As flexible working expands, we need a debate on retirement

THE past decade has seen a rapid expansion in flexible working arrangements of many kinds.

Indeed, flexibility in all its forms is now an integral part of the modern employment relationship in the UK and an important source of competitive advantage.

Our flexible labour market has proved its worth again during the recession. While unemployment has inevitably risen, and is now nudging 2.5 million, the unprecedented co-operation between employers and employees through measures such as short-time working, hiring freezes and moderation in pay has helped to minimise job losses.

Furthermore, businesses of all sizes and from all sectors tell me that the growth of the flexible part of their workforce will be a key part of their resourcing strategy over the coming decade.

But employers recognise that flexibility needs to work for employees as well as the business. The right to request flexible working, for instance, has been a significant success because it encourages employees and employers to take ownership of both the work the employer needs done, and the balance people need between work and other responsibilities.

The CBI supported the right to request flexible working and its extension to carers and to parents of children under the age of 16 – covering an additional 4.5 million employees – when it was based on good evidence.

The essential feature has been the balance between the needs of the employer and the employee. On the basis of successful experience, growing numbers of employers have voluntarily extended the right to request flexible working to their entire workforce.

The new Government plans to extend the right to request to all employees under the current framework, and while this may seem a logical extension, it is vital that the success of the current system is not undermined by these changes.

Employers must be given sufficient time to adapt and get their policies in place.

And the Government must provide clear guidance on how to prioritise requests from employees, since there will inevitably be occasions when not every request for flexibility can be met and some employees will have to be given priority over others.

Another plank of the Government’s employment agenda is to increase participation rates in employment. Boosting participation can mean encouraging older individuals back into the workplace, and retirement policies are likely to be examined carefully to see if they remain fit for purpose.

People are living longer, healthier lives – this is something we should celebrate. And the trend changes the way we think about work and our working lives: projections by the OECD suggest that almost one in 10 of the UK labour force will be over 60 by 2030.

Businesses value the skills and experience of older members of the workforce and are increasingly flexible about how they manage employees who want to delay retirement.

In future, more people will want to work on and employers will increasingly welcome that. It is equally likely that the explosion in flexible working we have seen in the past few years will help people stage their retirement over a longer period.

Working longer is an integral part of coping with the demands that our ageing society will place on pension provision.

These developments are welcome, but everyone will want – and need – to retire from work at some stage. We will still require a framework for retirement which includes a constructive discussion between employer and employee, and a hook on which to hang that conversation. Currently, this is delivered through the right to request continuing to work that all employees have when approaching retirement age, but it would not be possible without a set default retirement age.

This is not a philosophical argument but a practical issue: the default retirement age (DRA) is an essential part of employment practice, enabling businesses to plan and develop their workforces.

In its absence, workforce planning, staff development and business innovation would become harder – and there would be an increased risk of age- based litigation. Managing the transition to retirement would be more difficult for firms and employees, who might eventually have to be dismissed on competence grounds even where they have a long history of good work with the company.

For businesses to operate effectively, an alternative framework will have to be developed to either remodel or replace the DRA. The Government must address the practical concerns of business in this area, as a vacuum will create uncertainty for employers and employees. We need a debate about how people retire and what the correct legislative structure is to smooth the transition.