The Treasury

Global Navigation

Personal tools
 

Guest Lecture: Dr Mary DaviesRetirement

Page updated 20 Sep 2007

Slides, abstract amd speaker's notes from Dr Mary Davies's Guest Lecture presented at the Treasury on 19 April 2005.

Dr Mary Davies

Victoria University of Wellington

Mary is the 2005 NZiRA/TOWER fellow and she is here on the invitation of the New Zealand Institute for Research on Ageing at Victoria University.

Dr. Mary Davies was, until recently, Director of the Pre-Retirement Association of Great Britain and Northern Ireland. In this role she worked with employers to reverse the trend of early retirement and to promote mid life planning and pre-retirement education.  Among her achievements has been research and development in the financial field, resulting in the creation of a financial education curriculum available as workshops, workbooks and as an interactive website. These materials are currently being rolled out and evaluated in the workplace. The initiative was funded by the Department of Work and Pensions and a varied group of private sector companies.

Abstract

The decisions made by people in mid-life about whether and to what extent they are involved in the labour market are influenced by their own circumstances, by their employers and by public policy. All three aspects will be covered by Mary Davies in her presentation. She will use UK research to illustrate the importance of financial circumstances, but also social factors, at the individual level. She will point out how the retention of older workers can benefit employers. Policy setting can also produce push and pull factors which influence decision-making. Discussion of these factors is becoming increasingly relevant in the New Zealand situation.

Speaker's Notes

Labour force participation by older workers - what influences decision making

Setting the scene

We are increasingly living in a global society with people throughout the world having a growing connectedness and interdependence. There are both advantages and disadvantages to this.

The population is ageing. According to the U.N. this population ageing is unprecedented, without parallel in the history of humanity. It is pervasive, a global phenomenon affecting every man woman and child. It is profound, having major consequences for all facets of human life, and it is enduring. The young old balance is shifting throughout the world, in the more developed regions, the proportion of older people already exceeds that of children.

Technological advances are occurring with increasing speed, particularly
in communications. In many workplaces productivity is increasing with fewer people required. Some jobs can be done just about anywhere in the world.

Over the last few years stock markets have fallen dramatically, with effects on pensions and personal savings. Also the number of years spent in retirement relative to the number of years spent in work has increased.

In the light of these changes, it is not surprising that there has been a rethink about work, retirement and work exit and that the subject of the employment of older workers has been rising up the policy agendas in many countries.

Decisions about labour force participation of older workers are made by older workers themselves, by employers and are strongly influenced by public policy decisions.

Labour force participation decisions by older people

According to research carried out by The Department for Work and Pensions (DWP) in the U.K. in 2003, the influences on older people which affect their labour force participation are as follows:

  • State pension age, which is seen as a natural time to retire.
  • Retirement age for the job in question.
  • Health status.
  • Pull factors, such as wanting to spend more time with family or travelling.
  • Income.
  • Presence of a partner and their working status.
  • Type of occupation, with those in managerial/professional jobs expecting to retire early.
  • Desire for company.
  • Caring responsibilities.

Marital status was important in influencing the decision to leave work. Widows and single people were the least likely to work. The participation rates of married women were exceeded by women who are separated or divorced.

Housing tenure affected the decision to remain in work as follows. The group of men and women with the highest probability of labour market participation were those with mortgages. Those renting their house were the least likely to be working, perhaps because of access to Housing Benefit.

The significance of earned income to the weekly budget was important particularly for women. Their earnings represented nearly two-thirds of total income. Employment earnings therefore provide an important source of income for those choosing to remain in the workforce.

Educational qualifications were important, since having none was associated with leaving work and having higher qualifications was associated with working past state pension age.

There was a strong link between perceptions of health and the likelihood of remaining in work. The greater the health problem the greater the degree of detachment from the labour market.

Research carried out by the Centre for research on the Older Worker at The University of Surrey showed that the following factors affected the decision making process of whether to stay at work or to leave:

  • Feeling valued at work, by employer and colleagues.
  • A positive social environment.
  • A personal ‘mission’, cause or sense of purpose, or concern about professional reputation.
  • Having a sense of control. Older workers have developed ways of working which suit their personal styles and strengths and value the chance to say how their work is organised and carried out.
  • Flexibility about time and responsibility.
The effect of the employer on the work decision

According to the department for work and pensions, many people are faced with a set of factors which make their relationship with work dysfunctional. These include:

  •  Lack of career development and ongoing guidance.
  •  Limited opportunities for training.
  •  Unsatisfactory experiences at work such as negative attitudes, ageism.
  •  Low job satisfaction and lack of control.
  •  Deterioration in physical and psychological health linked to experiences in the workplace.
  •  Lack of control over work time.

