A Coming of Age: Constructive Scenarios for a Shifting Population Linda Boyes and Jim McCormick Scottish Council Foundation

Scotland’s changing population Beyond the 5 million question: changing age composition and distribution Beyond the 5 million question: changing age composition and distribution Modest natural decline through births/deaths balance with rapid ageing from 2020s Modest natural decline through births/deaths balance with rapid ageing from 2020s Increased longevity but healthy life expectancy slower to improve Increased longevity but healthy life expectancy slower to improve Workforce set to age steadily and drop by 5% from 2020s s Workforce set to age steadily and drop by 5% from 2020s s

Proposition Scotland can secure a prosperous future, perhaps because of rather than despite these trends.

Constructive Responses Higher Fertility: best bet but most complex of the factors Higher Fertility: best bet but most complex of the factors Higher Migration Higher Migration Fuller Employment Fuller Employment Sustainable Working Lives Sustainable Working Lives Phased Retirement Phased Retirement

Higher Migration Demographic ‘plug’ or strategic approach to future workforce? Demographic ‘plug’ or strategic approach to future workforce? Initiatives like Fresh Talent could slow the decline caused by natural population change… Initiatives like Fresh Talent could slow the decline caused by natural population change… But do little to alter trend in support ratio But do little to alter trend in support ratio 0.3 million net new migrants of working age (8,000 p.a.) by 2040s could slow workforce ageing and reduce the fall in support ratio by half 0.3 million net new migrants of working age (8,000 p.a.) by 2040s could slow workforce ageing and reduce the fall in support ratio by half

An ageing workforce One million people in the UK work beyond retirement age, but more aged 50-60/64 are unemployed One million people in the UK work beyond retirement age, but more aged 50-60/64 are unemployed Raise employment rates through sharper focus on helping non-employed (back) into the workforce Raise employment rates through sharper focus on helping non-employed (back) into the workforce Facilitate sustainable work: choices for those who need or want to carry on working flexibly Facilitate sustainable work: choices for those who need or want to carry on working flexibly

Fuller Employment By 2043, working age population projected to fall to 2.6 m from 3.1 m By 2043, working age population projected to fall to 2.6 m from 3.1 m Aim for a ‘best in Europe’ Total Employment Rate (TER) by 2040 of 80% (6% above recent trend) Aim for a ‘best in Europe’ Total Employment Rate (TER) by 2040 of 80% (6% above recent trend) An additional 140,000 more people in work than projected: a stable share of employees in the total population An additional 140,000 more people in work than projected: a stable share of employees in the total population

Later working: the Turner Recommendations Step down from full time work to part time work to full retirement Step down from full time work to part time work to full retirement Stronger focus on occupational health Stronger focus on occupational health Stronger focus on education and training of older workers Stronger focus on education and training of older workers Measures to allow those with poor health or lower life expectancy to leave the workforce earlier than others (e.g. variable ages to claim state pensions) Measures to allow those with poor health or lower life expectancy to leave the workforce earlier than others (e.g. variable ages to claim state pensions)

Sustainable Working Lives Flexibility across whole working lives Flexibility across whole working lives Quality and productivity at work Quality and productivity at work Informed personal choice Informed personal choice Practical steps towards asset-building Practical steps towards asset-building Phased approaches to retirement Phased approaches to retirement Crediting in the lifetime low paid Crediting in the lifetime low paid

Improving the quality of work New health at work agenda New health at work agenda Job satisfaction Job satisfaction The psychological contract: contribution/reward balance, trust, challenge The psychological contract: contribution/reward balance, trust, challenge Being measured on results Being measured on results Terms and conditions of work Terms and conditions of work

Paid Leave Plans Asset accumulation through work: saving time and money Asset accumulation through work: saving time and money Deferred salary and leave initiatives: choice of currency to suit changing circumstances Deferred salary and leave initiatives: choice of currency to suit changing circumstances Time out from work planned and funded in advance Time out from work planned and funded in advance Beyond unpaid career breaks Beyond unpaid career breaks

Possible Benefits Reduced risk of stress and early exit from the labour force Reduced risk of stress and early exit from the labour force Improved retention of older workers and ‘stretching’ of working life Improved retention of older workers and ‘stretching’ of working life Time out when people most value it Time out when people most value it Extending choice and autonomy as employees ‘save’ from their earnings and/or leave Extending choice and autonomy as employees ‘save’ from their earnings and/or leave Extended planning period allows employers to arrange cover at no additional cost Extended planning period allows employers to arrange cover at no additional cost

Conditions to make time out work Shorter periods of deferral and leave Shorter periods of deferral and leave Employer commitment to the process Employer commitment to the process Ensure suitable cover and continuity Ensure suitable cover and continuity Enable lower paid employees to benefit – a case for matched savings? Enable lower paid employees to benefit – a case for matched savings? Security of investment and guaranteed return to work (pay and conditions) Security of investment and guaranteed return to work (pay and conditions) Portability: transfer savings or money back Portability: transfer savings or money back

Phased retirement Retirement as a process rather than a ‘sharp exit’ Retirement as a process rather than a ‘sharp exit’ Distinction between ‘retiring’ from main job and leaving the workforce Distinction between ‘retiring’ from main job and leaving the workforce Distinction between ages of retiring and drawing state pension Distinction between ages of retiring and drawing state pension Assisting more people to stay in work longer: working life may be ‘stretched’ but less intense Assisting more people to stay in work longer: working life may be ‘stretched’ but less intense

Options for phased retirement Reducing hours with no loss of pension entitlement Reducing hours with no loss of pension entitlement Ability to combine paid work with the same employer with partial pension income Ability to combine paid work with the same employer with partial pension income Enhanced leave (e.g. Seniors Leave, Finland) Enhanced leave (e.g. Seniors Leave, Finland) Volunteering without loss of pay in the pre- retirement period Volunteering without loss of pay in the pre- retirement period

“We should abolish the word retirement and replace it with something more appropriate and meaningful that best describes later life “