Growth in number of jobless over-50s could blight recovery

BRITAIN'S long-term economic recovery could be severely blighted unless the Government takes radical steps to alter attitudes to mushrooming numbers of jobless over-fifties, research published today warns.

Vital skills and experience are already being lost as the number of men and women still working between the ages of 60 and 64 has shrunk.

The early retirement of growing numbers will simply add to the burden on the state, with the inevitable expansion of those in the 50 to 74 age group, dubbed the Third Age, as more people live longer.

The research carried out for the Carnegie Trust in two detailed reports, on employment and income for those in the Third Age, aims to provoke debate about the future needs of the group which already comprises 14 million people, a quarter of the population.

Tough decisions on the future of the relationship of state pensions and private income must be made now if the growing numbers of aged are not to swamp the resources of those in work, one of the reports' authors said.

Income from earnings for those aged 50 to 74 has fallen from 70 per cent in 1971 to 51 per cent in 1989.

Private pension and investment income grew in importance, rising from 14 per cent of total income to 23 per cent, says the report by the Institute of Fiscal Studies, an independent think-tank.

The effect has been that some of the poorest in the age group are those below the age of 60 who are unemployed and entitled only to low levels of state benefits.

One of the key reasons is the nature of occupational pensions, which depend on length of employment and earnings levels, which adversely effect those with low earnings and interrupted work histories.

Men and women over 50 have found themselves vulnerable when firms in recession shed labour, making long-term unemployment a prospect.

The report, Income: Pensions, Earnings and Savings in the Third Age, lays out the statistics against a backdrop that shows each pensioner is supported by 3.3 people of working age, which will fall to 1 for every 2.4 by 2030.

As the ratio drops it is crucial that the Government decides the relative importance of the state pension, it says. The basic pension today is equivalent in value to 15 per cent of average male earnings.

If the Government opted to increase state pension in line with prices, the cost would rise from the present pounds 22.2bn annually to pounds 32.6bn by 2050, when it would be worth only 7 per cent of average male earnings. To maintain pensions equivalent to present levels of average male earning would cost pounds 79.7bn by 2050.

Andrew Dilnot, one of the authors, said that levels of public expenditure on pensions would ultimately demand that hard choices were made by ministers.

At one extreme the state pension could be increased in line with earnings, which would require large increases in public expenditure. At the other, the pension could be means-tested.

The second study, Employment: The Role of Work in The Third Age, conducted by the Public Finance Foundation, found a steep decline in the numbers of those in that age group in work

Of men aged 55 to 59, only 69 per cent were in work, compared to 86 per cent in 1980, while just 42 per cent of the 60 to 64 group worked, against 67 per cent in 1980. Further, a quarter of unemployed men and women in their 50s had been out of work for three years or more.

The report says: 'An important obstacle to older people remaining in paid work is that employers' policies on recruitment, management and retention of staff are often influenced by stereotypes of what older workers can do, which are not related to the facts.'

It adds that although there might be some advantages of shedding older workers, using them as a 'buffer' against recessions, these workers, sometimes with valuable skills and experience, tend to be lost permanently to the firm and the economy.

Terry Banks, director of the Carnegie inquiry, said: 'To deny Third Agers the chance to continue in some form of work is wasteful and will in the long run result in higher taxes for the working population, if the growing numbers of retired people are to have a reasonable standard of living.'

Income: Pensions, Earnings and Savings in the Third Age and Employment: The Role of Work in the Third Age; Bailey Management Sevices, 127 Sandgate Road, Folkstone, Kent, CT20 2BL; pounds 9.50 each.

Leading article, page 24

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