Health Sector - Resource Pack
Contents
1. Introduction 4
1.1 Purpose of this Resource Pack 4
1.2 Target audience 4
1.3 Acknowledgements 5
2. The Health Sector 6
2.1 Background 6
2.2 Scope of the Health sector 6
3. Business case for recruiting and retaining older workers 8
3.1 Impact of demographic change 8
3.2 Cost-saving illustrations 11
3.3 Risks of not changing practices 13
3.4 Measures of success 13
4. How the Health Sector supports older worker retention 14
5. Suggestions for action 16
5.1 Recruitment 16
5.2 Flexible working 16
5.3 Training 17
5.4 Performance management 17
5.5 HR policies and practice 18
5.6 Health and safety 18
5.7 Workforce planning 18
Appendix A: Materials to support future activity 19
Articles 19
Publications by the Department for Work and Pensions 20
Generic slide presentation 20
Case studies 20
Research references 21
Further guidance and support 22
The document has been produced by Capita Consulting (part of Capita Business Services) in partnership with the Employers Network for Equality and Inclusion (formerly Employers Forum for Age and Belief) on behalf of the Department for Work and Pensions (DWP) as part of an Age Positive Initiative called Extending Working Lives. The content contains various resources for use in taking forward the older workers agenda. The DWP’s contact in the future is Carolynne Arfield () who is Employer Engagement Lead within the Redefining Retirement Division.
Please note this pack is for help and information only. It is not an authoritative statement of the law, and future changes in the law may make it gradually less accurate. The Department for Work and Pensions, Capita Business Services and Employers Network for Equality and Inclusion take no responsibility for how you use the information. You should always take professional advice on any specific legal or financial matter.
1. Introduction
1.1 Purpose of this Resource Pack
This document has been designed as a resource pack for Health sector stakeholders. It contains a range of materials (included as embedded objects in the Appendix) developed through working with Health sector stakeholders during the Age Positive initiative Extending Working Lives in 2010/11, together with links to further research and guidance. These can be used to encourage and support professional organisations, employers and others as they address the strategic nature and urgency of age and older worker related issues.
The objective of this document is to provide key stakeholders within the Health sector with the business rationale for continuing to promote and support ongoing activity on the older worker agenda. It outlines the business imperatives for supporting the recruitment and retention of older workers and includes suggestions for ongoing activities that can be adopted by sector bodies and others to address the ageing workforce agenda.
Any of the material included within this Pack can be freely used. It is hoped that the information provided in the Pack will be incorporated into, and used to update material relating to ageing workforce issues on websites and in reports, policy, guides, training materials and other products developed by sector bodies and promoted to employers.
The information contained in this pack was up-to-date on publication. As time goes on, it is hoped that sector bodies will seek to up-date information and statistics to retain currency and relevance.
1.2 Target audience
The target audience for this document is professional and employer-led organisations in the Health sector who have opportunities to influence and support individual employers to consider the issues outlined.
1.3 Acknowledgements
The following stakeholders have been particularly supportive of the Extending Working Lives programme – they all published guidance and articles on their websites and in e-bulletins to alert their members to the changes in the default retirement age and actions they need to consider in managing an increasingly ageing workforce. Their efforts in promoting the older worker agenda are greatly appreciated.
§ NHS Employers
§ Skills for Health
§ NHS Wales Centre for Equality & Human Rights
§ NHS Wales National Leadership and Innovation Agency for Healthcare
§ Independent Health Advisory Service
§ NHS Portsmouth
§ ABM University Health Board
- The Health Sector
2.1 Background
The removal of the default retirement age (DRA) has meant that organisations within the UK need to think differently about how they manage their workforces, in particular the older worker. Since April 2011 employers are no longer able to compulsorily retire their employees on the grounds of age unless notification of retirement had been correctly issued before 6 April. Now employers can only compulsorily retire a worker if they can objectively justify it in their particular circumstances. However, this would be open to challenge at tribunal.
