An Investigation of Pensioner Employment

Discussion And Conclusions

This paper investigated current trends in pensioner employment in Scotland and identified an increasing trend in numbers of people continuing to work past pension age. In 2015, 49,200 male and 30,800 female workers were over the age of 65.

The main employment characteristics of working pensioners are:

• Working pensioners are mostly employees but they are more likely than any other age group to be self-employed
• The number of overemployed people aged 65+ has grown considerably over the past decade
• Looking at employment rates by broad occupation group, the largest growth in numbers has occurred in medium -high and low skilled occupation groups
• However, female pensioners work considerably more in medium-low and low skilled occupations, such as elementary and caring, leisure and other service occupations, than male pensioners. This finding reflects the widening gender pay gap in older age groups
• More women than men have caring responsibilities across all age groups with the exception of the over 75s

Based on this analysis, observations on the economic and social conditions are:

• The proportion of income from earnings is significantly lower for pensioners at the lower end of income distribution
• Many pensioners do not claim pension credit, mainly due to perceived ineligibility and perceived stigma
• Although underclaiming pension credit is unlikely to have a negative impact on pensioners who wish to work, pension credit would help improve the wellbeing of low income pensioners who cannot work
• Pensioner poverty has decreased more steeply than child and working age adult poverty
• Pensioners are now more likely to own a property outright than they used to
• Pensioners should reach the Minimum Income Standard more easily compared to working age single people, lone parents and couple parents
• However, the UK has among the lowest gross pension wealth and the second largest pensions gap across OECD countries

The most significant barriers for working pensioners are:

• Inequality of health outcomes
• Discrimination against age
• Skill depreciation that leads to restrained employability
• Limited training opportunities
• Inflexibility to reduce or adjust working hours

It has been argued that an ageing population could slow economic growth, lowering population labour market participation rates. However, there are some indications that the increase in pensioner employment has had a positive impact on economic growth as more people contribute to output and a positive impact on public finances as more people contribute to income tax receipts.

Next Steps

As can be seen from the key findings above, there are a range of concerns about aspects of pensioner employment. It is therefore proposed to explore these concerns in more detail in a second stage of analysis, which will be taken forward in coming months.

Implications for policy

The challenges of supporting people to be able to continue to work beyond pension age are similar to supporting older workers in general - flexible working, reduced hours (each to help people balance work with caring responsibilities), retraining, making allowances for medical appointments, etc. This requires working with employers to help them understand the opportunities and benefits of retaining/recruiting older workers and the ways of doing this that avoid detriments to the employers activities.

In addition, the Scottish Government is providing other forms of support on the following key issues, which are expected to improve conditions for working pensioners:

1. Health conditions are likely to be a significant barrier to work for pensioners who need additional income

• The Scottish Centre for Healthy Working Lives already provides advice to employers on supporting workers with health conditions as well as how health and wellbeing can be supported in the workplace.
• Fit for Work Scotland offer support to workers who are at risk of going off on long term sickness absence, which will particularly benefit those more at risk such as older workers.

2. High gender pay gaps for older age groups reduce work incentives for those approaching retirement

The Scottish Government has a comprehensive range of policies intended to help accelerate the long term decline of the pay gap across all age groups though:

• Transformative funding for quality affordable childcare
• Initiatives to tackle pregnancy and maternity discrimination
• A commitment to achieve greater gender diversity on Scotland's public, private and third sector boards
• Working with partners to encourage flexible working, family friendly workplaces
• Encouraging employers to pay the Living Wage, which will disproportionately benefit women who make up around 65% of employees earning less than the Living Wage
• Providing further investment to health and social care partnerships to enable the Living Wage to be paid to care workers, mainly women, supporting vulnerable adults.
• Funding for partners to encourage greater gender equality within: enterprise; employment including gender imbalanced occupations, in particular science, technology, engineering and maths careers; education and modern apprenticeships.
• Committing to establish an 'Advisory Council on Women and Girls' to advise on tackling workplace and occupational segregation and other issues relating to gender equality.
• Committing to work with employers to pilot 'Returners' scheme, which will bring experienced women back into their previous career after a break.

Scottish Government analysts are planning further analytical work on the gender pay gap to investigate what is driving a persistent pay gap in over 50s.

3. Levels of investment in training opportunities for older workers have been low for the past decade

Training and employment support has been focused on young people since the recession as the rates of youth unemployment have been higher than in the wider population and because of the negative long-term impact unemployment at a young age can have on individuals and the economy as a whole. However, the Scottish Government recognises the importance and value of older workers to Scotland's economy and has a range of policies intended to support older people employability:

• Continues to fund short courses that lead to work or career progression.
• Makes progress towards advancing older people's position in the labour market and boosting training opportunities for this group.
• Continues to work closely with Skills Development Scotland ( SDS) who offer an all age careers service within Scotland, providing older workers with specific guidance and advice to get back into work or providing costs towards learning and training opportunities through Individual Learning Accounts.

Furthermore, the Scottish Government recognises that older workers are an important cohort to consider in the design of new employment services some of which will be devolved to Scotland from the 1 ^st April 2017. The Scottish Government recognises the particular support requirements of older workers, which might include a focus on retraining and confidence building. The approach the Scottish Government is taking for all customers accessing the programme(s) will be person-centred and support plans will be developed with them and tailored to their needs.

4. Working pensioners are more over-employed than under-employed and therefore seek opportunities for more flexible working

The Scottish Government recognises the importance of high quality flexible options for working pensioners and is taking steps to encourage and support employers to understand the needs of working pensioners who have caring responsibilities, whether for elderly relatives or grandchildren and provide working patterns which suit those needs. In addition, the Scottish Government is an active partner in the Family Friendly Working Scotland ( FFWS) Partnership.

The FFWS Partnership has taken steps to highlight to employers the support that working pensioners require, including:

• Delivering a seminar for employers in April 2016 titled: 'Business futures: what do changing workforce demographics mean for employers?' The event included a presentation from Dr Wendy Loretto of the University of Edinburgh Business School on: 'Older workers in the workplace'.
• Working closely with Carers Scotland, who operate the Carer Positive scheme. The scheme has been promoted to employers regularly at employer events.
• Delivering the annual Scottish Top Employers for Working Families awards, celebrating organisations that demonstrate excellent practice in relation to family friendly and flexible working. In recognition of the importance of supporting carers, including elderly carers, one of the award categories is the 'Carers Scotland Best for Carers and Eldercare'.

In light of demographic and employment trends, and the associated needs for family friendly and flexible working options, pensioner employment will remain a focus of work for the Family Friendly Working Scotland Partnership.