Retirement and the labour market situation of older workers

As Taylor (Reference Taylor, Dannefer and Phillipson2010: 541) observes, older workers’ fortunes ‘have been and continue to be strongly influenced by the ebbs and flows of market forces and government policy’. In the late 1970s and 1980s, when unemployment was rising due to large-scale industrial restructuring and the entry of a large cohort of young baby boomers into the labour market, older workers were largely viewed as a ‘reserve army’ of labour. Early exit was seen as one of the ‘bloodless’ ways of coping with unemployment (Kohli and Rein, Reference Kohli, Rein, Kohli, Rein, Guillemard and Van Gunsteren1991: 11) during this period, and many countries introduced institutional pathways, such as the Job Release Scheme in the UK, to enable older workers who had not yet reached full pension age to leave employment (Guillemard, Reference Guillemard1997). This produced a sharp decline in employment rates among older men in almost all industrial countries, including Australia, where the proportion of men aged fifty-five to sixty-four in employment fell from 67 per cent in 1979 to 59 per cent in 1990 (Taylor, Reference Taylor, Dannefer and Phillipson2010). This downward trend in older male employment continued into the mid-1990s, when a new ‘moral narrative’ (Phillipson, Reference Phillipson2015: 91) on ageing and employment emerged.

With people living longer, but also spending longer in education and leaving the workforce at younger ages, the proportion of life spent in work was ‘shrinking’ (Vickerstaff, Reference Vickerstaff2010: 869). As concerns started to grow about the fiscal ‘burden’ of ageing populations, major institutional players such as the European Union and Organisation for Economic Cooperation and Development began emphasising older people's capacity to ‘lead productive lives in society and the economy’ (OECD, 1998: 14, 84). Around this time, the World Bank also agressively pushed for countries to reduce expenditure on public pensions by expanding the role of private capitalised pensions as ‘second pillars' of retirement funding. A related ‘individualisation of retirement’ (Vickerstaff and Cox, Reference Vickerstaff and Cox2005: 92) occurred within occupational pensions, as more and more employers closed their defined benefit pension arrangements, replacing them with contributory schemes.

Employment rates among older workers have since risen in many countries, driven by markedly higher overall employment among older women but also rising part-time employment among older men (Ekerdt, Reference Ekerdt2010; Taylor, Reference Taylor and Taylor2013). By Reference Parry and Taylor2007, 66 per cent of Australian men and 48 per cent of Australian women aged fifty-five to sixty-four were employed compared with 55 and 27 per cent, respectively, in 1995 (Taylor, Reference Taylor, Dannefer and Phillipson2010: 543). In other countries, particularly the US, the growth in employment (particularly part-time employment) among older workers over the late 1990s and early 2000s was celebrated as heralding ‘a new phase of work in mid and later life’ in which older adults were increasingly pursuing ‘encore careers’ (Freedman, Reference Freedman2006–07: 46) or switching to part-time or self-employment as bridges to retirement (Shultz and Wang, Reference Shultz and Wang2011). The impression was of a new ‘voluntary and strategic’ kind of job mobility for older workers, although as Ekerdt (Reference Ekerdt2010: 75) cautions, rises in part-time employment may have equally been evidence of more frequent job displacements: ‘the late-career expression of the episodic employment and shorter job tenures that have become generally common across adulthood’. Taylor (Reference Taylor, Dannefer and Phillipson2010: 547), for example, notes that the increase in part-time employment among European older workers over 2000–05 was accompanied by an almost doubling of the number of older workers who were underemployed. More recently in Australia, there has been a similarly sharp increase in the numbers of underemployed mature-age workers from less than 214,000 in November 2008 to over 322,000 in November 2015 (ABS, 2015).

