Select Committee on Education and Employment Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1. Margaret, you are very welcome. Thank you very much indeed for agreeing to come before us so quickly after we have embarked upon this investigation. Clearly, important fundamental issues arise from the issue of age discrimination. Apart from my vested interest, my own interest was really stimulated by the large number of over 50s who are unemployed in my own area of the north-east where it is obviously a very important factor. The issue is very much wider than that but we are touching upon that during our sessions. Do you want to make a statement of any kind?
  (Ms Hodge) I am very happy to go straight into questions.

  2. Let me begin asking you how widespread and pernicious do you believe the extent of age discrimination in the United Kingdom to be and to what extent does discrimination affect younger workers as well as older workers?

  (Ms Hodge) I would prefer to describe it as age disadvantage in the labour market. It is pretty widespread and pretty frightening, if you look at the employment rate of the 50 plus group and compare that to the employment rate of the working population as a whole. For the 50 plus age group, 67.1 per cent are in work while for the workforce as a whole, it is 74.6 per cent. So there is a considerable disadvantage on the grounds of age. The other thing which is particularly worrying and which impinges on your point about the north-east, if you look at the statistics over time, the position of older people in the labour market has varied considerably over the last 20 or 30 years. In 1979, 84 per cent of men over 50 were in work between the ages of 50 and the state pension age. By 1997, that had declined to 67 per cent, or to put it another way one out of three was not in work. That has improved by a couple of points since then. But it is a considerable disadvantage. You can also look at various other statistics to see the disadvantage that older people face in the labour market. Wage rates are lower. Older people are likely to be doing more part-time work than others. Those who are unemployed tend to have been unemployed for longer than the general unemployment rate. Again, 42 per cent of older workers have been unemployed for one year or more. Compare that with a figure of 26 per cent of all workers who have been unemployed for one year or more. So there is considerable disadvantage. Discrimination is part of it but it is very difficult to pin down the extent to which the disadvantage is due to discrimination, although there are some factors that I will come back to. Derek, you mentioned the north-east. In the north-east there has been a restructuring of the economy. There has been a tendency to down-size with older people losing their jobs more quickly than younger people and, for example, to retire people early rather than to make other people redundant. There is also the question of skills and qualifications. It is more difficult for older people to re-engage in other areas of the labour market. So there are those sort of factors. In areas of heavy manufacturing industry, and you would probably say this of your own constituency, I do not think that everybody wanted to work beyond 50. So there is possibly a desire to exit the labour market early. The other thing you asked me about is whether there is any disadvantage for younger people. They certainly feel so. The Chartered Institute of Personnel and Development, for example, in a recent survey it did found that 7 per cent of 16 to 24 year-olds said that they had been explicitly told that they were too young by the prospective employer or recruitment agency. Another bit of general research which was published about a year ago found that 30 per cent of 18 to 24 year-olds said that they had experienced discrimination. So people certainly feel that there is discrimination. Recent research shows that 25 per cent, or one in four, of employees believe that they have suffered discrimination. So there is some evidence of discrimination and there is very certainly evidence of disadvantage in the labour market.

  3. You have covered quite extensively the issue of regional disparities in age discrimination. Can we touch upon a really rather delicate matter and ask why you think there has been such a large increase in the number claiming incapacity benefit over the last few years and why has the number of older men on that benefit increased in particular at a time when we understand that the nation's health is improving?
  (Ms Hodge) There is a strong correlation between claimants on incapacity benefit and unemployment of the over 50s. About half of the claimants on incapacity benefit are over 50 and about half of the over 50s are on incapacity benefit. There is a strong correlation but it is difficult to find an explanation for that. The explanation possibly lies in the late `80s and early `90s restructuring of the economy when there were no other opportunities. People who are out of work tend to become iller. They move on to incapacity benefit. That is an issue that we are actively looking at, as to what we action we can take to prevent that slide into illness and onto incapacity benefits. I can tell you that of the 3,000 a week who go on to incapacity benefit, only ten per cent will return to work[14]. So the more we can do to prevent that slide, of which this campaign to tackle age discrimination is a part, the better.

  4. Is it not true that previous governments have encouraged some people to go on to incapacity benefit?
  (Ms Hodge) There was certainly a tendency to try and get them off the unemployment roll and that is why we have been so careful to ensure that the OCS looks after the statistics. But I would accept what you say.

