Select Committee on Education and Employment Seventh Report


Informal note of the Seminar on Age Discrimination held on Wednesday 31st January 2001


    Mr Derek Foster
    Mr Richard Allan
    Ms Kay Carberry, Trades Union Congress
    Professor Stephen Fothergill, Centre for Regional Economic and Social Research, Sheffield Hallam University
    Ms Dianah Worman, Chartered Institute for Personnel and Development
    Mr Richard Worsley, The Third Age Programme, The Carnegie Trust and
    The Third Age Employment Network

1. The Chairman welcomed the participants.

2. Mr Richard Worsley said that age discrimination was distinct from other forms of discrimination in two important respects: (i) it applied to everyone and (ii) it was not regulated by any form of legislation. It was a particularly damaging form of discrimination as it wasted the talents of a growing proportion of the population. Between 1991 and 2001 the number of UK citizens in the 50-64 year old age bracket had increased by 1.5 million; by the end of 2002, one in three of those in work would be over the age of forty. Age discrimination was also damaging to the economy. It was estimated that excluding older people from the workforce resulted in a loss to the Treasury of some £5.5 billion through lost taxes and increased benefit payments.

3. The most familiar form of age discrimination in the workplace was in recruitment but it also occurred in promotion and in training and redundancy arrangements. During the last ten years so called early retirement schemes had a particular effect. Early retirement had been favoured by employers as an apparently painless means of cutting the number of employees but in practice it had been highly damaging. Many of those who had taken such packages hoping to find alternative employment had found it difficult or impossible to do so and had experienced a rapid decline in their economic circumstances. Equally many employers now recognised that by ridding themselves of older employees they had actually cut out the memory and experience represented by older workers and had done lasting damage to the balance and effectiveness of their workforces.

4. The problem of ageism was widespread—and there was no indication of improvement. Although statistics had not been gathered systematically, anecdotal evidence revealed a disturbing picture. The proportion of men over 50 who were working was 84 per cent in 1979 and 69 per cent in 1998. Two-thirds of a sample of 1400 IT professionals thought that they would be unable to get a job after the age of 45. Research undertaken for the DfEE had shown that 50 per cent of unemployed people over 50 felt that they had been discriminated against on the grounds of age. An Institute of Directors survey of 500 of its members revealed that half had workforces with less than 10 per cent over the age of 50 and 10 per cent had no workers over the age of 50. Only one in ten of those made redundant over the age of 45 ever return to work. Fifty per cent of men over 50 are no longer working.

5. Official statistics did not reveal the extent of the problem. For instance, for every person between 50 and 65 who is registered as unemployed, there are eight who are described as economically inactive. It is estimated that these hidden unemployed number 1 million, three times the 300,000 registered unemployed in the age group. The substantial increase in economic inactivity among older people had sometimes been associated with incapacity—1.5 million people over the age of 50 receive some form on incapacity benefit. The number dependant on long-term sickness or disability benefit had increased by an astonishing 300 per cent in the last seven years—at a time when the nation's health overall was improving.

6. Age discrimination was a result of a combination of prejudices and assumptions—ill-found and deeply ingrained—about the capacity of older people. Commonly held beliefs were that older people were harder to train, more prone to short-term absence, cost more to employ and that they could not master information technology. Research had refuted each of these. Another reason for the extent of the problem, and the failure of employers to tackle it, was the absence of legislation prohibiting age discrimination. Although there was still a long way to go in overcoming discrimination on the grounds of race, gender and disability, the progress that had been made in those areas owed a great deal to the existence of law as a deterrent and a clear signal from Parliament. It was suggested that employers may have drawn their own conclusions from the absence of legislation on ageism.

7. Over the years, Governments of both major parties have advocated a voluntary approach to tackling ageism. In opposition the Labour Party made an unequivocal pledge to introduce legislation but on gaining office initially preferred to continue the voluntary approach. A code of practice on age diversity in employment had been published and the possibility of legislation was made dependent on its level of success. The impact of the Code of Practice had been monitored and, by the Government's own measures, appeared to have had little impact.

8. In October 2000 the Government had accepted the EU's Equal Treatment Directive. As part of that agreement, the Government had undertaken to introduce legislation against discrimination in employment on the grounds of age within six years (and on the grounds of religion and sexuality within four years). This was a welcome step, not because legislation was seen as the only remedy, but because it was an essential part of a package of measures required to eradicate the problem. The timetable would allow employers to take necessary steps in policy and practice before the law was implemented.

9. There were strong arguments in favour of a single statute which would make it unlawful to discriminate unfairly on age grounds rather than having a series of single statutes. The latter option could serve to justify employers' complaints that they were faced with a mass of confusing legislation. A single statute would reflect the best diversity practice of employers in working to treat all employees on their merits. It would reflect a positive approach rather than a set of negative prohibitions. It would also represent an opportunity to integrate into a single equality commission the three existing statutory commissions, together with a remit covering the three new statutory areas. This approach had been taken successfully in New Zealand and Northern Ireland. The Government would also need to consider whether a single equality commission should have a remit designed only to cover discrimination in employment or more broadly to encompass goods and services. It would also have to consider whether legislation should bar mandatory retirement ages. There was a need for permanent research arrangements to enable rigorous assessments of the prevalence and perniciousness of ageism. It would be particularly important for the Government to be able to monitor the degree of improvement resulting from its policies.

10. Ms Dianah Worman, Chartered Institute of Personnel and Development, explained that the CIPD had been working in the area of age discrimination in employment for many years. One of the lessons it had learnt was that it took a long time to change people's perceptions. The CIPD believed that age diversity in employment was an important business issue as it was important that employers exploited all areas of talent. Age diversity was a part of the wider diversity agenda which recognised that it was important to value individuals and their differences. The current business climate, with a tight labour market, has resulted in what was termed a "war for talent" but it was still difficult to encourage employers to cast aside their stereotypical treatment of employees. The CIPD believed that it was important to teach employers to take objective decisions.

11. Knowledge management was increasing recognised as a key business skill. Knowledge, creativity and ideas were business assets, yet by shunning older workers, employers were depriving themselves of the pool of talent older people represented. Businesses also needed to consider the marketplace and business opportunities, both of which could be significantly affected by older people's needs and spending power.

12. Age discrimination could be tackled in a number of ways. Education and awareness raising were very important; people needed to understand why discrimination took place, to recognise it when it did, and to know how to combat it. The Voluntary Code of Practice which the Government had introduced was another useful lever, although the results of the early evaluations suggested that its impact had been limited to date. Legislation would be an important signal but it was important to remember that it could not be a complete solution. The Sex Discrimination Act had been helpful but it had not eradicated discrimination on the grounds of gender. Other approaches could be useful and effective. Campaigns could be successful: the campaign against smoking in the workplace had achieved much success without the support of legislation.

13. The real challenge was to make the business case in favour of age diversity in the workplace. Once employers had been persuaded of the merits of the case, they would need assistance in implementing the right policies. Case studies and spreading best practice would be important.

14. Reflecting on experience to date was useful as it ensured that lessons were not missed. The CIPD for instance had been conducting research on the effectiveness of anti-discrimination legislation and trying to identify ways in which it could be improved. The Foresight process had also been helpful in making connections and drawing together different aspects of social policy and research.

15. Communication was an important aspect of the drive towards age diversity. Legislation would have no impact if employers didn't know of its existence. Thus it was important that the Government maintained the pressure on employers and that other influential organisations were engaged in the dissemination process.

16. Ms Kay Carberry, Trades' Union Congress, said that the TUC was keen to see fair treatment of all people at work. Employment decisions should be related to a person's ability to do the job and not dependent on irrelevant factors such as race, gender, disability, sexual orientation or age. The TUC was also concerned about social issues, such as the mismatch between skills shortages and the high numbers of older people out of the labour market. The impact of the ageing population, and its knock-on effects on the tax and benefits systems had been well-analysed.

17. Employment decisions based on age and not on a person's aptitude for the position constituted age discrimination. It could adversely affect younger people as well as the older population. Often it was based on prejudice and groundless perceptions. Young people were stereotyped as unreliable, transitory and immature. Older workers tended to be seen as reliable but inflexible; slow to learn and not worth investing in as they might retire or experience health problems before any return on the investment was achieved. Moreover, for some employers, they did not have the right image and were seen as unattractive.

18. The TUC had not performed a scientific analysis of the ways in which age discrimination operated across industry although it had conducted a small survey in 1994 but there was plenty of other research available. All of it indicated that discrimination operated both formally (through age prescriptions in recruitment and retirement, minimum skills requirements, perceived health and safety requirements, and the need to generate returns on the costs of training provision) and informally.

19. The TUC had received a steady stream of reports from unions regarding problems encountered by members as well as correspondence from individuals. In the early 1990s there had been particular problems for FE lecturers who had been invited to take early retirement on their fiftieth birthday but more common instances of discrimination were concerns about compulsory retirement ages (particularly in the civil service); employees wishing to remain in employment beyond the normal retirement age; and discouragement from applying for promotion. Young workers faced discrimination in relation to pay scales that were aligned to age. Short-term appointments and casual working could also close off opportunities for older workers.

20. The biggest single compliant that was made was from those in their 40s and 50s who were unable to get back into the labour market after redundancy or enforced early retirement (there was some evidence to suggest that women hit this barrier at an earlier age to men).

21. Discrimination was not only unfair but also short sighted. Employers were not recruiting from the widest possible range of talent. Too many early retirements led to a loss of skills, knowledge and corporate memory. The voluntary code of practice set out the business benefits of employing a mixed-age workforce

22. The TUC was a strong supporter of New Deal for the over 50s as it was an important part of a package of measures required to combat age discrimination in employment. It also welcomed the voluntary code of practice, and noted that the supporting material was useful in helping interested employers in developing age diversity employment policies. Legislation was also required: it would make a strong statement about society's expectation and obligations. It would however be important to get the legislation absolutely right particular in the details. It would have to address the issues of mandatory retirement; contractual retirement ages and links with employment protection; occupational pension rules; and inland revenue rules. It would also be important to define those areas where age discrimination was justified.

23. Professor Stephen Fothergill explained that his research concentrated on the marginalisation of older workers. The problem of labour market detachment was more than one of discrimination. For older workers it was as much about the disappearance of job opportunities. For older men in particular, detachment from the labour market had been increasing.

Table 1: Economically inactive men


24. There was also a regional dimension to the problem. In the South East, 86 per cent of men in the age bracket 16 to 64 were in employment. The equivalent figure in London was 77 per cent, in the North East 73 per cent and the Wales 74 per cent.

25. There had been a large number of surveys of unemployed and economically inactive men so there was reason to have confidence in the figures. Very few referred to themselves as retired but many said that they suffered from long-term sickness. Those who said they were retired tended to be older: far more 64 year olds described themselves as retired than did 50 year olds. About half of those in their early 60s said that they were "early retired".

26. There had been a huge increase in the number describing themselves as long-term sick. There were half a million in 1981 and just less than two million currently. In fact the increase in men had levelled off, but it the number of women continued to grow. The number of those out of the workforce claiming sickness benefit of one form or another was twice that of those claiming unemployment benefit.

27. Half of those claiming a sickness benefit were over the age of 55. In some regions, particularly industrial areas, as many as 20 per cent of men of working age were on sickness benefit. In contrast, the figure was very low in the home counties.

28. Of those men between the ages of 50 and 64 who were out of the workforce, 34 per cent said it was because they had been subject to compulsory redundancy, 23 per cent cited ill-health or injury and 30 per cent said that they had taken voluntary redundancy. About a third of all men in this age bracket outside the workforce said they wished to work again. A further third had tried to find work unsuccessfully, become disillusioned and were no longer looking. Only 5 per cent felt that they had a realistic chance of finding employment. Of those in their early 50s, about half wanted to work full-time again. This figure fell to around 15 per cent in respect of those in their early 60s. Of those older men outside the workforce, some 88 per cent were not looking for work. Sixteen per cent of these said that this was because there was no chance of finding employment and a further 54 per cent blamed ill-health or injury.

29. The volume of those claiming ill-health or injury varied greatly across different parts of the country. The figure was highest in those areas with an industrial tradition. There was also a huge occupational divide. Of those with a professional background, 88 per cent had an occupational pension. At the lower end of the jobs market, detached males were far more likely to be dependent on the State for support.

30. There were principally two groups of detached older men. The slightly smaller group could be typified by middle-class men with access to a pension who left work through choice. The majority of these were not actively seeking further employment. The larger group was characterised by manual workers who had been subject to compulsory redundancy and rarely had their own pension. Many of these would still like to work.

31. It was clear therefore that the detachment of older male workers was not caused by discrimination alone. The lack of job opportunities was also an important (probably more important) issue.

32. Mr Richard Allan asked whether sickness could be the result of unemployment rather than the other way round. Professor Fothergill said that unemployment could certainly affect health and compound illness but it was not possible to assume that unemployment always caused ill-health. It was important to remember that long-term sickness was not necessarily a bar to employment, but that it often put sufferers at the back of the queue for jobs. Ms Worman added that unemployment was often a demotivating experience and that it was important to help those wanting to work to see a way in which they could rejoin the workforce.

33. Mr Foster pointed out that GDP was low in many industrial areas as so many were not in employment and there were not job opportunities in the industries in which the unemployed were used to working. Stereotypes applied at an individual level too: former miners may not be attracted part-time working for sales jobs for instance. Mr Worsley agreed that the cause of much economic inactivity in older was the loss of traditional job opportunities. The number claiming incapacity benefit had risen dramatically, but the claimants were not acting fraudulently. Disillusionment could cause a decline in health. It was however difficult to say how much economic inactivity was the result of discrimination and how much the result of a lack of opportunity.

