Employment Levels of Older People

Baroness Sherlock Excerpts

Thursday 5th March 2015 Grand Committee

[Baroness Sherlock (Lab)]

My Lords, this has been an interesting short debate. I, too, thank the noble Baroness, Lady Greengross, for enabling us to reflect on this issue today and for her many years of championing older people in our society. I also thank my noble friend Lord Bhattacharyya for pointing out that we have Moses presiding over us today. I remind him that we also have a very young Daniel presiding over us. Perhaps that tells us something about the importance of both young and older people and the wisdom that they both have to offer to us in our judgments.

The noble Baroness, Lady Greengross, and the noble Lord, Lord Shipley, have done a fine job of debunking the lump of labour fallacy, thereby saving the Minister and me the need to do that. However, it is worth dwelling on it briefly. I am amazed by just how hard it is to persuade most people that something that seems as obvious as the idea that if more older people work, younger people will not be able to may not in fact be true. That is something for the Government to think about. How does one go about trying to make sure that everybody understands that things are a bit more complicated than that?

In the pack that the House of Lords Library made to help us with this debate, which was very helpful, they kindly included a very interesting report from the Institute for Fiscal Studies from 2008 called Releasing jobs for the young? Early retirement and youth unemployment in the United Kingdom. It could almost have been written for today. Of course, the IFS evaluated the job release scheme, which was designed precisely to release jobs for younger people, but also looked at the measures that Governments took between the late 1960s and 2005. Its findings precisely backed up the comments made by the noble Baroness, Lady Greengross. On the job release scheme, it found,

“some evidence that it reduced employment of the old but no positive effect can be found on youth employment”.

It went on to say:

“When looking at the entire 1968-2005 period, labor force participation of the old is positively associated with employment of the young … Overall we find no evidence of long-term crowding-out of younger individuals from the labor market by older workers. The evidence, according to a variety of methods, points always in the direction of an absence of such a relationship”.

So the evidence is really very strong, and I hope that we can all agree with that.

That said, I agree with the noble Lord, Lord Shipley, that there is an issue about youth unemployment, which needs quick and careful attention. I agree with my noble friend Lord Bhattacharyya about the importance of focusing on NEETs and the importance of skills, a point also made by the noble Baroness, Lady Greengross. However, despite the welcome improvement in employment rates generally, young people are now almost three times as likely to be unemployed as the rest of the population. The youth unemployment proportion is 13%, whereas it is only 4% for 25 to 64 year-olds. So something is going on there. Young people are now faring, comparatively speaking, worse than at any point since 1992, which means that the UK is now towards the bottom of the league table internationally when it comes to giving young people a fair chance, with the gap between the youth unemployment rate and the overall rate higher in the UK than in all but five out of 39 OECD countries for which data are available.

We need to see some good help being given to young people, but only 35% of young people find a job after two years on the Work Programme. Indeed, more people return to the jobcentre than find a job as a result of the Work Programme. Last summer, the Government announced that they had decided to scrap the Youth Contract ahead of its planned closure. The latest figures published by the DWP showed that two-thirds of the way through the scheme’s three-year duration, the Youth Contract had delivered less than 13% of the promised job placements, with 20,030 wage incentives paid rather than the target of 160,000. So there is reason to be concerned and need for action.

I agree with my noble friend Lord Bhattacharyya about the importance of careers and mentoring and getting education right, but we need more direct intervention, too. Labour would tackle this problem by bringing in a compulsory job guarantee for anyone under 25 who has been on JSA for a year or more, as well as reforming the Work Programme and introducing a new youth allowance to ensure that unemployed 18 to 21 year-olds who do not have the skills they need to get a decent job are training as well as looking for work. We simply cannot afford to have young people scarred by damaging periods of unemployment, which can carry on having effects throughout their working lives.

Then there is the position of older workers, described very movingly by the noble Baroness, Lady Greengross. If you want to see the effects on older people of being able to turn up every day for work, to feel that they have a sense of worth and something to contribute and to mix with friends and colleagues, we do not have to look very far from this Room. The House of Lords shows just what a positive effect having a role to play in society can have on some people at quite a considerable age.

However, as the noble Lord, Lord Shipley, and the noble Baroness, Lady Greengross, pointed out, there are still too many older people who would like to work but cannot get a job or who lose their job in their 50s and then struggle to get back in, despite having great skills and experience. If the state pension age is to continue to rise, we need to ensure that older people can stay in employment on the kind of wages that enable them to carry on saving for a pension. Otherwise, not only will they end up struggling to get by on benefits designed for those who are temporarily unemployed, they will not be able to build up the kind of pension provision that they will need to have a comfortable retirement when they get there.

The noble Baroness, Lady Greengross, mentioned that the DWP will be giving more tailored support, and I will be very interested to hear what the Minister has to say. At the moment, it is not working. In fact, the Work Programme works even less well for older workers than for younger workers. In the latest figures available, 30% of 18 to 24 year-olds achieved a job outcome, but of 50 to 54 year-olds it was just 17% and it fell to 13% of 55 to 59 year-olds and of those who were 60-plus fewer than 7% achieved a job outcome. Whatever is happening now is simply not working for older people who want to get back into the workforce.

Labour would reform the Work Programme, devolving it to make it more responsive to the needs of older people in different areas of the country. We would also introduce a compulsory jobs guarantee to ensure that older jobseekers who have been unemployed for more than two years are guaranteed the offer of a paid job, and we would look to help more older workers save for a pension. With the latest figures showing that less than a third of self-employed workers are currently saving into a pension—older workers are more likely to be self-employed—we would act to find ways to help older self-employed workers to save for a pension. We would cut red tape for older workers. The new universal credit rules threaten 600,000 self-employed workers with a huge increase in red tape, and that is something that Labour is committed to addressing. We would also introduce a higher rate of jobseeker’s allowance for those who have contributed for longer, funded by extending the length of time for which people need to have worked to qualify.

I will be very interested to hear from the Minister what the Government’s strategy is to address that very serious problem. I have two other specific questions for him. First, what thought are the Government giving to ways in which employers as a whole can think about the way workers move into retirement? We have known for a long time that it is not always the most healthy thing for someone to go from a full-time, very high-stress job into nothing at all. It is not good for their physical or mental health and is certainly not good for their spouse or partner in many cases. Have the Government given some thought as to how strategically as a country we might approach that? Secondly, have the Government considered what impact, if any, the new pension freedoms might have on the pattern of labour market participation by older workers?

There is a challenge for us as a country to ensure that neither older nor younger workers are left behind as the economy slowly recovers. Fortunately, I do not believe that the people of our country will warm to a public debate that divides generation from generation. After all, many older people are deeply concerned about the opportunities and prospects for their children and grandchildren, and conversely the young do not want to see their parents and grandparents thrown on the scrapheap at 50 when they have so much to contribute. Apart from the individual costs, our country can ill afford to lose the talents and energies of either our younger or our older workers. If we do not tackle those challenges, we will all be the poorer.