DEMOGRAPHIC CHANGE IN

SCOTLAND - OLDER WORKERS IN THE SCOTTISH LABOUR MARKET

Emma Hollywood*, Ross Brown**, Mike Danson***, and Ronald McQuaid*

*Employment Research Institute, Napier University **Scottish Enterprise, *University of Paisley

Population estimates by single year of age (GROS, 2005)

male

60000 40000 20000 0 20000 40000 60000

0

7

14

21

28

35

42

49

56

63

70

77

84

female

Significance of population ageing for Scotland

• The ageing of society in Scotland is now one of the main challenges facing governments, employers and policy makers

• According to European Commission projections, the economic impact of ageing populations will be to reduce the potential growth rate of the EU from the present rate of between 2-2.5 percent to around 1.25 percent in 2040

• In Scotland the working age population is projected to fall by 8.5% between 2003-2028 (GRO(S), 2005)

Additional contributors to Scotland’s declining workforce

• Decline in the number of school leavers

• Continuation in the numbers of school leavers progressing to Higher and Further education

• Lower rates of labour market participation among older workers

Recent changes in Scotland's population

• Recent reversal in long-term population decline

• In migration has exceeded out-migration

• Slight increase in fertility (from low base of TFR c. 1.6)

Labour market participation of older workers

• One of the most significant trends among older workers has been their general declining participation in the labour market, particularly among men

• Until the mid-1970s, the participation rate in the UK for men aged 55 and over was one of the highest among OECD members

• Since this period there has been a virtually uninterrupted fall in the participation rate for the 55-59 age group, one of the sharpest declines of OECD countries

Regional labour market participation of older workers

• There are significant regional differences in the participation rates of older workers

• The rates for people aged 50-SRA are significantly higher in the South East and East of England (over 75% each)

• While the North East, Scotland, Wales and North West all have activity rates below 70%; the activity rate for Scotland is 69.3% (APS, 2006).

Scottish labour market participation of older workers

• Within Scotland itself, there are distinct spatial differences in labour market participation between Council areas

• Employment rates are lowest in former industrial areas and large cities such as Glasgow (55%), North Lanarkshire (58.1%) and East Ayrshire (58.5%)

• Employment rates are much higher in prosperous suburbs neighbouring these areas, such as East Renfrewshire (71.4%) and East Dunbartonshire, (78.8%), and the more buoyant cities and areas (e.g. Aberdeen 77.9%, and Edinburgh 73.8%)

• Rural areas such as Aberdeenshire (77.9%), Scottish Borders (76.6%) and Perthshire and Kinross (76%) also generally have high activity rates

Reasons for labour market decline of older workers

• Decline of traditional industries such as coal, steel and manufacturing

• Early retirement and pensions

• Age discrimination

• Regional dimension

• Lower levels of qualifications

Qualifications among older workers in Scotland 2005

% Educated to degree level

% with no qualifications

Working age population

17.8 14.8

Age 25-49 22.1 12.8

Age 50-SRA 14.5 23.9

Older workers in the tourism and hospitality sector

• Tourism has traditionally relied on a younger workforce

• 37% of the workforce are aged between 16 and 24

• Only 23% of the workforce are over 45

• Labour shortages and frustration among employers

• Taking on older workers?

Older workers in the tourism and hospitality sector (2)

• The benefits of employing an older worker are experience and reliability. They are also more likely to work on their own initiative. I don't know what the benefits of employing a younger worker are. (Hotel)

• Older workers are more reliable. They don't tend to let you down as much, they are more conscientious. Younger workers have no work ethos, they will try to get away with the bare minimum. (Hotel)

Older Workers in the Finance Sector

• Financial services are emerging as a major driver of growth in the Scottish economy, accounting for almost 7% of growth and 4% of employment

• Industry has a reputation of being dominated by older people

Older Workers in the Finance Sector (2)

• In Scotland, 18% of staff are aged between 16 and 24; 58% of staff are aged 25-44; and 24% are 45+

• Predictions by University of Warwick are that 220,000 financial services employees will retire over the next five years including; 29,000 managers, 40,000 professional and technical staff and 107,000 admin and secretarial staff.

POLICY INITIATIVES FOR OLDER WORKERS-EU

• One of the central aims of the European Employment Strategy has been to ‘bring about a significant increase in the employment rate of Europe on a lasting basis’

• Barcelona target aims to delay by five years the ages at which older workers stop working.

• The Stockholm target aims to increase the employment rate of older workers to 50%

• UK and Scotland well on the way to these, but…

POLICY INITIATIVES FOR OLDER WORKERS-EU (2)

• Age discrimination legislation that was introduced in the UK in October 2006, as part of the UK government’s obligation under the EC Directive on Equal Treatment in Employment and Occupation

• This legislation prohibits discrimination in recruitment, training and promotion, sets a default retirement age of 65, with a right of employees to request working beyond that, and extends protection against unfair dismissal beyond the age of 65

Scottish government policies aimed at addressing population ageing

• General policies: free personal care for the elderly, concessionary travel scheme, fuel poverty programme and the central heating programme.

• All Our Futures: Planning for Scotland with an ageing population

• Workforce Plus- the employability framework for Scotland (Scottish Executive, 2006)

• Fresh Talent Scotland

Future directions for an ageing workforce

• A greater role for employers• The regional dimension of ageing• Potential impact of economic recession• Dynamic nature of population ageing