From the TUC

A lost generation? What about those aged over 50?

06 Jul 2012, by in Labour market

Last week, the release of the NEET stats (Not in Education, Employment or Training) for young people and a key note speech from the Deputy Prime Minster made sure that once again the focus of attention was on young people in the labour market. This is nothing new. An endless number of commentators lament about the prospects of a lost generation of young people and push Government to do more and more to help young people in our labour market find work. On its part, Government has focussed nearly all of its effort on young people through the Youth Contract and extensions announced this week.

By implication, that would suggest that unemployed people of all other ages are not a concern: they will find work quickly, not suffer from experiences of ‘scarring’ from unemployment and do not need too much support from the state until they have hit the Work Programme from around 12 months of unemployment.

Unfortunately, Policy Exchange published a report last week outlining that this was very far from reality.

In particular, we found that while employment has been rising for the older (50 plus) workforce, those who find themselves out of work find it extremely hard to get back into work. Long-term unemployment is more likely for the over 50s than the under 25s (less than 40% of the over 50s who were unemployed in January 2010 were in work a year later, compared to nearly 65% of the under 25s); and our research shows that wage scarring (the pay penalty that results from experiencing spells of unemployment between jobs) is much higher for the over 50s than any other age group.

There are a number of reasons for this. The changing skills requirements of the labour market and a lack of support from the state are obvious problems. However, one of the key barriers to work affecting older jobseekers that the report found was age discrimination from employers.

In order to try to understand this better we conducted an experiment where we sent out job applications to both advertised and non-advertised positions. We applied to each position both as a younger worker and one in their 50s so that we could identify any discrimination according to age in the early stages of the recruitment process.

The process involved creating two similar age neutral CVs for each job type, which could then be randomly allocated to the older and younger applicant, sending out two applications each to more than 1200 positions. This ensured that there were no obvious differences in the applications other than the date of birth on the application, allowing us to identify the effect that the age of the applicant had on their likelihood of the employer pursuing the application further, whether that mean that they offered an interview or asked for more information.

Of the 977 bar work positions that were applied for speculatively, we received 160 positive responses for the younger applicant but only 71 for the older worker, meaning that the younger worker received 125% more responses than the older applicant. For the 250 personal assistant applications, we received a total of 11 responses to the older worker, compared to 16 for the younger worker, again indicating a bias towards younger workers.

The causes of this bias are unclear: perhaps employers feel younger workers would be easier to manage, feel that older workers come with larger risks of problems with their health or just hold negative views about the benefits of employing older workers. The one thing that is clear is that the Government’s focus on young people is not helping the situation. Those firms looking to give something back to their community or help in the labour market will naturally follow directions from Government and support younger workers.

At a time when unemployed over 50s are really struggling to find work and the economy vitally needs the experience and skills that older workers provide, this can only be damaging. Government policy must change course so that all jobseekers are given the support they need, regardless of age. With the dramatic consequences that a failure to act could have on living standards for individuals and families, not doing something now risks creating a whole different lost generation.

GUEST POST: Matthew Oakley is Head of Economics & Social Policy at Policy Exchange. His team focuses on welfare reform, growth and the UK economy, public sector reform and financial policy. Prior to joining Policy Exchange he was an Economic Advisor at the Treasury, where he worked on a number of tax and welfare issues for the previous eight years. He was closely involved in analysing the labour market impacts of and responses to the recession and in the Green and White Papers on Universal Credit.

2 Responses to A lost generation? What about those aged over 50?

  1. A lost generation | ToUChstone blog: A public policy blog from the TUC
    Jul 6th 2012, 6:45 pm

    […] been thinking about Matt’s post earlier today, and it raises important questions about targeting. I’m impressed by Policy […]

  2. Maggie
    Jul 19th 2012, 7:36 am

    Recently made redundant from a successful professional career, applying for dozens of jobs for which I am well qualified, with no response. Employers are careful to avoid any other type of discrimination in the application process, however age is immediately obvious from CV/job and education history. This must be addressed by government. Meanwhile do I omit twenty years of my CV, make up more recent dates for my qualifications?? I’m convinced if I could get to interviews I could get a job but I can’t get past this stereotyping.