There is no doubt that the proportion of people over the age of sixty living in the United Kingdom and in Europe will continue to increase. The figures for life expectancy at age sixty have increased by ten years since the 1970s and are set to increase again with the latest projections showing that between 2010 and 2035, there will be an increase in the UK population aged over sixty years from 14.1 million to 20.9 million, an increase of almost fifty per cent.
The median age, the age that divides the population into two equal groups, is set to rise by more than 3 years in this period. The support ratio, the number of working age people to people of pension age, will fall from 3.2 to 2.9. This provides a challenge to Government and an inter-generational challenge, because the younger generation will have to bear some of the cost of tackling this demographic challenge, but it is unreasonable to expect them to pay for all of it.
The current projection is that between 2015 and 2060, the costs of age-related Government spending will increase by 5.4% of GDP, equivalent to £ 80 billion in current prices. What is needed is an approach that is a partnership between the generations.
The impact of an ageing society is felt in health, pensions, social care and other areas. I wanted to talk about the implications for employment and housing.
Employment
People will have to work to a higher age. DWP recently published research from NIESR on the macroeconomic effects of extending working lives. The report analyses the effect of increasing State Pension Age by a year. It concludes that the effect is to increase GDP by one per cent by six years after implementation and that the unemployment rate would return to baseline after 4 years from implementation with 467,000 extra jobs created. This suggests that it will be possible over time to share the costs of longevity by increasing the age of working life without damaging the work prospects of the young.
It is often said that people will have to work longer as the population ages, but my mother-in-law always says to me, “don’t forget that many of us worked longer than you will” and she makes the point that many people in the older generation left school at fourteen and worked for ten years before graduates even started in the world of work. Working older does not necessarily mean working longer than previous generations.
It is true that the age at which people start work is increasing and there is also more sharing of work as part-time work becomes more common.
For many years the debate on longevity and the workforce had an element of fantasy to it with politicians suggesting ever later retirement ages and the public actually withdrawing from work earlier and earlier. But in the last decade we have seen the number of people aged 65 years and over in the workforce almost double to 850,000 with a 33.6% increase even in the last 5 years despite recession. The average age of ceasing work has crept into the 60s and is rising.
Whilst this is welcome there are still three key policy challenges:
*Age discrimination
*Ill health and disability
*Underemployment – many 50 plus workers are in part-time jobs or jobs for which they are over qualified
Age Discrimination
The removal of the default retirement age is helping older workers and although some companies do have employment practices which favour younger workers such as internal recruitment, research by the Institute of Employment Studies showed that employers generally value the qualities of older workers such as loyalty and reliability.
Health
The UK Commission for Employment and Skills has found that the average 65 years’ old worker is much more capable of work than previous generations. There is clearly a need to match capabilities to duties, but no reason why work should not continue.
Underemployment
Many of the jobs that were created in the decade before the recession were part-time jobs. They met a need for flexibility in the labour market and this affected both ends of the age spectrum, as well as meeting the needs of workers with caring responsibilities. These jobs were suitable for people who continued in education or training, had family responsibilities or wished to wind down at the end of their careers. It seems likely that part-time work will continue to be a more substantial feature of the labour market in Europe over the coming years. As people wish to train for the high-skilled jobs which are now available, some will wish to work part-time. Equally, in the middle of people’s careers, there will be a need for training and again, part time work may be a useful way of achieving this.
This is creating a very different labour market to that which we have known previously and it raises the challenge for employers of giving the option to older workers of continuing to work at a high level, but with less hours.
This Labour Market flexibility is good for employers, workers and governments. The costs of an Ageing Society are shared. Employers gain from flexible working enabling them better to respond to market conditions and older workers gain security from continuing in the workplace. Young workers know the costs are being shared and their employment is not at risk.
There are also implications for pension plans, which are being discussed this afternoon.. Half the UK population do not save. Improvements to the State Pension and automatic enrolment into the National Employment Savings Trust will help and a simpler savings scheme which enables an individual to receive matched funding from Government and also take money out of the scheme for limited purposes such a house deposit, a training opportunity and then finally as a pension, is a good model for those people who find the strict “lock-in” of a pension too strong for their needs. Some years ago, David Willetts and I suggested that a Lifetime Savings Account with these features could meet this challenge.
For occupational pension schemes to provide a “career average” pension helps intermittent workers and those who wish for the flexibility of not having to retire at their highest point of “final salary”.
Housing
There have been a number of recent reports by the Audit Commission, the Scottish Government and by the University of Reading, looking at the issue of housing markets and independence in old age, and ways in which opportunities can be expanded.
Questions of inter-generational solidarity in housing policy arise if young couples are competing with downsizing seniors for precious two bed homes. If there are suitable properties available, so that an elderly person can move from a large property to a more convenient, smaller property in the same area or neighbourhood, this frees up a property for the use of a family. In my constituency, many elderly people live in three bedroom properties and would be prepared to move to a two bed property, but are often told it is a one bed or nothing. There are not enough suitable properties at present.
I explain to the Housing Association that with the equipment some elderly people need, space is required. Sometimes an adult child is still at home caring for their parent. The system needs adequate flexibility. It may be that future demand will be for a range of properties which are smaller and more convenient. It should also be possible to move from an unsupported environment to one with support available.
Sometimes it may be necessary to allow public housing with three beds to be allocated to families awaiting a second child in order to allocate a two bed property to a senior. This is also worthwhile in terms of reducing the carbon footprint of housing, which requires that the building should be energy efficient and occupied close to capacity. Clearly, there will always be elderly people who wish to live alone in a large property, but there will equally be many who would welcome living in a cheaper, more energy-efficient and more comfortable environment, as they become older and that they should have available supported housing when needed.
As the number of people over sixty increases, design in homes becomes more important. Design should work well for people of all ages and be capable of coping with mobility problems or with sensory or cognitive impairment. It is not just homes themselves which need to be designed with this in mind, but also neighbourhoods where older people are not left out and where they can access buildings and public spaces. Neighbourhoods should have adequate transport, shops, green spaces, toilets and benches, which enable people of all ages and conditions to live comfortably. Planning should take account of these issues and ensure that new homes are supporting the continued well-being of communities. This is particularly important as we consider the challenge of elderly people being cared for at home, rather than in residential homes and nursing homes.
Another aspect is to ensure that housing strengthens the relationship between health, care services and housing itself. At present all too many houses or bungalows have to be adapted for the needs of the elderly. This is extremely expensive and it should be possible to design and build the houses in the first place, so that it is easy to adapt them and also so that some of the basic provisions, about the size of doorways and the like, are designed with the elderly in mind. Elderly people may not wish to continue to live in large properties with high costs and heating problems. But sensible alternatives are not always available.
This needs to be part of the Government’s thinking in terms of housing policy and planning guidance.