Any employer who dismisses an employee at or over 65 will have to follow a normal fair dismissal procedure based either on the capability, declining competence of the employee, conduct, redundancy, illegality or some other substantial reason.
This raises challenges and opportunities for employers to review their policies and practices within the workplace. However, few older workers are still in employment in the Health sector at age 65. With an ageing workforce, employers will need to maximise the business gains of retaining skilled and experienced workers by developing strategies to increase efficiencies while improving the quality of customer service.
By 2020 almost a third of the UK workforce will be over the age of 50. The removal of the default retirement age (DRA) in October 2011, together with implementation of the Equality Act 2010 raise some critical questions for employers.
Furthermore, recent research[1] by the Chartered Institute of Personnel Development (CIPD) and the Chartered Management Institute (CMI) found that only 14% of managers across the UK workforce considered their organisations to be well-prepared to cope with an ageing workforce.
2.2 Scope of the Health sector
The Health sector represents one of the largest sectors of employment in the UK. In 2010 there were an estimated two million people working in the UK Health sector, which represents just over 7% of all people working in the UK.
The Health sector has an older than average age profile when compared to the whole economy. The reason for this is that many of the roles within the sector require the completion of an approved course of study. Many individuals do not begin employment within the sector until they have completed formal qualifications at degree level and above.
The table below shows the Labour Force Survey age data for the Health sector and the whole economy.
Age profile of the UK Health Sector
The SIC[2] code covering the Health sector is 86: Human health activities. It includes hospital, nursing home, medical and dental practice activities. Although this sector is comprised principally of small businesses (<50 employees), as shown in the table below, by far the majority of employees work for the largest organisation, the NHS. Of the total health sector workforce, it is estimated that over two-thirds (73%) work in the NHS, and less than one-third (26%) work in the independent sector, comprising the small and medium enterprises.[3]
Number of employers of different sizes in health sector
Employer Standard Industry Code / Small(0-49 employees) / Medium
(50-250 employees) / Large
(250+ employees) / Total
86. Human health activities / 49,965 / 3,140 / 795 / 53,900
Percentage / 93% / 6% / 1%
Source: Office for National Statistics - UK Business: Activity, Size and Location, September 2009
- Business case for recruiting and retaining older workers
There are a number of drivers which will lead to an increasing proportion of the UK workforce, including the health sector, being older workers. Instead of being an issue of concern, there is a clear business case which demonstrates that an ageing workforce can improve both efficiency and customer care.
Efficiencies and savings could be increased by:
§ Extending deployment of older workers through flexible working and phased retirement to reduce expenditure on agency staff
§ Reducing premature turnover and phasing replacement costs by retaining older workers in key occupations.
Age diverse workforces that include workers aged over 60 can have 20% higher levels of performance in terms of productivity, enhanced customer service and enhanced workforce satisfaction[4].
There is mounting evidence of the value to be gained from retaining older workers as part of a wider workforce strategy:
§ Older employees experience less burnout and fewer customer stressors. They tend to use more appropriate stress management strategies, suggesting coping strategies that draw on lessons from the past[5]
§ Analysis of McDonald’s performance, productivity and customer data found that in stores employing one or more people over the age of 60, levels of overall customer satisfaction were more than 20% higher than those in stores with nobody over the age of 50[6]
§ For a wide range of jobs productivity does not usually decline until age 70, provided older workers receive the same levels of training as younger workers.[7]
3.1 Impact of demographic change
The number of older workers will increase across the UK at the same time as employers are being encouraged to take on apprentices and recruit from a dwindling population of younger people.
The figure below illustrates the projected percentage change for the different population age groups from a base year of 2011, in 2016 and then cumulatively in 2021.
Figure 1: Percentage change in 2011 population in 2016 and 2021[8]
Similarly, the age profile of the health sector workforce will become older. Figures 2 and 3 illustrate the changes which could occur in the age profile of the health sector workforce in two occupation groups over the next five to fifteen years, assuming that volumes of younger workers entering the workforce remain constant. No account has been taken of environmental factors or of current exit trends.
