Thursday, April 13, 2006

Older Workers In The UK Continue Working

by Edward Hugh

This news from the FT today is very interesting indeed:

More than half the jobs created in the past year were filled by people above the state pension age, according to official statistics.

The rise in the number of working older people reflected increasing financial pressures created by pensions shortfalls and a growing willingness of employers to take on older staff, employers’ organisations said.

The employment rate for “pensionable” workers, men aged 65-plus and women aged 60-plus, ranged between 7.5 per cent and 8 per cent for most of the 1990s but rose to 10.4 per cent during the three months to the end of January, according to the Office for National Statistics.

John Philpott, an economist at the Chartered Institute of Personnel and Development, said that concerns over pensions and increasing longevity were forcing people to recognise that they needed to work longer.

Sam Mercer, director of the Employers’ Forum on Age, is quoted to the effect that employers faced with skills shortages were also more prepared to hire older people who were physically and mentally fitter than previous generations. Interestingly the kind of jobs they are taking may be grouped more around the less skilled pole of the labour market, such as supermarket work, were there may well be less deterioration with output as people age. Dave Altig (at MacroBlog) has been drawing attention to a similar tendency in the US labour market (and this one). As he says:

"Was it the exceptionally good economy of the latter 1990s that prompted such a burst of later-life job-market activity? Not likely -- unless you want to concede that the last four years have been particularly attractive for job seekers as well (or at least older ones). Better, I think, to look for a smoking gun. Here's a candidate: The increases in the eligibility age for full social security retirement benefits (legislated in 1983), which affected its very first set of folks in the 55-and-over club in 1993, and every subsequent wave of AARP-eligible workers since (in increasing measure)."

And in this post here Dave looks at the related topic of teenage labour force participation rates, and argues that the decline may have nothing whatsoever to do with a supposed 'weak labour market', and much more to do with more and more US teenagers seeking more and more education, something which is entirely consistent with the long run decline in adolescent pregnancies in the United States highlighted here.

In conclusion some more details from the FT about UK trends:

The number of people of pensionable age in employment rose to 1.13m during the three months to the end of February; up 85,000 on the corresponding period 12 months ago.

That accounted for more than half the total rise of 147,000 in the number of people in employment. There was also a strong increase in employment among people aged between 50 and pension age, which rose by 57,000.

The biggest numerical increase in employment was in the 35- to 49-year-old age group, where the number of people with a job rose by 118,000 to 10.92m.

By comparison, employment figures for younger people fell by 13 per cent for 16- and 17-year-olds and by 0.7 per cent for the 25-34 age group.


As Claus points out in comments, New Economist has a post on the same issue here. In particular he draws attention to this:

A 2005 study by the John J. Heldrich Center for Workforce Development at Rutgers University said that most baby boomers think traditional retirement is obsolete. The survey found that more than two-thirds of workers in that generation expected to work after the traditional retirement age; 15 percent anticipated starting their own business after retirement; and 13 percent expected to stop working entirely. The study reported that the number of workers saying they would never retire rose to 12 percent in 2005 from 7 percent in 2000.


Anonymous said...

From what I can tell - presumably there are statistics that will support my impression - the increased workforce participation by older people in the United States is not, by and large, a result of later retirement from one's lifelong career. In fact people seem to be retiring from their main jobs at relatively young ages. The big cutbacks in defined-benefit pensions mainly affect people now in their mid-50's and younger, who haven't yet reached retirement age.
Rather, what's fueling the higher workforce participation rates by over-55's is post-career-retirement work, often on a part-time or self-employed basis, for instance a retired businessman who now sells real estate or a retired factory worker who now works part-time at Wal Mart.

Iron Rails & Iron Weights

Edward Hugh said...

"From what I can tell - presumably there are statistics that will support my impression - the increased workforce participation by older people in the United States is not, by and large, a result of later retirement from one's lifelong career."

I think we are all agreed here it isn't this. Lifelong careers are over. This is the message from Japan. And our most productive years - unless we happen to be Alan Greenspan - are over by then too. So what we need is a flexibilised situation where we pick up something from the company when we go at 55, and adjust our earnings realistically downwards by being prepared to take the kind of jobs you mention to see us through to the ever later ages when the full pensions will kick-in. Anything less than that and pensions systems everywhere will start going bump. As will those companies who keep paying us rates of pay after 55 which we were we were really only able to justify at 45.

CV said...

NewEconomist also blogs the story and includes som other very good ressources.