Government is doing its utmost to prepare us. Where employers can help the state is to embrace legislation such as the DRA removal and make it work for both them and their employees. What organisations need to realise is that by preparing themselves for an ageing population—and, in particular, an ageing workforce—they’ll be setting themselves up nicely as more sustainable, more dynamic businesses in the coming months, years and decades.

By Simon North, co-founder of late career management company Position Ignition, which specialises in the management and transition of older workers in organisations. Visit his HR Blog for more information, insights and ideas on managing the older workforce effectively.