34. Mr Foster pointed out that at one stage those on unemployment benefit had been actively encouraged to move onto incapacity benefit in an attempt to reduce unemployment figures. There was little incentive for them to seek to return to the unemployment register as they received higher payments from incapacity benefit and suffered less stigmatism. Professor Fothergill said that the statistics, which showed wide geographical variation, indicated that the local labour market was also an influential factor. Ms Worman added that aspirations may also play a part: whereas professionals may take a job where the attached salary was lower than that to which they were accustomed, because they could afford to or because the work was interesting, manual workers were less likely to do so.

35. Ms Worman raised the issue of flexible retirement ages. There was much evidence that many would like to work beyond the normal retirement age, albeit in many instances for fewer hours. Mr Worsley explained that phased retirement would enable those who wished to, to work fewer hours from, say, the age of 55, and that access to their pension, or at least part of it, might make this possible. This was permitted, and worked well, in France and Germany but was effectively prohibited in the UK by over-bureaucratic Inland Revenue rules. Mr Allan pointed out that there were two aspects to the retirement issue: the financial package and perception.

36. Ms Worman said that B&Q's restricted recruitment (restricted in this case to the over 50s) would become unlawful. B&Q had also abolished a compulsory retirement age, as had J Sainsbury plc. Ending the 'cliff edge' retirement age would however have implications for pension companies which were likely to see their market shrink. The low level of salary for young starters, which often meant that they were unable to make pension contributions also reduced the time over which contributions could be paid.

37. Mr Foster argued that the current tight labour market conditions should, logically, reduce the effects of discrimination on the grounds of age. Professor Fothergill said this was possible and that it was certainly true that, in a tight labour market, employers sought alternative means of recruitment and retention. If they then discovered the benefits of age diversity in their workforce, there could be a long-term effect on age discrimination.

38. Mr Allan asked why there should be market failure in this area: if there was a genuine business case for age diversity, why was it that businesses did not recruit older workers to gain a competitive edge. Mr Worsley pointed out that B&Q had indeed had some success with their policies, although it was difficult to say why. The most important reason, however, was that employers were prejudiced and that it took years to change their perceptions. In the 1980s and 1990s there had been many businesses which had sought to gain competitive advantage by marketing themselves as "young".

39. Ms Worman stated that it was not yet clear how legislation against age discrimination would work in practice. A conciliation approach might be a possibility. The CIPD believed that age should not be a factor in recruitment: It would be difficult to prove discrimination in all but the most blatant cases. Professor Fothergill pointed out that legislation could be used as a lever to affect a culture change. Mr Worsley pointed to Northern Ireland and New Zealand, both of which had a single equality commission and where all the arguments against a single commission had evaporated once the commission had been in operation for a while. The existing commissions in the UK had accepted that in the long-term a single commission may be advantageous. Mr Foster pointed out that this would certainly enable a reduction in bureaucracy and the regulatory burden placed on companies.

40. Ms Carberry said that the Government were aware of the difficulties employers faced by seeking information about their obligations under equality legislation. They had just set up a one stop shop phone line and web site to try to ease the burden. All three existing equality commissions already worked together on a number of issues. Some argued that the commissions should be merged. The Disability Rights Commission however needed more time to establish itself before this could be considered. Ms Worman said that the way forward may be for an umbrella organisation to promote education and awareness on all issues of diversity, with the issues of compliance and policing to be dealt with separately. Mr Worsley pointed out that it was not yet known whether a Human Rights Commission would be appointed. Some favoured that option. What should be resisted strongly was the notion of there being a commission for each issue.

41. Professor Fothergill said that older people dropping out of the workforce was (i) not synonymous with early retirement, (ii) was not entirely the result of discrimination and (iii) that there was a wide variety in geographical incidence rates. Ms Carberry agreed that discrimination was only one of a number of factors and that as a consequence, legislation against discrimination was only part of the answer. It was also important to remember that younger workers could also face discrimination on the grounds of age; as could women of childbearing age. Arguably, B&Q discriminated against younger workers.

42. Ms Worman pointed out that the nature of age discrimination varied not only geographically but also across different sectors on industry. In the IT sector, those over 30 might face age discrimination. Professor Fothergill said that for the last 20 years in the UK there had been a buyers' labour market. The closer the country came to full employment, the more that employers would have to shed their prejudices and hire people regardless of age, race or gender. Mr Foster pointed out that for that to happen, the definition of full employment would have to include those who are economically inactive as well as those who are registered unemployed.

43. Mr Worsley argued that the labour market would always be cyclical in nature and that there would always be variation between different parts of the country so legislation was needed as a backstop protection. He welcomed the figures on detached older male workers that Professor Fothergill had compiled and compared them to the complete dearth of data on the incidence of discrimination. There was a need to bring to together much of the valuable, but piecemeal research on discrimination.

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