The Ageing Workforce - what effect does employee age have on workplace performance?

Despite a significant increase in the number of people aged over 55 in employment in recent years, some employers remain reluctant to increase the share of older workers they employ, for fear of a negative effect on financial performance. A new study finds this fear to be unwarranted.

An ageing population, and growing labour force participation by older people, means there is a shift in the age profile of those in employment in almost all developed economies.

The UK is no exception. There have been sharp increases in economic activity rates among those aged 55 or more over the past two decades, and much of the recent growth in employment has been in this age group. These trends are expected to continue, with one in three working-age adults expected to be aged 50 or more by 2022.

In recent years, the UK government has engaged in a series of campaigns to challenge the stereotyping of older employees, and to emphasise the potential benefits to employers of employing older workers, and of adopting flexible approaches to work and retirement. That such campaigns are needed reflects residual uncertainties among some employers about the net benefits of employing from this demographic.

In the paper Does employing older workers affect workplace performance? researchers examined the relationship between the age composition of the workforce and workplace performance to see whether these perceptions are justified. Specifically, they consider whether changes in the proportion of older (and younger) workers employed at the workplace, as well as changes in age diversity, are associated with change in workplace performance.

The study uses panel data for private sector workplaces from the nationally representative British Workplace Employment Relations Survey to explore whether changes in the age composition of the workforce are associated with changes in workplace performance. The data covered the period 2004 to 2011. Workplace performance is measured according to managers’ subjective assessments of workplace labour productivity, quality of product or service, and financial performance.

In general, the study finds there are either weak or no associations between changes in age shares, changes in age diversity, and workplace performance over the period. There is some evidence that a higher percentage of older employees, and indeed a higher percentage of younger employees, results in a reduction in labour productivity, but these raw associations are attenuated somewhat after controlling for aspects of human capital, and overall they do not carry through to financial performance.

By investigating the association between workforce age composition and a range of workplace performance indicators (labour productivity, product or service quality and financial performance) the paper goes beyond much of the existing research, which typically focuses only on productivity effects.

The evidence indicates that age-related workplace demographics do not play a major role in determining the success of private sector workplaces in Britain. These results suggest that employers should be open to increasing their employment of older workers.

The accepted version of the paper Does employing older workers affect workplace performance? is available on City Research Online. The paper has been published in Industrial Relations.

Author profiles:

John Forth - Cass Business School

Alex Bryson - University College London

Helen Gray - Institute for Employment Studies

Lucy Stokes - National Institute of Economic and Social Research