The rise of grey labour

It's not just young mothers who want flexible working hours. So do the over-fifties - and unless we

The debate about how late in our lives we should go on working has got into a terrible muddle. Twenty years ago, the talk was all of declining demand for labour, of redundancy and of retirement at 50. Today it is all about the pensions time bomb and the need to go on working until at least 70. Older workers, who once felt prematurely written off, now fear they will be made to work till they drop.

We have missed the central point: exactly how can people in their fifties and sixties play a useful role, and achieve their own aspirations, in a society where being 60 no longer means being old? These age groups will become the most populous in the workforce as the age pyramid inverts. By the early 2020s, nearly 9.5 million people will be in their fifties, compared with eight million in their forties and 8.5 million in their thirties. With people also entering work later and living longer, it has become clear that ever-earlier retirement (fewer than half of the male population now works to 65) is not sustainable without drastic effects on pension levels.

In fact, the trend towards earlier retirement, which lasted for much of the 20th century, may already be over. The graph opposite shows that, while the proportion of men aged 50-65 who are not working remains nearly double what it was in 1979, employment is now rising much faster in this age group than for "prime age" workers. This has happened for women, too, in contrast to the 1980s when the over-fifties did not share in the rapid growth in female employment. So we should not wring our hands and imagine that unsustainable dependency ratios are inevitable. Rather, we should think about three crucial issues that arise from a likely trend towards a later average retirement age.

The first issue is inequality. Research for the Joseph Rowntree Foundation confirms not only that occupation is the most important predictor of poverty in retirement but also that, for certain groups, the risk of poverty increases if they stop work in their fifties. A shorter working life allows fewer years to build up a pension.

Moreover, though people have growing opportunities to work beyond full-time employment, these tend to favour the better-off. The Rowntree research found that nearly half of early leavers move into "bridge jobs" - into part-time, short-contract or self-employed work in a transitional period before full retirement. Educated professionals and managers get the plum deals here. Well-qualified men are most likely to make it in self-employment, the form of bridge job that yields the greatest job satisfaction.

True, crude labour demand can help less-skilled older workers. In the US jobs boom of the 1990s, unskilled older people took up what were known as "fairground jobs" - casual, grotty work - and started to become what unskilled young people used to be: the last dregs in the labour reservoir. But this does not address a fundamental problem that has fed the decline in grey labour: a disillusion with the world of work. People who feel their talents are not appreciated can become surly, reluctant workers, which makes them even less appreciated. The research shows that once people become fed up with work, financial or other incentives to stay in the labour market can carry little weight. Finland, the only country that has made a serious assault on age discrimination, has tried to combine better occupational health with changes in the workplace that help older people. In such campaigns, giving fortysomethings positive goals and allowing them to continue to progress in a career structure can be as important as supplying an ergonomic office chair.

The second issue concerns what older workers should actually do. One kind of answer comes from the past. People who had become less productive in their career jobs were hired by the same organisation to do something different. Business executives and politicians were "kicked upstairs" into positions where their direct responsibilities decreased, but where they were still at hand to give wise counsel. Manual workers became park keepers or nightwatchmen with duties no more specific than "keeping an eye on things". When local authorities became more cost-conscious, would-be park keepers drifted on to incapacity benefit. Labour efficiency increased - and so did the quantity of graffiti sprayed on the swings and park benches.

We are unlikely to return to a world where older workers' intangible contributions allow them to remain in jobs that cannot be justified on strict economic grounds. But we can still redeploy and retrain people. For example, young recruits to nursing are drying up. Yet a Rowntree study of older NHS nurses revealed an astonishing lack of thought by employers about how to keep them working. Even a modest amount of training to help older nurses learn about new technology and procedures, or some well-publicised opportunities for less physically demanding jobs, would help.

The most successful third-age workers will be those who can take their working lives into their own hands. So it will be as important to learn how to handle new working relationships (negotiating contracts; selling your services) as it is to learn new technical skills. Some older workers are setting up their own local networks to spread such skills - for example, the East Midlands "Experience Works!" network. The aim is to build self- confidence among the over-forties. Having others your own age around you can count for a lot: a 50-year-old sitting next to a 20-year-old to learn computer skills dreads being shown up.

The third issue concerns how, among the over-fifties, work relates to the rest of their lives. More than one in three people in their fifties is a grandparent; many still have dependent children of their own; a fifth classify themselves as "unpaid carers", typically of ageing parents. Research on why people leave work at this stage of life shows that domestic factors play a critical role. Few employers encourage the part-time working that many older workers would like.

One consequence is that working carers are being put under immense strain, often doing two full-time jobs, one paid and one at home. These strains will increase if declining pension values force more people to stay in work longer without part-time or flexible working options.

If this ultimately causes a reduction in the amount of unpaid care on offer, the consequences for the Exchequer could be catastrophic.

The new-found public respect, in theory, for the "work-life balance" has focused overwhelmingly on the needs of parents with young children. This is partly because it's probably easier to tell colleagues that you're leaving work early to pick up a toddler from playgroup than to say you're going to change your mother's incontinence pads. But it is also to do with government priorities. For example, legislation that obliges employers at least to consider requests for part-time working applies only to parents of children under six.

The government has promised to legislate against age discrimination by 2006. This will mean much more than stopping employers putting "over-forties need not apply" on job ads. Most significantly, it will become illegal for an employer to force you to retire just because you have reached 60 or 65. Yet on its own, it will not cause older workers to be better regarded, nor will it improve their incentives to stay in work. And to raise the state pension age to 70 would simply favour the better-off groups again, because they tend to start work later, to have more chances of staying in work, and to live longer after 70. To many who are being edged out of the labour market in their fifties, a higher official retirement age would not mean working longer, but waiting longer for a pension after leaving work.

So the only real solution is to make work more friendly to people as they grow older, through more flexible hours and employment terms, better training throughout working life, and better conditions in workplaces. The stakes are high, for employers as well as employees. Ultimately, such improvements could be the only way of securing the supply of labour.

Donald Hirsch is a special adviser to the Joseph Rowntree Foundation. His report Crossroads after Fifty: improving choices in work and retirement is published by the foundation on 2 December