6 new things you need to know about older workers
Research from the IFS, funded by the Centre for Ageing Better, has found that employees over the age of 65 were 40% more likely to have been on furlough than those in their 40s.
Our Deputy Director of Evidence, Emily Andrews, writes about the key areas of evidence surrounding older workers and ensuring older jobseekers are given the same opportunities as younger people.
One in three workers in the UK is aged 50 or older. Older workers are more likely to work part-time, or be self-employed. Nearly one million people aged 50 to 64 are involuntarily out of work, most commonly for health reasons. When people in this age group do fall out of work, they struggle the most to return to the labour market.
These are all well-known, well-established facts about older workers. They show how important it is for Government and employers to take action to support the extended working lives that are becoming more common as the State Pension Age rises.
But they also give a false picture of older workers as a homogenous group – which they are not. The circumstances we are born into, and the experiences that accumulate over the course of our lives, make a big difference to our experience of work in our 50s and 60s.
A new report from the Institute for Fiscal Studies, funded by the Centre for Ageing Better, offers rich, important insights into who is most likely to experience poor employment outcomes in later life – and where we should target support.
1. The retirement ‘cliff edge’ is disappearing
In the mid-2000s there were two clear retirement peaks: at ages 60 and 65. Now, those peaks are flattening, with more people making different choices about how and when to retire.
From 2004-07, around 10% of working 59-year olds and over 30% of working 64-year-olds were retired a year later. From 2012-19, that ‘peak’ at age 59/60 had almost disappeared, replaced with a steadier increase up to age 63. There is still a visible spike in retirements at age 64/65, but it has shrunk to below 25%.
The removal of the legal ‘default’ retirement age of 65 in 2011 is clearly key to this change, as is the rise in the State Pension Age (SPa), which has been taking place since then. The increase of the SPa up to 66 for men and women will alter this pattern further.
But these changes may also reflect a cultural shift. Retirement is becoming less a phenomenon that occurs at ‘set’ ages, and more a move that people make when the time is right for them.
2. Women, people with lower levels of education, and the long-term unemployed face particular struggles returning to work if they fall out if it in their 50s and 60s.
We know that overall, older workers struggle more to return to the labour market when they fall out of it than younger workers. This new analysis highlights which older workers are particularly at risk.
Education does not seem to make a significant difference to whether or not people fall out of work, but more educated older jobseekers are six percentage points more likely to have found work one year later than otherwise similar jobseekers with lower levels of formal education.
Meanwhile, those who have already been out of work for 6-12 months are around 17 percentage points less likely to be in work one year later than someone who has been out of work for less than six months, while those who have already been out of work for over two years are over 30 percentage point less likely to be in work one year later.
Clearly support for the long-term unemployed – soon to be delivered through the Restart scheme – is crucial to support older workers and longer working lives. Providers need to be offering tailored, intensive support to this group of jobseekers – and DWP needs to hold them to account for doing this.
Women are almost one percentage point more likely to leave paid work at older ages than men with otherwise similar characteristics, and are around four percentage points less likely to move from unemployment back into work. And they are much more likely to stop actively jobseeking.
This might reflect women’s weaker ‘attachment’ to the workforce (women of this generation being overall more likely to have spent time out of work during their lives than men). It may also reflect their greater caring responsibilities: one in three women aged 55 to 64 report themselves to be carers, as opposed to just over one in five (22%) men. Enhancing flexibility – including a right to carer’s leave – will make it much easier for many women (and men) to remain in the workforce.
3. Older workers from Black and Minority Ethnic communities are more likely to fall out of work in their 50s and 60s than White older workers.
The IFS analysis of the Labour Force Survey found that – when controlling for all other factors – older workers from a BAME background are two percentage points less likely to stay in paid work at older ages than White older workers.
We know that there are sharp differences in occupation by age among workers with different ethnic backgrounds – so there are likely to be further nuances between this headline. For example, the pattern is different when you look not at ethnicity, but at immigration status: workers born outside the UK are 2.5 percentage points more likely to stay in paid work between the ages 50 and 69 than those born in the UK, as they are less likely to retire.
But there are clearly risks for older workers from BAME backgrounds related to structural racism, and how it plays out in employment across the life-course. Overall, people aged 50-69 from BAME backgrounds are more likely to be in the poorest fifth of the population than their White counterparts. While the average weekly income of White and Asian groups is very similar (£499 and £500 respectively), it drops drastically to £397 for Black people aged 50-69.
We must ensure that age-inclusion activities do not default into primarily representing and supporting White older people, and that anti-racism work doesn’t only target change for younger people.
4. Self-employed people are less likely to fall out of work in their 50s and 60s than employees.
Compared to permanent employees, self-employed workers with otherwise similar characteristics are almost two percentage points more likely to stay in paid work at older ages. This may partly be driven by flexibility of self-employment – allowing self-employed workers to stay employed for longer. If this is the case, then efforts to make self-employment more accessible to more people could be a useful strategy for extending working lives.
At the moment, men and people with higher socio-economic indicators (such as qualifications levels) are more likely to transition into self-employment during their 50s and 60s, on their path to retirement. It is also more common among people who have experienced self-employment at younger ages – suggesting that an expansion of self-employment overall could also help increase employment in later life.
There is another set of characteristics which is more associated with transitioning from employment to self-employment as an older worker. People who have less secure work arrangements are more likely to move to self-employment: workers who are temporary employees, working part-time, or have a job tenure of under five years.
This suggests that as well as being a positive choice for more well-off older workers, a move into self-employment may also be a resort for people who are struggling to find secure employment. So work to reduce age-bias in recruitment has to be part of the answer to improving the prospects of older workers, even if self-employment is good for some.
5. 1 in 6 older workers want to work fewer hours
These workers fall into two main categories. The first is workers with health conditions: who are four percentage points more likely to want to work fewer hours than those without.
The workers with long-term conditions that we interviewed over the course of the pandemic (more on this in our forthcoming report) spoke passionately about the benefits of part-time work to help them manage financially, stay connected to the workforce, but also manage their health:
More part-time work, that’s always been my sort of saviour…a full-time job sometimes you’re not well enough to do that, whereas a part-time job you can be reliable.
The other group wanting fewer hours are those who are more financially secure and socio-economically privileged: people in couples, living in less deprived areas, in more secure jobs and with higher pay. People who are mortgaged are more likely to want more hours than those who own their house outright – and renters are even more likely to want more hours than them.
It is unsurprising that those with lower incomes and more outgoings want to work longer hours. We need to reduce age-bias in recruitment to ensure they can access it. But the desire of many workers to work fewer hours shows the importance of increasing flexibility and creating more part-time work options.
6. Manual workers do not leave the workforce earlier than other workers
It is commonly – but incorrectly – assumed that manual workers fall out of the workforce earlier than others due to the physical strain of their jobs becoming harder with age.
In fact, the IFS analysis found that manual workers are no less likely to remain in paid work in their 50s and 60s than those in non-manual jobs. They are less likely to become unemployed, and less likely to want shorter hours.
Of course, we do not know the full story behind these figures – staying in work isn’t necessarily a positive choice for some of these manual workers. But they are an important reminder not to rely on stereotypes when we think about older workers and what they need. The IFS report is full of further insights which will guide policy makers and practitioners to provide the support that older workers really need – towards the people who really need it.