Salary survey autumn 2006: the age of acceptance

Ageism is an issue that has increasingly pervaded the workplace as industries have become ‘younger’. It has cut short many careers and costs business valuable skills, knowledge and resources, not to mention inflicting hard times on highly-skilled workers still in their prime.

A survey, carried out by the Chartered Institute of Personnel Development before recent legislation came into force, found that age discrimination was a significant problem in the workplace for 59% of respondents who said they had been disadvantaged because of their age.

This autumn, however, saw the introduction of the UK’s first ever legislation directly outlawing employers and staff from discriminating on the grounds of age, representing the most significant change in employment law for many years.

To say there was resistance to the changes is an understatement. Some commentators suggested the legislation would straitjacket business because among other requirements, the law imposes a national default retirement age of 65, making compulsory retirement below age 65 unlawful unless they are exceptionally justifiable circumstances.

The Accountancy Age/Robert Half Finance & Accounting autumn salary survey 2006 suggests less public animosity to the new discrimination laws – at least in the accounting sector – than portrayed in the media ahead of the law’s implementation.

When asked if the new law would make it more difficult to find the right people, almost half of more than 3,000 respondents said ‘no’. Only 11% of accountants said they believed the law was restrictive and would lengthen the selection process. The 37% of accountants who said it would make hiring ‘somewhat’ more difficult, said they weren’t overly worried about the changes.

John Davies, head of business law at ACCA, says: ‘For years it’s been accepted that certain positions in an organisation are effectively reserved for people of a certain age range. That that sort of compartmentalisation of positions based on age will now be illegal will help infuse a whole new modus operandi into recruitment. People will be able to compete on skills, not age now.’

Our findings are positive given that estimates put the costs to the economy at between £19bn and £31bn a year through lost output because of age discrimination.

That said, our survey findings also showed an overwhelming majority say the new age discrimination legislation leaves employers open to more lawsuits.

But of those who thought the law would lead to more litigation, the majority attributed their negative forecasts to ‘the society we live in rather than the specific law’.

A third of respondents were more optimistic saying their employers had the necessary processes in place to ensure they avoid litigation.

Perhaps more promising for the discriminated is the view taken by the majority of accountants (48%) that the law is nevertheless an important one.

But well over a third said that they didn’t think it would make any difference to employers’ recruitment processes in reality, indicating that prejudice would prevail in the workplace.

Worse still, 13% said they thought the law was a complete waste of time and money – a finding that won’t be good news to either those at risk of workplace age discrimination or those campaigning to combat it.

The results showed more concern over the new legislation in the Home Counties compared to Scotland, where a mere 8% of accountants polled said the new laws were restricting. In the Home Counties, Scotland and the North of England, the level of concern over the potential for litigation because of the new age discrimination law rose to 19%.

The dearth of accountants in the UK however means that the sector is less likely to ignore older skilled workers. Davies says: ‘Employers are always looking for skilled accountants. No-one’s suggesting there are too many accountants here. There’s still a lot of work for accountants.’

As far as retirement is concerned, the survey revealed that almost two-thirds of accountants aren’t in favour of a compulsory retirement age.

Still, the majority of organisations continue to operate a fixed retirement age policy, according to research carried out by the CIPD last year, although many employers said they had no mandatory retirement age and operated a flexible retirement policy.

More positively the CIPD’s annual recruitment, retention and turnover survey also revealed that some 70% of employers ‘are actively seeking to recruit people aged between 55 and pension age’. Another 31% are looking to recruit people who are already entitled to a state pension.

Skills shortage

An acute skills shortage in the accountancy business has in part stifled the industry’s growth over the past few years. Despite this shortage, our survey shows British accountants are overwhelmingly against companies hiring accounting and finance professionals from overseas as a way of enhancing skills, with an emphatic 94% of more than 3,000 UK accountants saying they didn’t believe companies should look abroad.

Accountants based in Manchester and Guildford were the most fervently against companies adopting a proactive policy to overseas recruitment to enhance skills. Irish accountants pronounced themselves unanimously against the idea, with 100% of those who responded saying ‘no’. More men than women were opposed to the idea with 95% and 92% respectively.

Resistance is futile, however. Recruiters say that the recruitment situation in the UK is so dire that the Big Four firms are proactively poaching staff from their associated firms in central and eastern Europe. Russian firms are also actively poaching staff from central and eastern European firms to fill demand and fuel a booming economy.

Tony Osude, head of business partnerships at ACCA, says that overseas accountants are recruited more for compliance jobs which are less attractive to UK accountants because they are increasingly seen as offering less career progression prospects.

‘Those from overseas are happy to accept those jobs even though they are limited in career terms,’ Osude says.

At present to resolve the workload associated with Sarbanes Oxley compliance for European companies with a dual US listing, accountancy firms are hauling US staff across the Atlantic to fill skills gaps in European firms.

Despite UK accountants’ apparent resistance to overseas recruitment, a recruitment survey by ACCA found that 79% of respondents either agreed or partly agreed that there would be a shortage of talented finance professionals to meet the needs of business in the future. To encourage growth, staff will have to be found from somewhere.

Two-thirds of respondents to our salary survey, however, said there was a noticeable skills gap with newly qualified accountants.

The results should further worry employers who are struggling to match recruitment with the demand for work.

The government has come under repeated fire for failing to arm students with the skills that UK industry needs. This summer a report by the Confederation of British Industry revealed some startling statistics on basic skills. According to CBI research, one in three employers has to send staff for remedial training to teach them basic English and maths skills they did not learn at school. The business organisation, which represents around 240,000 companies employing around a third of the private sector workforce, has called for urgent action to tackle these shortcomings.

As if business needed further evidence of their concerns, our findings show that only 8% of accountants believe that graduates are well prepared to start work. Communications skills and basic literacy, spelling and numeric skills were cited as the areas where skills are most lacking with 22% and 19% identifying them as areas of concern.

The composition of the British workforce could yet change more radically as the battle for skilled staff continues in the accountancy profession. Recruiters Joslin Rowe found that Polish accountants are already beginning to pick up the slack in the UK, as companies cast their net wider to fill the skills gaps in accountancy.

The recruitment company said the ‘chronic shortage of qualified accountants in the UK’ was creating opportunities for those from overseas.

Recent Tenon Forum research has shown that small and medium-sized enterprises are backing the big firms in wanting to attract more overseas staff. Some sectors appear to be employing more immigrant labour than others, in part because of their work ethos, but also because they can’t find the skills locally.

So far, however, according to our research, only 21% of respondents’ companies regularly hire overseas workers. One third said there were no overseas workers in their teams at all, while 44% said that although their companies did not actively hire overseas workers, there was a mix of nationalities in their offices.

Those figures are likely to change if, as is predicted, the financial services and accountancy sectors continue to flourish over the coming years. UK accountants will just have to get used to working in a more multicultural environment.