  5. I hesitated to say that because I thought it might look as though I were making a political point from this exalted position. Do you accept that the majority of those people who are on incapacity benefit say they would like to work; they would like a job?
  (Ms Hodge) The figures show that there are 2.6 million people who are locked into incapacity benefits of whom 1 million want to work and out of that 1 million, about 400,000 are ready to work[15]. Both the New Deal 50-plus and the New Deal for Disabled People—which we are just in the process of expanding nationally—are aimed largely at breaking down the barriers to jobs which those people face.

Mr Allan

  6. Are there any signs yet that there are real opportunities there? In the former heavy industrial areas like Sheffield, the Government have made great play of getting younger people into work in areas where there is already high unemployment. That is not a very good climate for older people, particularly ones who have got some health problems which mean that they need to take on lighter duties, that is not a very good climate to get back into work?
  (Ms Hodge) We have found a degree of disadvantage there so we are looking at how to expand those labour markets. Clearly, a lot of our programmes are aimed at young people who have lost their jobs but new opportunities are beginning to develop and quite a lot of new jobs in the new economy are emerging. Take call centre jobs. They may be very different but they actually provide the flexibility and choice for individuals to work to different work patterns which will suit them when they get older or when their health changes. I am not pessimistic about it, with our great success in relation to jobs in the labour market and in relation to the economy as a whole and our attempt to focus our intervention very much on where are these areas with large-scale unemployment like Corus. There will be opportunities. There are good stories to tell in places where there was great deprivation in the 1980s but which are now thriving, providing good jobs and opportunities.


  7. You will remember our report which dealt with where there is a jobs gap. That certainly proved to our satisfaction that that did exist in certain inner city areas and areas like Cornwall and some seaside resorts as well. There were clearly insufficient jobs for the people available to take them up. Following that up, if you are a former steel worker in Corus in Sheffield, no doubt, Minister, you could understand the feeling amongst former steel workers that a job in a call centre may not be the kind of job which those people would take who need to support a family in the way that they have done in the past. Also, there is some reluctance on the part of employers in areas like that to take on older workers; that they are rather difficult to train and may not be quite as adaptable. So there may well be feelings on both sides in that situation?
  (Ms Hodge) Just coming back on that, as far as Corus is concerned, we already have got Exi, which have already made an impact there, so that is an indication of where new opportunities arise. Let me go on to the more general points about the culture change which we believe is necessary to ensure that we make the best use of undoubtedly talented and experienced people who want to work and who are eligible for work. That is what we are attempting to confront and tackle. For example, you say that some companies are reluctant to train their older workers. If you are 50 plus, only 10 per cent of employers offer you training whereas if you are under 30, the figure is between 17 and 23 per cent[16]. We need to change that. The demographic changes that will occur within the labour market mean that the economy will not survive without using the talents and experience of older workers. The stark statistic is that at the moment, something like 35 per cent of our workforce is over 45. In 10 years time, that will be 40 per cent and in 10 years time, only 17 per cent will be under 25. So we must break down those cultural attitudes about older people retraining and whether they are less healthy, all those sorts of things that are around. We must believe in what we know are the facts about keeping older people working--experience, loyalty, all those things. We must acknowledge that, otherwise the economy will be in trouble. So we have got to tackle disadvantage and we have got to tackle discrimination because of the change in demography.

Mr Twigg

  8. I want to take you back to the New Deal for 50-plus and the success of that. Can you tell us what plans the Government have to take that forward and to develop it further and build on that success?
  (Ms Hodge) We are actually thinking about how we take all the New Deals forward. The New Deal 50 plus has only been national since April 2000. We are looking at a whole range of options to see whether or not we can build on that success.

  9. Moving on to the business case for age diversity, you put great emphasis on the strength of the business case. If the case is so strong, why do the Government need to take action to make employers do it?
  (Ms Hodge) I think probably the answer is speed of change. There has been change and there is still. A lot of the indicators from our assessment of the effectiveness of the code of practice suggests that it has not been as fast as we would like. What I have just said about the demography and the labour market means that we need to get on rather faster than we have. We are committed to tackling discrimination and disadvantage where it does exist in the labour market. What we really want is legislation which confirms existing good practice.