Although rates of participation are now higher than twenty years ago, the majority of older workers continue to leave employment before full pension age (Phillipson, Reference Phillipson2015: 83). Many do so involuntarily through redundancy, with the global financial crisis (GFC) severely restricting their opportunities. In America, the unemployment rate among workers aged fifty and over more than doubled over 2007–10, while almost half of older American workers who lost their jobs during the recession were still unemployed a year later (Johnson, Reference Johnson2012: 3). In Europe, more than half of those aged fifty-five and over who were unemployed in 2010 had been unemployed for a year or more, with rates of unemployment among older men higher in 2010 than they were in the early 1990s in several countries, including Denmark, the Netherlands, Ireland and Spain (Taylor, Reference Taylor and Taylor2013). While Australia is widely considered to have weathered the GFC relatively well, nevertheless, in June 2015, almost a quarter of a million mature-age jobseekers were receiving unemployment benefits or Newstart (Department of Employment, 2015b) compared with fewer than 155,000 in June 2008 (Department of Social Services, 2009). Of these, close to 70 per cent were long-term jobseekers who had been registered for social security for a year or more (Department of Employment, 2015a).

High rates of long-term unemployment among older workers are compounded by the pervasiveness of age-discrimination, which leads many older workers to become discouraged and to stop looking for work. According to research by the Australian Human Rights Commission (2015), around a quarter of Australians aged fifty and over experienced some form of work-related age-discrimination in 2013–14, with reports of discrimination highest among those looking for work. The Australian Bureau of Statistics (2014) data show that almost half of ‘discouraged’ mature-age Australians outside the labour force in September 2013 had stopped looking for work because they felt ‘considered too old by employers’. Elsewhere in this issue, Bowman et al. highlight systemic barriers facing older jobseekers within employment services systems, including the young age of many employment services’ staff (mid-twenties to early thirties), which can lead to unconscious bias and misrecognition of older jobseekers’ capabilities and experience. The changing nature of work and the obsolescence of many older workers’ skills have also been suggested as contributing to high rates of long-term unemployment among older jobseekers (Deeming and Smyth, this issue).

Research studies highlight the devastating effects that unemployment in mature-age can have on mental health, as individuals face the demise of their careers with a sense ‘of being denied a decent ending’ (Kohli and Rein, Reference Kohli, Rein, Kohli, Rein, Guillemard and Van Gunsteren1991: 27). This is reflected in the high levels of depression reported in empirical studies by those who experience involuntary exit (for a review see Hershey and Henkens, Reference Hershey and Henkens2013), with participants in qualitative research reporting feelings of ‘anxiety, depression, guilt, anger, and sadness’ (McDonald et al., Reference McDonald, Donahue and Moore2000: 79). There are also the serious long-term financial effects associated with prolonged loss of earnings and reduced capacity to save for retirement, which, as Ranzijn et al. (Reference Ranzijn, Carson, Winefield and Price2006: 474) observe, can lead to ‘intense anxiety’ among older unemployed workers ‘about their ability to manage financially for the rest of their lives’.

The Australia study

The findings reported here are drawn from a recent study, Understanding and Preventing Workforce Vulnerabilities in Midlife and Beyond. The focus here is on the retirement and labour force experiences of a group of involuntarily non-employed and underemployed mature-age Australians, drawing on narrative interviews with eighty older Australians conducted as part of research on the complex ways in which people's labour market attachment weakens before ‘retirement age’. The participants came from a range of occupational backgrounds (Table 1) in three areas of Eastern Australia with high levels of mature-age unemployment, and were recruited using advertisements placed in local libraries, public employment services and on-line jobsites for older workers, and with the assistance of older worker advocacy organisations.

Table 1

Characteristics of participants

Semi-structured phone interviews were conducted with all participants in 2013. In the interviews, participants were asked a series of questions about their experience of ageing and age identities. Questions also addressed their work histories and most recent experiences of looking for work, including their previous employment experiences; the sequencing of their transitions into, within and out-of employment; and the personal and social circumstances surrounding these transitions. In this way, the interview questions adopted a life-course perspective, situating interviewees’ current labour market experiences within the context of past constraints and opportunities (McDaniel and Bernard, Reference McDaniel and Bernard2011). The interviews were recorded and transcribed. A sample of twenty transcripts, stratified by age and gender, were analysed manually by the authors and a series of categories and themes emerging from the data were agreed upon following an intensive workshop. NVivo software was used to manage the coding of the data, and transcripts were coded in depth until saturation point – the ‘point in data collection and analysis when new information produces little or no change to the codebook’ (Guest et al., Reference Guest, Bunce and Johnson2006: 65) – which occurred after thirty-eight interviews. A further eight transcripts were coded to ensure the sample reflected the age, occupational and gender profile of interviewees.