It is important to realise that older workers are a heterogeneous group and will have differing attitudes to work. Research done by the CROW/UNIS (2004) indicated that older workers could be considered as three separate groups, called Choosers, Survivors and Jugglers.

Choosers are the group who are most amenable to staying in work. They are mainly male and are managers or professionals on a high income. They are home owners. They are the best qualified of the groups, since fewer than one in ten is unqualified. They can afford to leave work and are motivated to stay in work if they find it interesting.

Survivors are in work through financial necessity. They have the least skills and the least experience of controlling their working lives. They will make decisions about work because they need the money.

Jugglers are mainly women whose work decisions are influenced by external commitments like family and caring roles. They need work flexibility to be able to continue working.

They way people leave work can be seen as either being PUSHED by unpleasant work conditions or PULLED by factors outside work such as caring responsibilities or a desire to spend more time with family. Sometimes people JUMP out of work if an opportunity arises which seems too good to miss.

It is possible that employers can influence the PUSH factors and encourage older workers to remain in work in the following ways:

  •  Tackle ageism in management throughout the workplace.
  •  Develop appropriate H.R. Policies.
  •  Improve being at work by providing education and training, career. development and guidance job adaptation and pre- retirement education.
  •  Include older people in performance appraisal and development.
  •  Ensure employees can manage change.
  •  Demonstrate that older employees are values and appreciated.

Even the PULL factors can be accommodated if the need for employees ‘time sovereignty’ is recognised and individual patterns of work are created to suit the changing personal circumstances of individual employees. This will mean creating flexible working arrangements after consultation with the employees.

Effect of public policy on the decision making

Public policy can encourage both employers and employees to increase labour force participation of older workers in the following ways:

  • Anti-age discrimination legislation.
  • Allowing a mix of income from work and pensions, so that work income can provide the fourth pillar of income in retirement.
  • Removing employer retirement ages.
  • Creating obligations for employers to allow flexible working arrangements.
  • Having a wider concept of work life balance.
  • Raising public awareness around the issues, including the benefits and challenges of an ageing population.
  • Creating a new mind set about the value of older workers.

Older workers can bring considerable benefits to the organisation employing them. The Employers Forum on Age in the U.K. list them as follows:

  • Knowledge sharing, older workers can tutor younger employees.
  • Holds on to the experience of older workers and protects the corporate memory.
  • Creates new positive role models.
  • Reduced staff turnover and savings on recruitment costs and hassle.
  • Higher staff morale, avoids the rebound effect of early retirement on other workers.
  • Improved public image.
  • Access to wider customer base because there is a better match between customer needs and workers age and experience, customers are also part of the ageing population.

In conclusion, there is currently available a reasonable body of information about the influences on the labour force participation by older people. If older people are to be encouraged to stay in the labour market then work adaptation is necessary. This is a RECIPROCAL and a continuous and dynamic process by which the individual seeks to establish a ‘fit ‘ with the job and the job is modified to suit the needs, values and interests of the older worker. Older workers leave bad jobs. Furthermore, H.R. philosophy need to change from the ‘depreciation model’, where the individuals value to the organisation peaks early in his career, reaches a plateau at mid career, then steadily declines, to the ‘conservation model’ in which all employees regardless of age are viewed as renewable assets that can continue to yield a high rate of return for long periods of time if they are adequately managed, educated and trained. This will require an attitude change within organisations and will require a programme of awareness raising and education such as that carried out by The U.K. Department of Work and Pensions within its Age Positive Initiative.

Research Methodology

The DWP Research was carried out by computer assisted interviewing of adults aged 50 to 69 some working some on benefits, some retired.

The CROW Research was carried out by adding questions to The National Omnibus Survey. Interviews are carried out ten times per year by The office of National Statistics. Between January and March 2003, 5204 people were interviewed, 31% aged 50 to 69.

Further information from
  • www.dwp.gov.uk/asd/
  • www.surrey.ac.uk/education/crow
  • www.agepositive.gov.uk 
  • DWP Research Report 182
    Working after state pension age; quantitative analysis
    D. Smeaton and S. McKay 2003
  • DWP Research Report 200
    Factors affecting the labour market participation of older workers.
    A.Humphrey, P. Costigan, K. Pickering, N. Stratford and M. Barnes 2003
  • CROW Changing work in later life; a study of job transition.

Mary Davies
April 2005

Email: mary-alice-davies@curwain.fsbusiness.co.uk

Page top