Figure 2: Estimated percentage impact of time on age profile of GPs, medical and dental workforce[9]
Figure 3: Estimated percentage impact of time on age profile of qualified nursing, midwifery and health visiting staff[10]
The figure below indicates the trend of older employees exiting the health sector.
Figure 4: UK Health sector employment by individual year and working pattern[11]
If the exit pattern from age 55 continues across the sector, the age impact projections indicate risks to future sustainability, efficiency and supply, shortages in key posts, inefficient transitions and an ongoing dependency on costly agency staff, together with the loss of experience and expertise to support the development of new entrants.
The Health sector will need to engage older workers effectively to deliver high quality services to a growing and ageing population in an environment of budget constraints. Wider adoption of flexible working, ‘bank’ and phased retirement models, will be essential to increase the retention of workers aged 55+.
Survey data[12] implies that the sector may not yet be maximising its potential to retain key older workers longer: 37% of employees aged 50-64 in the health sector would like to work reduced hours, but only 13% believe their employer would allow it and only 7% have approached their employer.
3.2 Cost-saving illustrations
To demonstrate the potential for cost savings through improved retention of workers aged 55+, we have used data from published sources to offer illustrations. We recognise that health sector lead organisations are much better placed to estimate these savings.
3.2.1 Staff turnover
There are significant costs associated with staff turnover. The Chartered Institute for Personnel Development (CIPD) has estimated that the average cost to an employer is £5,800 on each occasion that an employee is “lost”.[13]
Using this figure along with a health sector wastage rate of 2% and NHS staff turnover rate of 11%, it has been estimated that workforce movement costs the sector some £1.36bn per annum.[14]
By applying the CIPD estimated staff turnover cost of £5,800, it can be estimated that for every year 1% of staff in the health sector aged 55+ remain in employment, a potential short-term saving of £22 million could be generated[15]. The duration of the saving could span several years depending on the period of retention and the extent to which the sector develops and embeds a new trend in later phased retirements.
3.2.2 Use of agency staff
There is considerable impetus in the sector for employers to reduce their agency costs by moving to “a planned and flexible use of substantive and bank staff”[16]. Retaining older workers on a flexible basis could further reduce the need for agency expenditure.
To demonstrate the potential scope for savings, an illustrative scenario using published information on nursing can be compiled:
§ 40,722 nursing, midwifery and health visitor employees in England are aged 55+, out of a total 352,104[17]
§ The premium cost of framework agency nurses may be about 8%[18]
§ Applying an 8% premium to the cost of a mid-band 5 nurse at £31,920[19] would imply that the cost of a framework nurse is around £34,500, i.e. an additional £2,580
§ Agency expenditure as a proportion of total nursing, midwifery and health visitor staff costs in 2009/10[20] was 2.9%. If it is assumed for the purposes of this illustration that all agency staff are employed through procurement frameworks with a premium rate of about 8%, this would suggest that approximately 2.7% nursing staff are employed through frameworks[21].
For each 1% of the nursing, midwifery and health visitor workforce aged 55+ working flexibly for an additional year in place of framework nurses, approximately £1 million could be saved in that year in respect of framework premium.[22]
If 10% of the nursing, midwifery and health visitor workforce aged 55+ was to work flexibly for an additional year in place of framework nurses, then agency nursing staff could be reduced by 43% in that year with savings in reduced premium costs of around £10.5 million.[23]
The duration of the saving could extend for several years depending on the period of retention and the extent to which the forward workforce strategy develops and embeds a new trend in later phased retirements.
In addition to savings in agency premium costs, there are efficiencies to be gained by reducing the amount of time taken to arrange, induct, train and supervise temporary staff, as well as productivity and quality gains from continuity of knowledge and skills alongside familiarity with work culture and behaviours.