  10. The Government went through a voluntary code initially and in your reply just now, you referred to the need for legislation. What has led to quite such a rapid change on the part of the Government on this?
  (Ms Hodge) Not so rapid. We always said that we would assess the efficiency of the code and then consider whether or not further action is necessary. What has happened is that awareness of the code is much better. We have done three bits of research. We did the first bit of research before we issued the code. We then did a second bit of research in December 1999 and we did a third bit of research in October 2000. Of that research, I can give you some of the results this afternoon but the full results will not be published until early summer of this year. But what we found is that awareness of the code has increased substantially from the second wave because in December 1999, 29 per cent were aware of the code; in October 2000, that rose to 37 per cent. One aspect of interest is that larger companies are more likely to be aware of it than smaller companies. We have also found some good indicators. For example, in December 1999, 27 per cent of those interviewed took age into consideration when selecting candidates. That has now dropped to 16 per cent and similarly, in December 199, we found that 18 per cent said that they took age into consideration when promoting candidates and that has now dropped to 15 per cent. So those are changes for the good. Stephen, I have forgotten your original question?

  11. It was about why the Government have opted to go for legislation?
  (Ms Hodge) We have always said that if the code was not sufficiently effective, then we would go further. That is what we are now doing. The European directive has come together quite neatly for that and we very successfully negotiated this long transposition period of six years which will give us time to develop from that best practice.

  12. You mention that there has been a quicker response among large companies compared with small companies. Are you doing anything particularly for small businesses or those organisations which need to be brought up to speed?
  (Ms Hodge) We are indeed. We are bringing forward specific guidance for the SME sector in terms of promotion. In actual fact, we are taking an enormous range of steps. Guidance is one. Articles in trade journals is another. Working through large companies down their supply chain is third. We are running three award schemes, one through regional newspapers. We have 25 awards through regional newspapers which worked really well last year and we will do that this year. In addition, we are targeting recruiters who are the ones who do a lot of selection for the SMEs, so we are working with those. Clearly, we will be working further as we start preparing for legislation. What I can tell you is that I have now established a working group with huge representation which I can take you through. We have got the CBI, the Chartered Institute of Personnel and Development, the Employers Forum on Age, the Small Business Service, the TUC, the Association of Chief Personnel Officers, the Third Age Employment Network, the Learning and Skills Council, Age Concern England, Age Concern Wales, the Scottish Enterprise Campaign are all signed up to work with us now in developing the legislation.

  Mr Nicholls: I must apologise for being late.
  (Ms Hodge) Not at all. We were a little rude about the Conservative Party in your absence.

Mr Nicholls

  13. There are a number of meetings to attend all at the same time. I wonder if you are able to think why there is this prejudice against older people and whether it is just simple prejudice. It cannot be in the light of experience because those who have experienced using older workers will know about their common sense, the loyalty. Those are matters with which we are all familiar. As an ex-Employment Minister, I could never work it out and I still cannot work it out why there seems to be this prejudice on the part of those who are making decisions about employment?
  (Ms Hodge) I think that there are probably three factors. One is that there has been a lot of down-sizing, if you look at what has happened to older people in the labour market. When people down-size, they have chosen to select the older people to go. That is the first factor. The second one is the fear that older people cannot adapt to change and cannot get on with new technology which is nonsense because far more older people are logging onto the Internet, twice the rate of younger people. The other thing is that employers do not think it is worth investing in the training of older people in the workforce. The third is the fear of being less healthy. But I agree that it is difficult to understand.

  14. The younger you are, the more likely you are to seek promotion or to seek other employment?
  (Ms Hodge) Yes. I think also there is the cultural barrier that we have got to try to break down. There are perceptions that, for example, an older person sometimes finds it more difficult to work for a younger person. That is a cultural attitude which we need to break down. The other thing I would say to you, and we are looking at this, is that we do not have a tradition of progressive retirement in this country and we need to look at the constraints of that. That is one of the things that we are actively seeking to take action on.

