An Investigation of Pensioner Employment

Barriers For Working Pensioners

Inequality of health conditions

Poorer health is considered one of the most important barriers to older people continuing in employment. Evidence from the Scottish Health Survey ( SHeS) shows considerable inequality in health conditions by household income. Poorer adults aged 65 to 75 in Scotland are disproportionately facing more general health issues and long-term illness than older people at the higher end of income distribution.

SHeS data have been used to look at three different health conditions by income distribution: self-assessed general health, long-term conditions and signs of possible psychiatric disorder.

The results indicate a strong relationship between household income and general health and long-term conditions. In particular, as shown in Figure 32, adults aged 65 to 75 demonstrate significantly better general health as we move up the income distribution, with 78% in the top quintile of the distribution being in good or very good health, compared to only 49% in the lowest income households. Figure 33 shows that more adults aged 65 to 75 are facing limiting long-term conditions when they live in low income households, with 56% at the bottom quintile having a limiting long-term health condition, compared to 41% in the highest income households.

Figure 32: General Health by equivalised household income, ages 65-75, 2012-2014

Source: Scottish Health Survey, 2012/2013/2014

Figure 33: Long-term conditions by equivalised household income, ages 65-75, 2012-2014

Source: Scottish Health Survey, 2012/2013/2014

Results indicating the prevalence of possible psychiatric disorders are mixed. Prevalence of mental health problems, as shown in the following chart, decreases as we move up the income distribution with the exceptions of those households in the fourth and top income quintiles.

Figure 34: Signs of the presence of possible psychiatric disorder by equivalised household income, ages 65-75, 2012-2014

Source: Scottish Health Survey, 2012/2013/2014

This health inequality may go some way to explaining why earned income is a greater proportion of total income in higher income quintiles, as poor health of the poorest population can act as a great barrier to access work. As discussed in the previous chapter pensioners at the lowest quintiles of the income distribution receive a very limited proportion of their total income from earnings, indicating that they are less likely to continue work.

Well-being and working beyond state pension age

Volunteering in retirement is consistently shown to be beneficial to wellbeing ^[20] .

Studies suggest that those in occupations with positive working environments might see benefits to health from working beyond SPA, whilst those who are forced to remain in poorer working conditions, due to the inadequacy of pension income, are likely to see a deterioration in health, and particularly in mental wellbeing. Retirement on the basis of redundancy, illness or another's illness was associated with higher levels of depression, as is retirement for those with low wealth.

Figure 35 shows the estimated prevalence and rates of self-reported illness caused or made worse by work. The highest rate of illness caused or made worse by work is for women aged 45 to 54. Men in age groups over 55 have incurred or reported illness caused or made worse by work more often than younger men (in all other age groups).

Figure 35: Estimated prevalence and rates of self-reported illness caused or made worse by work, by age and gender, for people working in the last 12 months, 2011/12

Source: Health and Safety statistics, Labour Force Survey

Age discrimination

Age discrimination can be a significant barrier for working pensioners. Figure 36 presents the general experience of discrimination by age group and sex in Scotland. Nearly 3% of women and 1.5% of men aged 65 to 74 have experienced discrimination at work. The overall figure for this age group is at 2%. For women, the age group that has experienced most discrimination at work is the 16-24 category (5%) whilst for men it is the 25-34 (2.6%) but also the 55-64 age group (2.4).

Figure 36: Experience of discrimination at work by age group, Scotland

Source: Scottish Health Survey 2013, supplementary web tables

More women than men have caring responsibilities which could act as a barrier to start or continue working

As evidenced in the following chart, a considerably higher proportion of women in all age groups, with the exception of the 75+ category, have caring responsibilities. In the age group of 65 to 74, 20% of women have reported caring prevalence compared with 17% of men in this age group. For people aged 75 and over, only 9% of women have caring responsibilities compared with 13% of men.

Figure 37: Caring prevalence, 2013, by age and sex

Source: Scottish Health Survey 2013

Lower training participation in older workers

Evidence ^[21] suggests that as workers age, they tend to experience 'depreciation' or 'devaluation' of their skills through lower levels of on-going training and education. Data shows that levels of participation in training is lower for the 55-74 age group compared to people in the 25-54 age group. This pattern could reflect either declining investment in training by employers or low take-up of training by employees.

Qualification level plays an important role in determining how long individuals work for. Several studies ^[22] report that less-qualified workers are more likely to exit the labour market earlier than white-collar and more qualified workers. A general decline in education and training even in the 25-54 age group could be 'storing-up' barriers in the form of accelerating depletion of skills.

The following chart sets out the gap in training between age groups and how this differs across the EU countries in 2014 figures. The UK comes sixth in the ranking with 19.1% of workforce aged 25 to 54 years participating in training and 13% of older workers aged 55 to 74 years taking on training opportunities.

Figure 38: Training of older workers versus younger workers in the EU, 2014

Source: Eurostat (2016), Participation rate in education and training

The chart below shows that training participation in the UK between 2005 and 2014 has been declining across the broad range of 'younger' workers (age group 25-54), whilst the trend for workers in the 55‑74 age group has been flat for the past decade, and consistently much lower than that of the 25‑54 age group.

Figure 39: Training of older workers versus younger workers in the UK between 2005 and 2014

Source: Eurostat (2016), Participation rate in education and training

Inflexibility of working hours may be driving overemployment in pensioners

Flexibility in working pattern and hours can reduce work-related physical strain and promote a gradual transition to retirement ^[23] . Research on older workers and working time ^[24] has shown that overemployment can have a negative impact on working pensioners where they wish to reduce their hours, especially where individuals have poorer health and economic conditions.

As discussed in the previous chapter , the number of working pensioners reporting that they are overemployed has been increasing. This suggests that lack of access to the various forms of flexible working is behind this, and is likely to act as a disincentive to work.

This logic is also consistent with the observations above on the rise in self-employment, which may be interpreted as an indication of older workers looking for more flexible working patterns.

Older workers may be channelled towards smaller firms and are paid less

Evidence from the UK ^[25] suggests that post SPA workers are over‑represented in small firms, and that smaller firms appear to be more inclined to both retain and recruit older workers. This suggests that smaller firms may be offering conditions more suitable to the needs of older workers. Evidence ^[26] shows that small organisations often offer more flexible working arrangements.

Data for the UK from the Annual Survey of Hours and Earnings show that median hourly pay declines with age (see chart below). In the UK, 60+ female hourly rates are similar to those of age group 22-29. This is likely to be associated with people moving towards part time work and downgrading skill level in order to access greater flexibility.

Figure 40: Median hourly pay - Excluding overtime: United Kingdom, 2015

Source: Annual Survey of Hours and Earnings, 2015 Provisional results

Data on median gross weekly earnings for full-time employees in Scotland suggest that older workers earn an average of £469.75 per week. This figure is lower than weekly earnings across the other age cohorts. Older workers are paid less within a range of 4 to 20 % when compared with workers aged 25 to 64.

Figure 41: Median gross weekly pay - Scotland, 2015

Source: Annual Survey of Hours and Earnings ( ASHE), Office for National Statistics

Notes: Covers employees age 16+ on the PAYE system on adult rates and whose pay was not affected by absence