Older workers, choice and sustainability

A long-term rise in early exit from working life might be interpreted in one of three ways. One is that people are taking a positive choice to increase their lifetime leisure. A second is that they face distorted financial incentives to retire or claim invalidity benefits rather than carry on working, and do not have to face the true economic cost of a decision to leave work. A third is that people lack sufficient opportunity and capacity to carry on working, regardless of their preferences and the economic consequences.

Up until about 10 years ago, early retirement was seen largely in positive terms, with declining older worker participation being interpreted as people enjoying the fruits of prosperity – the first of the explanations listed above. The concern to reverse this culture during the past decade has owed much to the economic imperative, in particular the feared consequences of falling labour participation combined with lengthening life expectancy. As a result, much of the public debate has focused on the second factor, retirement incentives, and on the case for making individuals bear the real cost of retiring earlier while offering them improved rewards for retiring later.

At the same time, it is recognised that financial considerations may influence but do not determine retirement behaviour. The findings of the Joseph Rowntree Foundation's Transitions after 50 programme of research (summarised in Hirsch, 2003) gave strong support for the third explanation – that workforce exit is more about whether people are able to carry on working than about whether they think it is financially worthwhile. This has profound implications for policy responses. To prolong working lives, we need to think about how to improve opportunities for older workers to remain in their jobs. This chapter explores how policy makers, employers and individuals might approach the issue of job retention, and suggests that the most effective responses move beyond a focus on the immediate circumstances surrounding retirement, to consider how working lives need to change to make them more sustainable.

Rescue, retention and disadvantage in working life

How can choices and opportunities for older workers be improved? Those who are experiencing difficulties in the labour market can be helped directly in a number of ways.