Mr Trickett

  15. The level of the enterprise, I am slightly sceptical about the business case which is being made. You ran a large council and no doubt as I did, struggle over it. And with the financial pressures, no doubt you did the same as many of us in encouraging the older part of the work force to leave because of the financial pressures that were on local government at the time and certainly on the private sector at the time as well. It seems to me that if you analyse why that option was taken, to encourage the older sections of the workforce to take early retirement, it was because the older workers were more expensive and that has to be a factor which any enterprise has to take into account, particularly any enterprise which is under financial constraints. There was another factor as well. I can vividly remember my grandfather who was a plumber and was in and out of work all his life. He took the view that it was better that he was out of work when he was older rather than him doing a job which a younger man might have, and I am thinking of retention now, rather than recruitment. But in terms of retaining older people within the workforce, they do tend, by their nature, to be in more senior and expensive posts and so there is a financial issue. Secondly, there is the ethical issue, to try to encourage younger people to take more senior jobs. I want to ask you what estimate the Government have made, because you are the largest employer by a long way, the NHS is the largest employer in Europe, of what the financial implications are in terms of turnover. What are the financial implications of trying to encourage them to stay longer with you in the government service. If I may finally illustrate that in school terms. Schools are now being forced to make budgetary decisions and sadly, we know that the older and more experienced teachers are also the more expensive. A head teacher and a governing body will often take the view that they need younger teachers from the point of view of the fiances of the school. Because we are talking about a business case, it would be better to have younger teachers when we all know that older and more experienced teachers are needed in schools. The Government are an employer and I am just wondering what they are doing about this. It is no good lecturing the private sector but not doing something yourselves?
  (Ms Hodge) We are developing the code of practice with the Government as the exemplar. When this legislation is brought forward, it is on the basis of the Government being an exemplar employer. What I do not know off the top of my head, but I will write to you, is the composition of the Government's own workforce, the Civil Service workforce, but I will write to you, in terms of the pre-pension age composition and retirement. Let me just challenge some of the things that you said. First of all, I think there was a tradition, which is what I tried to say to you, in terms of down-sizing that most firms thought that the way to do that was to get rid of older people and some older people want that flexibility and choose to retire early. They want that flexibility and that is fair enough. However, and this is one aspect that we want to see encouraged, people should be kept for their competence and not consigned because of their age. That is what we want to instil in our own workforce and, indeed, across the economy. The other thing is that you say it is expensive to retain older people. I would put back to you two things. First of all, it is extremely expensive to go through the process of recruitment and in a tight labour market, it is in a business's interests to keep their workforce rather than just getting rid of them and than having to go through recruitment and training. I was in Birmingham not so long back to talk to the Business Links conference about these issues. One of the major employers said to me that he had deliberately not chosen age as a criteria in down-sizing because to do so was more expensive for the pension fund. So it is not a cheap option to retire older people first. If you think about teaching or the fire service or the police, many of them chose to retire people early when they were down-sizing and are now facing difficulty in meeting the claims on their pension funds. Finally, one of the other changes that we are trying to promote is progressive retirement. Let me take an instance which I think is very important. A lot of head teachers may get burned out in the job after 10 years in the job because it is a pretty tough job. But they may wish to go back to being class-room teachers. We are trying to get class-room teachers. So we must look at a way of enabling that progressive retirement without detriment to the pension arrangements for the individual. We should do that. There is no reason why, if you are at a particular level in an organisation, you should remain at that level. We can and should be able to get an acceptance of progressive retirement which enables people to stay in a job. They may say, "I do not want to work for somebody else who is younger than me", but I think we should learn to accept the concept of progressive retirement. I keep coming back to this but older people, and I will declare my own interest, I only started this job at the age of 50 and I am not knackered and I am full of energy and I have no intention of retiring. We are all more energetic. We are going to live longer and be a greater proportion of the labour market. We must ensure that there is a recognition of that and that those people are included in the labour market.

  Mr Allan: There is something that I want to go back to because I think it is an important point. Certain assumptions are made when people are older.
  (Ms Hodge) You are talking about age discrimination?

Mr Allan

  16. Yes, and I have seen it more and more in the people who come to my constituency surgery to see me. One chap wants a job as a marketing manager. He is 50 years-old. But everyone knows that marketing managers are in their 30s, 35 years-old and those are the people that the companies employ. They will not consider a 50 year-old marketing manager. Have you got any research on that: people go for a job who are equal but one does not get it because of age. Surely the Employment Service should be getting some qualitative and quantitative data about that specifically, discrimination at the point of job application?
  (Ms Hodge) We have got it. Research shows that 25 per cent of employees believed they had suffered discrimination. Research data is around but it is difficult to achieve any consistency. It is not always the same sort of staff. We have got that data in relation to 25 per cent suffering from discrimination but in another survey, the Families and Working Lives Survey, it is only 5 per cent. So there are very different figures. The Chartered Institute of Personnel and Development did some very recent research which showed that people believe that employers are not interested in recruiting or promoting anyone over the age of 40. We all feel it. We all experience it. I would reiterate what I said at the beginning. This is not just discrimination alone. There is the question of skills and qualifications, pension age, the retraining, all those sorts of things that we need also to look at.

  Chairman: I take you back to the code of practice. If I may just say, so that there is no misunderstanding, that your memorandum is available for anyone who wants to see it today and it will be published within about two weeks, but people are welcome to have a look at the memorandum that you submitted to this Committee. In the memorandum and in your own evidence, you have given a rather upbeat assessment of the code and its effect. We have had evidence from other sources, not evidence because it was not on the record but in a private seminar but this will also be published, definitely saying that that is not quite the picture which they themselves see. For example, the Employers Forum on Age says that its own research reveals disappointing results of the code's impact and similarly, both Manpower and the Recruitment and Employment Federation, they also say that awareness of the code of practice amongst employers is low and unlikely to change practices. How do you respond to that? Oh, I am sorry, there is a division in the House. All those people who have come here today, I hope you will stay with us until we return. The sitting is suspended.

  The Committee suspended from 4.45 pm to 4.53 pm for a division in the House


  17. I was quoting to you some contrary evidence to the opinion that you were expressing both in your memo and in the code of practice which was that it was doing rather well. Can I ask you to comment on that?
  (Ms Hodge) In a sense, it is an issue of judgment. I have to say to you that when I looked at the figures that we are getting from the 2000 research of that awareness going up from 29 per cent to 37 per cent in six months, I thought that was not bad. So that is a judgmental issue. Equally, we would not be here thinking about how we are going to take forward age discrimination legislation if we thought that everything in the garden was completely perfect. In the end, you have got to make a judgment. I cannot tell you the figures off the top of my head but we have had sex and race discrimination now for 25 years, yet if you to go SMEs, awareness of it is still below 50 per cent.

  18. And that perhaps gives credence to the argument that there are limitations on the effect of legislation, do you agree?
  (Ms Hodge) I think that legislation on its own will not achieve all the benefits which we aspire to achieve. I am absolutely convinced of that. That is why we have a much wider programme of intervention, with the New Deal for 50-plus, with looking at how we can encourage progressive retirement, by looking at how we can encourage more retraining and qualifications among older people. All these things are absolutely crucial. Again, I would point you to the American example. They have had legislation in place against age discrimination since 1967. All the evidence from everywhere in the world is that older people's participation in the labour market correlates with general labour market health.

  19. Can I go back to a question which I was going to put to you earlier on but we moved on, and that really relates to the statistical basis upon which we make our judgments and upon which policy will be developing. Again, referring to your memorandum, you say there, "There is a wealth of European and UK research, using inconsistent methodologies, which has tried to measure the extent of age discrimination. The body of evidence suggests that there is age discrimination in employment but it is difficult to put a figure on its extent". I think that someone said earlier that there was a very strong case for meaningful research which actually gives a hard base of statistics upon which we can make these judgments and decide about policy development. Do you have any thoughts about that?
  (Ms Hodge) We are doing more research. I am always open to more ideas if further research is required which can be evaluated and added to the data we have in the labour force survey which we have done which is basic research. We are doing some case study work. We are looked at attitudes and experiences of young people and age discrimination. All that will be ready by early summer. We are looking at another impact assessment of the code to see how that is progressing. So we are doing a lot of research. The reason we are doing that is that there are a wide range of factors which impact on disadvantaged older people, if we stick to that, and the labour market. As you look across Europe, for example, a lot of countries are now attempting to bring in progressive retirement policies and in France, for example, where there is a culture against part-time work, there is a low take-up of progressive retirement. Equally in Germany, where there is a culture of early exit, there is a low take-up of progressive retirement. So we have to tackle this issue on a huge range of fronts.

14   Note by witness: Each week, around 3,000 people move from Statutory Sick Pay to Incapacity Benefit and up to 80 per cent of these people are then out of work for several years. Back

15   Note by witness: There are around 2.3 million people on Incapacity Benefit. The Labour Force Survey indicates that 4 in 10 people on Incapacity Benefit would like to work and 1 in 20 are ready to work. Back

16   Note by witness: Older people participate in less employer based training. Recent Labour Force Survey figures show that 10 per cent of over 50's took part in employer based training in the last 13 weeks compared to 23 per cent of those aged 20-24. Back

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