Workplace inequalities make it more difficult for women, disabled people and those from ethnic minority backgrounds to save for a comfortable retirement, according to Aideen Young, senior evidence manager of research, impact and voice at the Centre for Ageing Better.
In a blog post, Young discussed how the Centre for Ageing Better, State of Ageing report 2023/2024 highlighted the inadequate pension provision and low levels of savings that put many people in the UK at risk of financial insecurity and even poverty in their later lives.
She said: “Labour market inequalities across the life course play a key role. They mean that some groups have lower than average employment rates, are more likely to be self-employed, to have fragmented work histories, precarious work and fewer working hours and to experience pay gaps linked to their ethnicity and/or gender.
“All of these can lead to lower than average pay which in turn impacts ability to save, including into a personal or private pension, and determines whether the auto-enrolment threshold for workplace pensions is met. These factors also impact national insurance contributions with a knock-on effect on the amount of state pension received.”
Workplace inequalities
Young pointed out women, disabled people and those from ethnic minority backgrounds are the most susceptible to workplace inequalities.
She discussed how older women bear the consequences of fewer working hours and fragmented work histories across the life course due to caring first for their children, and later for other adults with 20 per cent of 55-59-year-old women acting as unpaid carers.
Young also highlighted how the gender pay gap has also been a factor for most women in the workplace.
Disabled and people with long-term health conditions are more likely to be out of work than the population in general, according to Young.
She said: “Sickness, injury or disability is the reason most commonly given by people aged 50-64 for being out of work but almost four in ten of these would like a job. So, while many are unable to work, some are prevented from doing so by disablism and working environments that don’t accommodate them.”
Young also expressed that people from minority ethnic backgrounds suffer multiple disadvantages in the labour market, because of both direct discrimination and indirect, structural factors, such as poor neighbourhoods, that create and maintain disadvantage.
According to Young, people from ethnic backgrounds are more likely to be employed in “non-professional” occupations with lower pay and are more likely to experience longer periods out of work.
Centre for Ageing Better data showed the employment rate of 50-64-year-old Bangladeshi men is almost ten percentage points lower than average for the age group.
Young also said people from ethnic minority backgrounds are subject to the ethnicity pay gap with women of Bangladeshi, Pakistani and mixed White and Black Caribbean heritage being paid 14.7 per cent, 11.8 per cent and 10.6 per cent less respectively than white British women.
“These workplace inequalities are writ large in the poverty data. These groups have the highest rates of poverty, are all under-pensioned and more likely to have no savings than the average,” she added.
Ageism
Young believed the impact on older workers themselves needed to be considered as well.
She said: “Once out of the labour market, it is much harder for older workers to get back in because of persistent ageism and working conditions that are not suited to the needs of older workers.
“People in this situation are therefore at risk of falling into poverty in later life, their income having dried up with many years still to go until they can collect their meagre state pension.
“This is particularly relevant now because of the large numbers of older workers who fell out of work during the COVID-19 pandemic with employment levels of people aged 50-64 remaining lower than before March 2020.”
Combatting inequalities
Young pointed out that historically, rising employment for working-age adults was one of the keys to declining levels of pensioner poverty.
Therefore, Young said interventions to address worklessness among people in their 50s and 60s was essential.
She said: “This should include back-to-work support tailored specifically for older workers and age-friendly workplaces that support longer working lives.
“We can also reduce the impact of labour force inequalities across the life course by lowering both the age and lower earnings threshold for auto-enrolment into workplace pensions, which currently stands at 22-years-old and £10,000 per year, thereby nudging lower earners to accrue pension savings.”
Young also said there was a need to provide those with caring responsibilities the ability to work flexibly.
Last week (April 6) the Carers Leave Act 2023 came into effect which has given employees the entitlement to take up to one week of unpaid leave every 12 months to give or arrange care for a dependant.
Young said she would like to see this initiative taken further with all workers given access to ten days’ paid carer’s leave and up to six months’ unpaid carer’s leave if needed.
“This would better equip those with caring responsibilities to balance work and care and ultimately stay in work for longer, where desired or necessary,” she added.
Young said she wanted to see workplaces accommodating people with disabilities or long-term health conditions so that people can remain in the workplace and allow them to earn and save for the future.
She also wanted to see a national race equality strategy which addressed the structural factors that trap people from minority ethnic backgrounds in poor work with low pay.
She said: “With an increasingly diverse older population, growing health inequalities and a state pension which doesn’t provide even a minimum income standard in retirement, levels of pensioner poverty and inequalities within the pensioner population are at risk of increasing in the future unless action is taken."
alina.khan@ft.com