Half the participants (twenty-two women; eighteen men) were re-interviewed to further explore key identified themes, including participants’ perceptions of ageism, their experiences of employment services and their changing expectations about retirement. The findings reported here focus on their understandings and experiences of the fragmentation of retirement, which was widely commented upon in the interviews, although it affected different groups of participants in divergent ways that reflected occupational and age-related differences in their attachment to work. For example, several (seven) of the participants were managers or professionals in their late fifties or early sixties who had recently been made redundant. These older managers and professionals felt a sense of injustice about the way they had been retrenched, which caused them to question their previous level of commitment to their careers. Being without work for a sustained period had also unexpectedly given them an opportunity to (re)discover other sources of fulfilment that they had previously not had time to develop. With financial savings over long careers, work was less of a necessity for these jaded older workers who were looking to rebalance work in relation to the rest of their lives.

A second group of participants also prioritised the importance of balancing work around having time for other pursuits, although for different reasons. Nearly all women, many of whom had intermittent work histories as second income earners, the small minority of participants in this group described a shift in their perspective on working life that came from mature age. This included feeling more ‘comfortable in [their] skin’ and being less concerned with materialistic pursuits or fitting other people's expectations. They expressed a degree of ambivalence about the value of work and prioritised having time for themselves and avoiding the rushed experience of life that they associated with working full-time. Most participants in the study, however, remained strongly attached to the labour market and could not envisage retiring at the traditional age of sixty-five. The findings reported below focus on the intersection between these participants’ experiences of joblessness and their need, or desire, to keep working.

Unravelling of work and retirement

A common sentiment expressed by participants was that ‘times have changed’ (Neil, fifty-five), and, as a former HR manager who was working casually in a liquor store observed, the old days are gone where ‘at sixty-five . . . the orchestra plays and you live happily ever after without jobs’ (Ian, sixty-three). For some, this was a welcome development on the basis that they feared retirement would leave them with ‘too much time’ and that their health would ‘start to deteriorate’ (Jacinta, forty-six, administrative worker) upon retirement. For Kevin (fifty-three), a transcriber, ‘[t]he notion of vegging out at the age of sixty-five, going on an Age Pension and driving around’ induced in him ‘absolute horror’ as he had ‘seen so many people who looked forward to retirement and when retirement actually happened . . . they went physically and mentally and morally to pieces’. In many ways, these participants’ fears about what they would do in retirement echoed longstanding concerns about the potential for the loss of the work role to lead to an ‘identity breakdown’ (Havinghurst, Reference Havinghurst1954: 311) if the void left by work was not successfully filled. The comparatively young age of a number of these participants may have also made it more difficult for them to conceive retiring. However, a psychological resistance to retirement was also evident among several older (predominantly university-educated) participants who, often referencing their parents’ experiences, sought to distance themselves from pensioner identities which they associated with ‘turning into an old lady’ (Eve, media sales, sixty-three) and being ‘totally retired from life’ (Margaret, HR manager, sixty-six):

By contrast, a small number of managerial and professional workers who had been through traumatic redundancies in their late fifties or early sixties reported coming to view retirement more positively – as ‘a chance to do other things’ (Andrew, IT, sixty-four). A vocational teacher in her early sixties recounted ‘feeling very bitter and disappointed with how [her] work life had concluded’ after she was retrenched without a farewell party or letter of acknowledgement despite more than twenty years with her employer. In the second interview, she described how she had eventually made a psychological adjustment:

