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The Bottom Line

Evan Davis gets to the heart of the big finance stories at The Bottom Line.

‘The power of technology’ and ‘How long is long in years of service in the same organisation’ are the twin themes of the latest BBC/Open University The Bottom Line programme. Evan Davis's three guests are drawn from General Electric International, SES Global, which brought us the Astra broadcasting satellite system, and Ford Europe. The central thrust of their argument about the power of technology is that partnerships with the state are crucial in enabling technological change and innovation. The guest from SES Global, echoing the Open University‘s new Vice Chancellor, suggested that technology is not enough in itself: it is about the role of processes and people engaging in entrepreneurial and innovative activity. The rider should have been added to all three guest contributions that the love of the “new” does not preclude the “old”. That is, many of the technologies their companies deal in are based on “old” technologies, including the internal combustion engine and the aero engine. Indeed, the inspiration for Astra came from the first Soviet Union satellite, Sputnik, launched in the late 1950s.

BBC Micro in Broadcasting House window.
Picture © copyright Rain Rabbit, used under Creative Commons licence.

The fixation with the new informs every society as the art historian and critic, Robert Hughes, wrote and narrated in his 1980 television series entitled The Shock of the New: Art and the Century of Change. In the accompanying book, Hughes examined the development of art and culture from the late 19th to the late 20th century: the period of what is known as modernism. Essentially, modernism is a view of the world that posits the progress of science and technology and its underlying culture as the organising principle of rational modern society. The early proponents of modernism proclaimed that it had dramatically changed the world in a very short period.

The late architectural writer, Reyner Banham, was the author of the book, Theory and Design in the First Machine Age. For Banham, the First Machine Age was ushered in by the invention of electricity which created the conditions for innovations like the telephone, the gramophone, the washing machine, etc. The Second Machine Age, starting around the 1960s, is characterised by mass production techniques producing electronic devices, which are consumed universally and symbolised by a single source of mass communication – the television. The Third Machine Age can be said to have started with the invention of the personal computer and the mobile. Whether the Internet represents a fourth age or a fifth Kondratieff wave (named after the Soviet economist Nikolai Kondratieff, who developed the idea of 50 year cycles of technological innovation) is open to question. But, despite the recent febrile claims that we live in a weightless economy, it is the mass of human interaction with technology that appears to be the central condition of our species.

This truism leads us to the question of employment longevity. There have always been claims that how we organise our economy is a break with the past. Labour market flexibility, portfolio and virtual workers are part of the heady stuff reported by journalists every day as though it was the global reality of the contemporary work environment. Unfortunately, journalists too frequently psychologically externalise their own experience onto everyone else. My grandfather was a flexible worker: he was part of the casual labour system at Southampton Docks at the start of the 20th century – he worked when he was chosen from the queue of men similarly seeking a day’s pay. My father worked for 30 years for a nationalised industry that, in the 1950s, threatened to sack all the staff at the engineering base on a Friday night and re-employ them on inferior contracts on the following Monday morning: flexibility is nothing new.

The average length of employment in the same company is 5.6 years in the UK, yet there appears to be a cultural aversion to long service in this country as though it was antediluvian. It was heartening to hear that the three guests on The Bottom Line had been with their companies for a long time and that a third of Ford workers had spent twenty-five years there. In a society in which there are more 60 year olds than 16 year olds, it is doubly curious. Moreover, the loss of corporate and policy memory was shown to almost devastating effect at the onset of the financial crisis. In many important sectors of the economy, experience is at a premium. Yet discrimination in the workplace and too strong an emphasis on the beauties and beatitudes of new technology, sui generis, and every associated ‘nouvellle vague’ blights all our lives. Ageism like any form of short or long discrimination is not rational. More importantly, it is not right.

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About the author

Leslie Budd is Reader in social enterprise at The Open University Business School. He is an economist and has written extensively on the relationship between regional and urban economics, and international financial markets.

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Money Programme

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A lifetime of experience in computer based accounting systems did not help Jen Howell when she went looking for a job in her mid-50s. After months of fruitless searching and job interviews that focused on her age not her skills, she decided to return to what she knew best, not as an employee but as a self-employed sole-trader. However, she could not rely on attracting a steady stream of clients from the large organisations where she used to work. Transforming this challenge into an opportunity, Jen diversified into general IT training and book-keeping services for fellow small businesses and self-employed. She knew that most small businesses detest preparing annual accounts and, from that insight, 'Books in Boxes' was born. Clients bring all their receipts and invoices in boxes and Jen turns the mess into books of well-kept accounts. Jen is now pushing the official retirement age but is still going strong, actively recruiting clients through accountancy service websites.

