Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
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24 | 23rd - 29th January 2015 | utILIty WEEK Operations & Assets Market view T he ageing workforce is here to stay. It is a product of demographic change driven by baby booms, people living longer, the changing nature of pension pro- vision and the extension of discrimination laws to encompass age. Whatever your perspective on the issue, its implications require careful management and the subject will be high on the 2015 boardroom agenda, especially for utilities. In its 2014 Strategic Directions Report, Black & Veatch identifies the ageing workforce as the seventh most important issue facing the water industry in the US. According to this survey, 30-50 per cent of industry employ- ees in the US are due to retire in the next ten years. The position is similarly critical on this side of the Atlantic, where the Economist Intelligence Unit has forecast that the age- ing workforce will be a top three issue for UK employers across sectors by 2020. The threat posed by this trend is magnified for util- ity companies by a tendency for employees to be long serving. Therefore the collective loss of expertise and experience from this dynamic will be colossal. Set alongside the increasing complexity of regulatory require- ments and technological developments, this is expertise the industry can ill afford to lose. The law protects employees from dis- crimination on the grounds of age, but this is really just protection against employer misconceptions and prejudice against older workers. In fact, older workers are generally reported to be more reliable and loyal, as well as carrying valuable experience. There is no evidence that age significantly affects cognitive function for a fit employee up to their late 70s. While it is true that older workers can suffer from ill health – and if they do they are likely to be absent for longer – this is offset by a lower incidence of absence and accidents. The law against age discrimination is not going to solve the skills shortage but it might play a part in changing attitudes towards older workers. While employees are free to retire as before, they will be less inclined to do so as the state pension age increases and yields from pension pots decline. There is nothing to stop employers from seizing an opportu- nity and planning for an ageing workforce by taking a more creative approach to the tim- ing and the concept of retirement. Indeed, employers should treat their older workforce as any other employee group and invest in training and support irrespective of age. Flexibility is increasingly common in relation to working practices and employees do not forfeit legal rights by adopting flexible working. Legislation governing the taking of pension benefits provides latitude for crea- tivity and employers can flex remuneration and benefits packages to match. Indeed, they will need to do so both in relation to cost and suitability. National Insurance contribution breaks above retirement age are attractive and it may be that tax laws will change in response to demographic change. Employment laws encourage flexibility by removing barriers to employee requests but employers will need to be proactive and they will need to wean male employees, in particular, off traditional assumptions about working longer hours and receiving more pay. There is no doubt that human resources professionals have a major communications role to play, breaking down stereotypes and advocating the type of workplace environ- ment in which older workers can feel com- fortable and are attracted to defer retirement in whole or part. For some, this will be a challenge. Employers may still be getting to grips with the subtleties of shared parental leave, let alone thinking about draing a policy for grandparental leave. If the consequences of age become a fac- tor, then these can be dealt with by perfor- New tricks and old dogs Michael Ryley and Noel Walsh explore the new management, recruitment and HR policy approaches utilities will require if they are going to make an ageing workforce work to their advantage. Data used from ONS, Labour Force Survey Microdata, 2010, http://www.esds.ac.uk/findingData/lfsTitles.asp Share of workers aged 45-59 years of age Energy sector All other sectors Share of workers aged 30-34 years of age Share of workerS in the energy Sector on average aged 45 - 49 and 60-64 compared to other SectorS 40% 35% 30% 25% 20% 15% 10% 5% 0%