The cost of this grey inactivity is borne by the UK economy and the taxpayer to the tune of 31 billion in lost production and 5.5 billion in benefits and lost income tax. And for those who have accepted early retirement, their pension is unlikely to support them through their extended retirement, as a Green Paper on pensions recently confirmed.
It is no surprise then that the Government, prodded by the EU, has finally grappled with the issue and recognised that age discrimination in the workplace is severely handicapping the UK workplace. Under an EU directive, Britain will have to outlaw age discrimination by 2006 at the latest, and the Government is consulting with interested parties on what form legislation should take.
Corporate attitudes are slowly changing. One growth sector providing job opportunities for the more mature worker is call centres. Poor retention rates and increasing competition for younger staff have forced Barclays to look to older people to fill vacancies in its call centres. Niccola Swan, equality and diversity director at Barclays, says customer drivers also came into play. We realised that selling pensions, life insurance and mortgages is done better by older people who have bought these products themselves, whereas young people probably havent, says Swan.
Previously, the age profile of the call centres was predominantly 18 to 24. Having already extended its retirement age from 60 to 65, Barclays is now planning to raise it to 70 this year. The bank is also using a call centre in Manchester employing older people in an age diversity experiment.
While some firms are making changes, 90% of older employees believe their employers practise age discrimination. The recruitment process is the biggest source of complaints. CIPD research revealed that one in eight job seekers had been discouraged from applying for a position because of age limitations, and one in 10 claim to have been rejected because the recruiter considered them too old.
The trouble is that age discrimination is easy to allege but difficult to prove. It takes a variety of subtle, often unconscious, forms. Mike Saunders, operations manager for Wrinklies Direct, an employment agency for people over 50, says one big problem is the pre-interview screening that may include aptitude tests. They are designed to weed out good graduate candidates from the mediocre but are not at all relevant to the job, says Saunders. They dont take any account of a persons experience or education at the school of life. He argues that a fresh approach is required, one which debunks myths about older people being too expensive, over-qualified, IT-illiterate and difficult to retrain. Until such ingrained perceptions are shed, no amount of legislation will change things, he argues.
Legislation is less likely to change mind-sets than the demographic reality. Over the next four years, the population in the prime career age of 25 to 34 will shrink by 300,000, and for the first time those in the prime recruitment age of 16 to 24 will be outnumbered by those aged 55 to 64.
One company that is well-known for actively promoting age diversity is B&Q. Business expansion forced the DIY chain to reconsider its recruitment policy, as it was finding it difficult to recruit young people in areas of low unemployment. However, there were large numbers of older people, many retired, who had no retail background but did have an interest in DIY and gardening, or had been previously employed in related trades. The chain decided to experiment by opening a new store in Macclesfield, staffed solely by people over the age of 50. Independent research showed that the store performed equally well or better than the average B&Q store when measured by sales, profit, staff turnover and customer satisfaction. More than a decade later, B&Q now employs 6,300 staff over the age of 50 nearly a fifth of its entire workforce.
Many customers would rather seek advice from an older person as they think they will get a more informed answer, says Mike Cutt, HR director. Aside from DIY knowledge, older people have better people skills and can act as mentors to younger staff.
Nationwide has also been promoting age diversity in the workplace since 1991, due to a loss of corporate memory following its merger with Anglia Building Society and difficulties in recruiting staff in Swindon and Northampton, as both had high employment rates.
A year ago, it introduced a flexible retirement policy that raised the retirement age from 60 to 70. Employee turnover has been reduced to 4%, providing annual recruitment and training savings of 7 million.
Getting top-level commitment was key to the success of the strategy. Head of corporate personnel, Keith Astill, says that, aside from widening the talent pool, age diversity has benefited customer relations, as the age spread of its employees is now more representative of Nationwide customers. Five years ago, we introduced recruitment procedures that focus on people's inherent capabilities as individuals, rather than age, he says. And we exploded the myth that people over 50 couldnt be trained on computers and had higher absences.
Because of this ageing workforce, general HR practices will be challenged like never before to deal with issues surrounding the employment of older workers, such as performance management, health and wellbeing, training, flexible working and pensions. Companies will also need to adopt sophisticated performance appraisal systems. This will be particularly important if working age limits are scrapped altogether, warns Freda Line, relationship and strategy manager for the Employers Forum On Age. Employers wont be able to turn a blind eye to poor performance in the knowledge that old Fred will be retiring soon, she says.
The number of employment tribunal cases has trebled in the past 10 years and, with the cost of defending a case averaging 10,000 and awards of similar amounts being made to employees, businesses need to be prepared for new legislation. But those who think they still have four years to put their house in order may regret not acting with more haste. Although an employee cannot yet bring a case of age discrimination, some are finding other ways of doing so.
One example of this is the Rutherford case, where two sacked male workers in their 70s claimed to have been unfairly dismissed because of age. An employment tribunal unanimously allowed the claim to proceed, on the grounds of sex discrimination, because the working age limits, related to state pension ages disadvantaged men. The ruling effectively gives the over-65s the same employment rights as younger workers.
As the state pension pot continues to dry up and a growing number of workers face the prospect of working into their 70s, the deployment of older employees will increasingly challenge businesses. Positive steps have been taken by a few, yet many feel that both business and the Government need to do more. Those firms that have made a positive start in addressing the issue can afford to feel more optimistic. Swan at Barclays hopes that raising the retirement age at the bank will have a beneficial effect on the morale of fiftysomethings who are still some way off retirement. There may have been a feeling that prospects were limited for 50 year-olds, she argues, but now they wont feel they are heading for the scrapheap.