Yesterday’s Budget was controversial, as much for what it left out as for what it gave away. The NHS, care and housing had all queued up and were left wanting more. But probably the biggest problem issue of the Budget came from the problem of flat-lining productivity. Do older workers have a contribution to make here?
The Budget Statement states that ‘The Office for Budget Responsibility (OBR) now expects to see slower GDP growth over the forecast period, mainly reflecting a change in its forecast for productivity growth. It has revised down its forecast for GDP growth by 0.5 percentage points to 1.5% in 2017, then growth slows in 2018 and 2019, before rising to 1.6% in 2022.’
Productivity has hardly increased since the financial crisis and, when measured by output per hour, is 13% below the G7 average. This is driven by low levels of investment, particularly in the private sector, leaving investment in the UK now well below OECD averages (IPPR analysis here).
Brexit can only compound the problem. The associated costs are mounting. But we will also face uncertainty over whether immigration will be able to meet anticipated shortfalls in the labour supply, further threatening growth. Current Government measures to increase employment of older workers seek to address this labour shortfall.
So how are we to address the productivity question? The budget announced more money for research and development, a new investment fund and a national retraining scheme. All these measures are welcome, and the national retraining scheme is good news for older workers trying to re-enter the workplace.
But perhaps we can also find ways to draw on the potential productivity of the workforce itself, and of those not currently in work – especially those older workers who would like a job if they could find the right one?
Over 50s outside the workforce
There are currently over 3 million people aged 50 to 64 who are not in the workforce. The majority of these are ‘economically inactive’, those not actively seeking work, with a much smaller number of unemployed, 0.3 million, many of whom have been out of work long term (more here).
Employment for this age group is increasing and there will soon be 10 million ‘older workers’ at work. But the level of unemployment and inactivity is not going down – the increase in employment reflects increases in the demographic. So there remains economically productive potential not in use. And 0.6 million of those currently ‘economically inactive’ already say they would like to work if they could find a suitable job (see here).
Productivity of older workers
There is good evidence to suggest that older workers are productive. Many studies have shown that older workers are no less productive than their younger peers (see here). But research has also suggested that our 50s may in fact be our most productive decade. German research found productivity in the workplace peaking in our mid-50s, and that high productivity may continue up to 60 and beyond (full paper here).
Older workers have a good reputation for loyalty and accrued knowledge, but research has now documented that the over 50s do indeed score higher for occupation specific knowledge and skills than younger employees (see here). And a recent examination of employee attitudes found that the over 50s are our most motivated employees, performing better than all other age groups with regard to enjoyment of work (see here).
Technology is not necessarily the issue we assume for older workers. Research has shown that the over 50s can be effective with IT at work and able to use computers effectively to enhance workplace productivity (research paper here).
Cognitive ability is also not necessarily the problem that might be assumed. The age at which cognitive decline kicks in is increasing with increasing longevity (report here) and research suggests that extending working lives may improve cognition in older age too (report here). Raw speed and flexibility are strengths of the young brain. But social reasoning increases with age, and evidence has shown high level reasoning peaking in our 50s (report here) offering older workers strengths in perspective, compromise and understanding.
The potential for productivity
Older workers clearly represent a productive and effective workforce. Employers can make better use of this resource by fully realising it’s potential and making sure they continue to offer older workers training and development opportunities.
To improve retention and increase participation we will need to make work more attractive for older workers. We need to build good workplaces (see here). And this will be to the benefit of all generations.
Good work needs to be secure, well designed, properly paid and with terms and conditions which support employee well-being. Today it also needs to be flexible, adapting to people’s needs. This can benefit new parents as much as older workers needing to care for elderly parents. And flexible work can also drive productivity – a virtuous circle all round!