The ability of these professionals to adapt to redundancy by embracing new dimensions of a life beyond work was aided by the life-course timing of their job loss, with most having sustained careers beyond their mid-fifties. Relatively few were paying a mortgage or living in rental accommodation, and they had generally experienced redundancy at an age when people might previously have been considered to be ‘working with retirement in mind’ (Ekerdt et al., Reference Ekerdt, Kosloski and Deviney2000). Earlier disruptions to career trajectories, by contrast, can have much deeper scarring effects that accumulate over the life-course to significantly narrow people's range of choices in later life. This was highlighted by the experiences of a third group of participants, nearly all of whom had been displaced from stable employment in their forties or very early 50s, leaving them with no choice but ‘to keep working and hoping that things will get better’ (Rory, community services, fifty-four). As Diane (fifty-two), a former school librarian, who had been in-and-out of casual employment since experiencing redundancy in the mid-1990s, commented:

The concept of stopping work was largely seen as ‘completely fictitious’ (Ed, fifty-three) by these participants: a transition reserved for those lucky enough to have sustained continuous careers. Many (two-thirds) were income support recipients who spoke of the ‘difference between surviving and living’. A former care-worker receiving the Disability Support Pension elaborated:

There was a sense of lament in their expectations about retirement in that they valued the normative idea of a period of leisure at the end of their working life while seeing it as something they were increasingly less likely to experience. This was reflected in Janine's comment that people, ‘especially if they have worked all their life, [are] entitled to a bit of luxury in the end, but I don't see that happening to a lot of us Australian elderly now’. The prospect of retirement was something to be feared; not for how they might fill the void left by work but because, as a long-term unemployed teacher explained, ‘if we retire we're moving into total poverty basically’ (Catherine, fifty-eight). When asked about his retirement expectations, a warehousing worker who had worked intermittently since his thirties responded:

As reflected in Larry's concerns about retirement, housing security was a major concern for interviewees in this group. The majority were still paying a mortgage or living in rental accommodation, and some had lost their homes after an extended period of unemployment. An advertising worker who had lost his job during the GFC described his family as living ‘on the edge of homelessness’ after several years on unemployment benefits:

Caught between work and retirement

Interviewees’ accounts of their recent experiences in the labour market suggested that many saw themselves in a kind of Catch-22 situation: on the one hand, they desperately wanted or needed to work, yet, on the other hand, most were pessimistic about finding employment. A software developer who had worked intermittently since the late 1990s described himself as ‘semi-retired’ on the basis that he didn't ‘see getting full-time work at all and [he'd]be lucky to get part-time work’ (Jim, fifty-one). Others characterised themselves as ‘too young to be old and too old to be young’ (Sarah, fifty-eight) or ‘professionally unemployed’ (Diane, librarian, fifty-two), with many doubting higher pension ages would significantly extend working lives as ‘there's a lot of fifty-year olds who are out of work . . . and if you can't employ fifty-year olds, you're sure as heck not going to be having a lot of seventy-year olds in the workplace’ (Dan, laboratory technician, fifty-three). This sense of being caught between work and retirement was reinforced by repeated unsuccessful attempts in the labour market, which often gave rise to feelings of hopelessness and despair:

Finnish research into coping with unemployment suggests that the corrosive effects of joblessness on mental health can be aggravated by ‘never-ending efforts to penetrate the labour market, which in turn lead to exhaustion and deteriorating mental wellbeing’ (Raito and Lahelma, Reference Raito and Lahelma2015: 14). This finding was underscored by the emotional pain many participants described as accompanying unsuccessful attempts to find work:

An experience recounted by a financial professional was not uncommon:

A sense of powerlessness about the future pervaded participants’ accounts of coping with joblessness and underemployment, with several ‘hanging out’ for the Age Pension, although, as an administrative worker in her late fifties emphasised: ‘I've still got to get to sixty-five, that's the issue’ (Sarah, fifty-eight). In the meantime, there was an overriding experience of being ‘in the lap of the gods’ (Neil, mechanic, fifty-five) or ‘lost in limbo’ (Sarah, fifty-eight). This was typified by how another administrative worker (who was forced out of her previous long-term job by bullying) described the rest of her life as being ‘sort of on hold’: