27 January 2022

The grey resignation: why the disappearance of older workers is an economic risk

There are now 208,000 fewer over-50s in the UK’s labour market than there were before the pandemic, and that’s a problem.

By Emma Haslett

Illustration by Gary Waters / Ikon Images

Since the start of the pandemic, people currently in their 50s, 60s and 70s have begun to vanish from the workforce at an alarming rate, and no one can come up with a definitive explanation.

Figures released last week by the Office for National Statistics (ONS) showed another rise in the number of people falling into economic inactivity – those who are not employed or looking for jobs. A large proportion of that group is made up of older workers. Analysis by the Centre for Ageing Better indicates there are now 208,000 fewer over-50s in the UK’s labour market than there were before the pandemic.

The baby boomer generation holds a disproportionate share of wealth in the UK – one in five over-65s are millionaires – and for many of those older, wealthier workers, the pandemic may have been a pause that turned into an early retirement, the lure of a life of pottering having become too great to ignore. The economy itself would have helped, as asset prices rose.

“If they’re home-owners, they would have made good money on the housing market,” said Yael Selfin, chief economist at KPMG, noting also that some boomers “will have had a defined benefits pension” – offering a healthy fixed income in retirement – to fall back on.

But there may be other, less positive factors at play. Lyndsey Simpson, the founder of 55 Redefined, an organisation that seeks to help over-55s who want to return to the workplace, said there were “sacrificial goats” during the pandemic. While younger workers were put on furlough, those at the top were encouraged to retire. “The company thought, well, if we’re going to have a bad year anyway, we might as well get rid of our most expensive people this year, when no one can see it – then we can re-emerge with much cheaper payroll.” There are no figures for this phenomenon, because those people would have been listed as “retired” – but she said it is alarmingly common.

Ill health is also a factor: as the number of economically inactive people over 55 has increased, so has the number of people describing themselves as “long-term sick”, figures from the ONS show. Emily Andrews, deputy director of evidence at the Centre for Ageing Better, said it’s one of the major factors older people cite when they drop out of the labour force.

“A large number of those people describe themselves as being out of work for health reasons,” she said. “A large bit of ageism is ableism.”

There’s no proof that this trend is down to long Covid – but we do know that among those suffering from the condition, 50-69 year olds have one of the highest prevalences of long Covid, with 2.5 per cent of that age group suffering from it, while another 1.2 per cent of people in their 70s or over have it.

Not surprisingly, this means the number of people looking for part-time work is on the increase. “Sixteen per cent of people in their 50s and 60s who are working want to work fewer hours,” Andrews said.

But not all of the drop-off is due to ill health. Generally, our older generations are in ruder health than ever, and many of them are desperate to get back to it.

Sudhakar Patel – who, at 55, is on the cusp of the baby boomer generation – is one of that group. His CV, which spans 30 years, boasts senior roles at companies in the US, Germany and the UK. His most recent jobs were right at the top of organisations: chief information officer; senior vice-president; head of global programmes. Since last February, though, he has struggled to find work, and he’s becoming frustrated.

After a recent interview, the feedback was confusing. “The feedback was, ‘he’s too polished and we’ve gone for the cheaper option.’”

Another interview was similar: “They said, there’s absolutely no questions about his experience, we know he can do the job, but we think there’s another candidate that’s a better cultural fit.” Patel is baffled. “What does ‘cultural fit’ mean?”

This is a recognised phenomenon, according to Simpson. She said she regularly speaks to employers who use corporate doublespeak to avoid being accused of age discrimination. “[They] would never overtly say ‘I don’t want to hire older candidates’ – they would say, ‘I’m looking for up-and-coming talent’; ‘I don’t want somebody at the top of their game’; ‘I think they may be a bit too experienced.’ They’ll give you every reason why not, other than just ‘I don’t want that age.’”

There are other excuses. Simpson said she has spoken to a retailer that has avoided hiring over-55s because they would be too tired to walk the shop floor. “Have you seen how many triathlons and swimming marathons this age group do – do you really think they can’t walk a shop floor without needing a rest?”

Patel agreed. “The pandemic… hasn’t really taught me that I need to slow down,” he said. “I thrive on pressure… For me, it’s not a question of slowing down. It’s a question of picking up again.”

Which leads us to the awkward truth: we need boomers, and not just to make memes about. ONS figures published last week showed there are almost 1.25 million vacancies in the UK. Meanwhile, “the working age population of 16- to 65-year-olds is shrinking by 25 per cent, while the over-65 population is growing by 40 per cent,” said Simpson. The fact is, employers can’t afford to be picky.

“It’s wonderful that we’re now going to live an extra 30 years from when retirement was invented,” said Simpson. “But pensions don’t cover that period of life. You can’t work for 40 years, and then be retired for 40 years. The economics don’t work out.” For employers, that means finding ways, such as more flexible working options, to encourage older people back into the workplace. And for employees, it means working for longer, gaining more experience, and perhaps trying out several careers.