Examination of Witnesses (Questions 1
WEDNESDAY 14 FEBRUARY 2001
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
(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.
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
Both the New Deal 50-plus and the New Deal for Disabled Peoplewhich
we are just in the process of expanding nationallyare aimed
largely at breaking down the barriers to jobs which those people
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
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.
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
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
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.
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
(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.
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?
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
(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
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
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
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