Many column inches have been devoted to the “Great Resignation”, the recent wave of people in their twenties and thirties leaving jobs they didn’t like. But it is the Covid-era trend of older workers leaving the workforce that poses the bigger challenge for the economy.
In autumn 2022, the Office for National Statistics estimated that, by July the same year, just under 400,000 more adults aged 50-64 had become economically inactive compared with before the pandemic. Many either retired early, developed long-term health conditions, or were made redundant and thereafter unable to find another job. This is one of the factors, along with Brexit, driving the UK’s labour crisis.
In its focus on economic growth, boosting employment, and reducing the costs of the benefits system, the UK government wants to get over-fifties back into the workforce. But efforts have been fitful. In July 2022, the government announced a £22m package of support for those wishing to re-enter the job market. In the 2023 spring Budget, Chancellor Jeremy Hunt announced a “returnerships” initiative modelled on the idea of apprenticeships – but this was quietly downgraded to redirecting older workers to existing schemes just a few months later.
“What we saw before the pandemic for a good two decades or so was an improvement in the employment rate of [over-]fifties,” said Luke Price, senior research and policy manager for work at the Centre for Ageing Better, a non- profit. “And then the pandemic hits.” People often leave the workforce for a mixture of reasons. Some, for example, are forced into retirement either because of poor health or because the workplace is not willing or able to support staff with long-term conditions.
“The right employment opportunities aren’t there,” he added, and “employers aren’t thinking about how they structure work to enable all the workers with health issues to engage”.
Price would like to see changes to employment support services, such as the government’s Work Programme, which is meant to support the long-term unemployed, and the Work and Health Programme, which is meant to help people look for a job. These initiatives do not meet the needs of older workers, he said, adding: “I think what we need is a targeted employment support programme, because that’s got the best chance of addressing [the] systematic disadvantage that older workers might face.”
Employees over the age of 50 are also more likely to have caring responsibilities, from children and grandchildren to partners and parents. As has been amply documented, women over 50 take on a disproportionate amount of that care. Price wants to see progress beyond what was achieved with the Carer’s Leave Act 2023, which comes into force on 6 April, to stem the tide of older workers leaving the job market. This new legislation will give workers who are carers ten days of paid leave and six months of leave, but Price believes it needs to go further.
One of the solutions being piloted by government via Jobcentre is “midlife reviews” or “midlife MOTs”, which help people assess their skills, health, finances and career. More businesses should be encouraged to introduce midlife reviews for their staff, said Price, but they could also be useful for people who are out of work, helping them plan for the future, including re-entering employment, reskilling or upskilling.
Anna Savage is a manager of the Age at Work Programme at Business in the Community, Scotland, a responsible business network. She helps her clients “rebrand”, recognising the skills that they have developed throughout their lives, communicating that effectively, and finding relevant job opportunities. A lot of the people Savage meets are returning to work after a protracted period of caring for someone, or their own ill health.
“Many of those people have only had one or two jobs, so for them the process of getting back to work is really quite scary,” she explained.
One of Savage’s clients was made redundant from the airline industry during the pandemic. The economic crisis meant they struggled to get back into it – but they also found it difficult to recognise that the skills they had developed as a project and operations manager could be deployed elsewhere. With support, however, they found a similar role in train travel.
“Sometimes people… have got skills that are really, really easy to transfer, but they can’t envisage transferring them,” Savage said.
Financial pressure is one reason people want to rejoin the workforce, but a sense of purpose is often part of it too. “The right amount of work is good for you. Even if you do have a health problem, that doesn’t mean you can’t do anything,” she said, adding that flexibility is key to the over-fifties being able to re-enter employment.
The think tank Demos estimates that in the UK 800,000 over-fifties are currently unemployed but would like to return to work. It commissioned a survey of 1,068 people aged 55-75 and a series of focus groups to find out the views of that age group on work. While there were many people who wanted to be in employment, they also found the opposite was true for some. Those who leave work and “describe themselves as retired are pretty unlikely to return”, said Andrew Phillips, a researcher at the think tank.
Despite being an urgent economic challenge, the government has been slow to act. “It’s classic British policymaking,” said Phillips’ colleague Andrew O’Brien, director of policy and impact at Demos. “We wait for a massive problem to emerge, and then we start panicking about how we’re going to fix it. Demos’s evidence shows “that the horse has bolted already”.
O’Brien is critical of the government’s use of tax breaks to tempt people back to work, rather than focusing them on people in their fifties who are currently in work but at risk of leaving. Demos believes people should be supported so that they don’t leave the workforce earlier than they want to. Ways to enable this include reducing their working days over a longer period to give people greater flexibility for caring responsibilities or to cope with ill health.
One of Demos’s proposals is that the government could offer an incentive, or a “thank you”, to older workers in key industries to encourage them to stay on. This would help mitigate the skills and labour crises in those sectors. “It was an undercurrent in some of the focus groups that people don’t necessarily feel like they are always appreciated by their employers,” said O’Brien.
Demos is also looking at how government could subsidise occupational health services being provided by employers to prevent workers developing long-term conditions, and to support staff with poor health. Similarly, better redundancy support and retraining could, Phillips and O’Brien explained, help people stay in work longer when faced with unemployment in their fifties. Currently, a lot of services for people who have been made redundant only kick in once they have run out of money.
“We know that European countries are spending a lot more money on CPD [continuing professional development] in-work training, vocational education for their workers,” O’Brien said. This means they have a much more flexible workforce that can be deployed in different roles. It was only as recently as a decade ago that the UK had a similar rate of employment among over-fifties as Germany, said O’Brien. What’s missing here is investment in training.
A government spokesperson said that “getting older people back into work is a key priority for the government”, adding that “this age group has a lot to offer”. The government is investing £2.5bn in the Back to Work plan announced in the Autumn Statement, which will provide extra support to 1.1 million, including older people, and £2.7bn to support more apprenticeships, the spokesperson said.
They added that eligible job-seekers aged 50 or over on Universal Credit receive additional work-coach time, and there are dedicated 50Plus Champions working in job centres. The midlife MOT and the digital MOT are open to everyone, including people out of work not claiming benefits. The spokesperson highlighted that the government has invested more than £150m to expand free flexible skills boot camps and free courses for job training schemes.
But for O’Brien, there is a more fundamental question at play: what type of economy do we want?
“We could end up sleepwalking into maintaining our low-growth, low- productivity setting, by excessively trying to extend people’s working lives,” he said.
In countries that have an earlier retirement age, such as France, the economy has higher rates of saving and investment in capital that increases productivity. In Britain, meanwhile, “we are addicted to labour over capital,” O’Brien said. His alternative is to boost savings, which would allow people to retire earlier. This would then unlock money for investment in the capital needed to boost productivity – and it would force firms to focus on using capital, rather than trying to squeeze a few more years out of their labour force.