Similarly, Mike Crisp hit strong age barriers when he began job-hunting in his mid-50s following a 4-year bout of late-career higher education. With good experience as a RAF technician followed by years as a systems engineer in the computer and aircraft industries in Britain and Saudi Arabia. On returning to Britain he decided to get the university education that he had missed when young. Instead of his degrees in law and psychology unlocking the job markets for him, however, he found it hard to get a job. Impressed by an Australian business that provided house renovation and maintenance services for an affordable set fee, Mike founded HouseHubbies when he was aged 58. Five years later the firm was thriving, having opened two new sites in the Manchester and Staffordshire areas as well as employing Mike and nine other people. 

These two stories of age-related barriers prompting late life entrepreneurship reflect a growing trend. A drop in birth rates and longer life-spans due to increasingly more effective health care means the populations of most developed economies are ageing. At the same time, global competition and technological change, plus a perception that it is hard to re-train older workers, have skewed demand in the jobs markets towards a diminishing proportion of younger workers. This is leading to a steady leakage of experience-based knowledge and skills from the labour force and a worrying rise in the ‘dependency ratio’ – the proportion of working people supporting, through their taxes, the economically inactive. Those aged 50 or more account for some 70 per cent of the economically inactive. In 2004, the National Audit Office estimated that the then 2.7 million people between 50 and State Pension Age (SPA) who were not working were costing the UK economy £18-£31 billion in benefits payments plus lost output and taxes.

It is not surprising, therefore, that governments across Europe are concerned to increase employment and entrepreneurship among the post-50s by as much as they can. In Britain, the Performance and Innovation Unit (PIU) 2000 report, Winning the Generation Game, recommended a selective raising of the pension age (which is now underway) and legislation to prohibit age discrimination at work, in the job markets and elsewhere (implemented as the Age Discrimination Act in October 2006). Employment rates have improved. Increasing the participation of ‘seniors’ in the labour market, is also an important part of the EU 2005 Lisbon Strategy. EU studies confirm that overall employment among seniors (people aged 50 -64 years) in the enlarged EU rose from 37 per cent in 2000 to 43 per cent in 2005. Britain was among those that had reached or exceeded its 2010 target. However, the picture in relation to self-employment and entrepreneurship was not so positive.

There are two main sets of reasons why older people decide that they should keep working – financial necessity and satisfaction and the need to be active. With regard to the first set, the most common financial pressure comes from inadequate pensions (the Pensions Commission suggests that about 11.3million people are not saving enough to fund their retirement).

The post-50s self-employed entrepreneurs come from three main stands:

• existing self-employed and small business owners who decide to continue to work
• high-earning ex-employees who have high levels of education or professionally training, with a strong work history, good work ethic and well motivated, who choose to continue
• those with lower incomes working through necessity.

"only 10% of post-50s who lose their jobs find paid-employment"

With regard to this third category, it is worth noting that only around 10 per cent of post-50s who lose their jobs find paid-employment after fifty so, even if they just drifted into self-employment, they are still more entrepreneurial that some 90 per cent of older people.

For those looking to continue working, help and support is available from various organisations who have started working in this area. For example, PRIME is a not-for-profit organisation established in 2001 by the Prince of Wales which specializes in assisting the self-employed. TAEN is an independent charity with a wider remit: all aspects of age and employment. These organisations, like their peers, offer advice and resources to help people who feel excluded from employment by their age.

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• Investigating entrepreneurial opportunities course
• Take it further - sharpen up your business skills
• Join the discussion - why can't older workers get jobs?
• Too Young to Retire - Ageing entrepreneurs are still rocking
• What makes an entrepreneur? - take a test to discover if you’ve got what it takes
• Just Do It - Bobby Friction asks Alan Sugar and others how to make a success of your business
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About the author

Colin Gray is Professor of Enterprise Development at the OU Business School, where he is responsible for research and teaching in small business and entrepreneurship.

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