Opinion: there are many barriers facing older workers in the workforce, but there are also many benefits to employing them
It’s said that 80 is the new 60 with older people increasingly playing an active role in society. We only have to look for inspiration to octogenarians Nancy Pelosi, Speaker of the US House of Representatives or to the legendary GAA commentator Mícheál Ó'Muircheartaigh. As former US comedian George Burns put it, "you can't help getting older, but you don't have to get old".
The good news is that people are now living longer, healthier and more active lives while often living with, rather than dying from, chronic medical conditions. But despite all the benefits of greater longevity and heathy ageing, there is a challenge: how can society value, protect and financially resource an ageing workforce?
To date, policy efforts to boost the labour supply of older people in Ireland have focused on pension reforms. These include raising the bar for eligibility for full State pension, an incremental increase of the State pension age, removal of mandatory retirement age(s) and delaying the compulsory retirement age for public servants to 70. In addition, the option for both public and private sector workers to defer their State pension must be prioritised to allow for greater flexibility around working and retirement decisions.
From RTÉ Radio 1's Morning Ireland, RTÉ Political Correspondent Paul Cunningham on the clash between parties in the 2020 General Election over the retirement age
In both global and Irish contexts, government policy is focused on delaying retirement and encouraging extended working lives. In both the February general election and government formation talks, one of the main discussion points to emerge is the possibility of delaying the planned increase in State pension age to 67 in 2021 (68 in 2028). This follows a campaign by a SIPTU-led coalition of NGOs to scrap the pension age increase.
A cursory review of party manifestos shows that political parties differ in their approach to tackling these issues, mindful of the weight which the "grey vote" carries. Fianna Fáil, Labour, the Social Democrats and Aontú have pledged to defer or stop increases in the pension age, estimated to cost around €1.1 billion over the next five years. Fine Gael has promised a transition payment, while Sinn Fein and Solidarity-PBP have both pledged to bring the pension age back to 65. The Green Party advocates eliminating mandatory retirement laws and pushing for ﬂexible retirement options. Increasing the eligibility age for state pensions is also a very contentious issue in many developed countries, including France and the UK.
At present, workers who are contractually obliged to retire from work at 65 must apply for the Job Seekers Allowance until the State pension kicks-in, receiving €2,350 less per year than the State pension provides. What’s more, eligibility criteria have changed since 2012, requiring more contributions over a longer period to receive the full pension.
From RTÉ 1's Six One News, pension age increase continues to cause controversy
This is particularly bad news for part-time workers and those who have intermittent labour market attachment, i.e. women mostly. According to Age Action Ireland, 35,000 pensioners, most of whom are women, were negatively affected by these pension changes in the four year period to 2016, resulting in reduced annual pension payments of up to €1,500 annually. In addition, findings from TILDA point to the propensity for workers approaching pension age to work fewer hours or part-time. Despite men and women living in retirement for almost 19 and 22 years respectively, a recent report from Matrix Recruitment found that almost half of all Irish workers have no private pension and expect the State pension to be their main source of income.
Looking ahead to 2050, the increasing costs of providing the State pension are stark. Ireland’s old age dependency ratio is predicted to increase to roughly 50% as a result of population ageing and reduced fertility rates. This will likely result in two people working to pay for one pension; a significant reduction from the ratio of six people of working age to every retiree in 2010. Spending on State pensions and relevant additional payments is set to rise from €7 billion in 2016 to €8.7 billion in 2026. Efforts to stimulate demand-side measures include encouraging self-employment and giving employers a €10,000 cash incentive to hire older, long-term unemployed workers.
From an organisational perspective, a recent study found that employers frequently use exit policies more than they use development measures. Before the 2008 global financial crisis, organisations frequently used voluntary redundancy schemes as a means of shedding older workers. During the crisis, this cohort was often the first to lose their jobs and, once unemployed, were more likely to remain jobless long-term, compared with younger workers. While many organisations employ older workers, few recruit them as a result of ageist attitudes, concerns over competency, adaptability, technology and upskilling capabilities.
From both societal and economic perspectives, continued participation by older workers in the labour market is not only desirable, but essential
Despite these perceptions, the benefits of employing older workers are numerous. Although not a homogenous group, older workers often possess knowledge and expertise, the main predictors of job performance. In addition to adding to an organisation’s physical and cognitive diversity, research suggests that this cohort also tends to be more altruistic, punctual and has lower rates of absenteeism, compared with younger workers.
From both societal and economic perspectives, continued participation by older workers in the labour market is not only desirable, but essential. In this world of an ageing workforce, older people need to keep their skills current while government and employers must do more to provide better quality, sustainable jobs, including part-time and flexible options, in a wider range of economic sectors and occupations. In agreement with Nancy Pelosi: "our work is not finished".
Dr Maeve O'Sullivan is a lecturer in management and HRM at the Department of Management and Marketing at Cork University Business School at UCC. Dr Christine Cross is Head of Department, Personnel & Employment Relations at the Kemmy Business School at the University of Limerick. Dr Jonathan Lavelle is a Senior Lecturer at the Department of Work and Employment Studies at the Kemmy Business School at the University of Limerick. He is a former Irish Research Council awardee.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