Help the over-50s work part-time

Donald Hirsch	Monday 11th December 2000

NS/Fabian Society Second-Term Agenda - Help the over-50s work part-time. By Donald Hirsch

Labour's three social priorities in its first term have been work, work and work. Whether you are young and on the dole, a lone parent or disabled, the messages have been the same: work, if you can do it, is good for you; if you can't find a job with decent pay, we'll pay you to take a low-wage one. Most important, work is the best route out of poverty.

The results are impressive. A million more people in work; youth unemployment shrinking; total claimant unemployment set to fall below a million for the first time since the mid-1970s. All these trends are no more than an extension of what had been happening under John Major, but some of Labour's attempts to encourage more people to consider the option of working appear to be bearing fruit. For the first time anyone can remember, the number of lone parents without work is falling.

But are we in danger of becoming a nation of workaholics? We continue to labour for more hours than other Europeans, despite the implementation of working time regulations that forbid employers to make workers do more than a 48-hour week (except when employees want to or when their bosses can think of a good reason for making them do so).

To be fair, Margaret Hodge, a minister at the Department for Education and Employment, has launched a "work/life balance campaign" this year to persuade employers that being a slave-driver is in nobody's interest. More tangibly, the working families tax credit has made it fruitful for parents to take on part-time work, providing they do at least 16 hours a week.

Yet the present government has come nowhere near reversing one of the most destructive trends in the organisation of work: the large-scale exclusion of the over-50s. The promotion of "cool Britannia" and the advent of three relatively youthful party leaders can have only intensified our apparent quest for dynamic thirtysomething workaholics. Now 50-year-olds withdraw quietly into a retirement that is likely to last about as long as their working lives. (Just look at Chris Patten, who has ruled out a return to British politics because he will be 60 when he finishes his present stint as a European Commissioner.)

The result of this thinking is that one in three men aged between 50 and 65 is not working, compared to one in six in 1980. During the 1990s, a man in this age bracket became 20 per cent more likely to be out of the labour force, while a woman aged 25-34 became 20 per cent less likely. Rejecting the over-50s will become more damaging on an economic level, as the 1960s baby-boomers begin to grey: by 2020, there will be two million fewer people in the 16-50 age group and two million more who are over 50 but below state pension age.

A second-term agenda should put as much emphasis on a more rational distribution of work as the first term put on work as a good in itself. This is not simply a question of telling fiftysomethings to behave like 25-year-olds, and making their employers treat them that way. True, if age discrimination legislation finds its way on to the statute book, as seems likely, it will send a strong message not to assume that someone's age determines whether they can do a job. But older people are likely to benefit at least as much from new opportunities to structure work around their own personal needs as from equal access to a rigidly defined working world. Most importantly, they need more options in between full-time work and full-time retirement.

One of the most absurd of all rules operated by the Inland Revenue forbids employees from working part-time for an employer from whom they also draw an occupational pension. This rules out the option of working fewer hours and drawing a bit of pension to make up some of the earnings loss. Many schemes further discourage downshifting because they base final pension calculations on the grade and hours that were worked immediately before retirement. The Inland Revenue has been reviewing its restrictions for several years. It should abolish them forthwith and, at the same time, send a strong message to employers by penalising schemes that do not treat downshifters fairly.

The government could go further. It has been willing to lure more parents into the labour force by topping up their pay, where necessary, to the cost of supporting a family. Similarly, it could make a contribution to help older people remain part-time in the workforce without either their present income or their final pension sinking below an acceptable level. One way would be to match, pound for pound, any partial pension being drawn by those aged over 55 who have reduced their earnings by working part-time.

The biggest objection to such a scheme would be that it could encourage some workers to downshift prematurely. But we have already accepted the value of top-up benefits for working families, which could also have this effect; we should now give people new choices about the trade-off between paid work and leisure or other activities. The support should be income-tested, helping to correct the biggest injustice of the private pensions system - the skewing of incentives to the rich by allowing them to claim back tax on their contributions at the higher rate.

Most importantly, however, it would show that Tony Blair really means it when he says that he wants to stop writing people off at 50 - a milestone that he himself will reach two years into the next parliament.

This article is the second in a series, prepared by the NS and the Fabian Society, on ideas for a second Labour term


© The Author © New Statesman Ltd. 2000. All rights reserved. Please contact the publisher.