The UK is playing catch-up in harnessing the power of older workers

People in the UK aged over-55 are more likely to have left work and not returned than those in other G7 countries, according to a new report.

In fact, the UK ranks 21st out of 38 OECD countries in PwC’s Golden Age Index measuring how well countries are harnessing the power of their older workers. The 244,000 more older workers in the UK who are economically inactive now compared to before the pandemic is the highest figure for any country in the G7 except Italy. While a similar pattern of older workers leaving the labour market occurred in other major economies during the pandemic, other countries have made far more progress in returning to pre-pandemic levels of older worker employment.

So how concerned should we be that we as a country are lagging behind here?

One of the factors identified in the PWC report that could potentially explain the higher levels of older workers disengaged from the labour market was the significant rise in house prices during the pandemic which could have reduced the financial imperative for some older people to continue working. So maybe those older workers have just disappeared into the sunset of a comfortable and relaxing retirement?

That had been the assumption of many but another new report has thrown that reading of the current climate strongly into doubt. The Institute for Fiscal Studies (IFS) revealed this month that almost half (48%) of 50- to 70-year-olds who left the workforce in 2020–21 ended up in relative poverty.

This was significantly higher than the percentage of individuals who were in poverty after leaving the workforce in pre-pandemic years – even though overall poverty rates declined in 2020–21.These individuals were not basking in a comfortable retirement, they were desperately scrimping just to get by. The IFS research reveals they were forced to cut their food expenditure by around £60 per week on average, much more than those who had stopped working in previous years, and were forced to endure lower levels of well-being than previous cohorts of people who had recently stopped working.

Nearly half (49%) did not have access to either private or state pensions. So it is a financial imperative for many of these individuals to return to work as soon as possible. And it is a financial imperative for employers and the UK government to do more to lower the barriers that prevent many older people returning to the workplace. The UK economy is struggling under the weight of one million job vacancies and remains smaller than it was prior to the COVID-19 pandemic.

So what can be learned from the countries that have done a much better job of restoring their older worker employment levels since the shock of the COVID-19 pandemic?

The PwC report found New Zealand to be the most successful country when it comes to older workers.

Its key policies including generous jobseeker benefits, training for employers to work with over-50s, and finding ways to match older workers’ skills with those required by businesses. Crucially, these initiatives involve an active role for employment support staff in working with employers, to broker job opportunities for jobseekers over 50. This was also a key feature of Germany’s much feted Perspektive 50+ programme.

Does the UK have anything similar in the pipeline? Right now, the Department for Work and Pensions' 50 Plus Champions are working to improve employer awareness and capability in age-friendly employment.

But there are only 37 of them to cover the whole country, so a lot of this activity will rely on other individuals working within Jobcentre Plus. We will soon be publishing guidance, based on our insight, to help them do just this.

The Universal Support programme announced at the Spring Budget could also potentially recreate some of this international best-practice. It has been described as a service which will match sick and disabled workers, many of whom will be 50 plus, to jobs and offer them in-work support once they get there. The few details we have on this proposed model suggests it could be really effective – as long as DWP does not allow it to repeat the failings of the Work and Health programme, which is only getting 15% of participants age 60+ into work.

This week, we learnt that a prospective Labour government would also seek to expand access to back-to-work support, as Jonathan Ashworth outlined his vision to transform DWP. The Shadow Secretary of State for Work and Pensions highlighted how the current funnelling of all employment support through the Jobcentre was failing older workers who did not wish to engage with the service. Mr Ashworth also highlighted the importance of flexible working to 50+ older workers, and emphasised the role of Jobcentre Plus in helping to broker this kind of flexible arrangement.

We would hope that a prospective Labour Government would recognise the strong start already made by the 50 Plus champions in this kind of activity, and seek to continue their work. Whoever is in government following the next election, the scale of their ambition on older workers needs to match the scale of our comparative global weakness. Our employment support system is failing people who fall out of work over 50 – engaging only one in ten, and funnelling a minority back into work (in the case of the Work and Health programme).

Now is the time to implement a national programme of employment support for workers in their 50s and 60s, offering them targeted, tailored support that they do not need to enter the Jobcentre or claim benefits to access. All-age employment support must be scrutinised with age in mind: ensuring that progress on 50+ and 60+ outcomes are closely monitored and consistently improved.

Our own research and testing shows that explicitly-targeted, localised support could make a big difference. In the meantime, employers are missing out on the experience and skills that older workers have to offer – and that many desperately want to access.

They can start by signing our Age-friendly Employer Pledge where they can learn from our research, and from each other, on how best to reap the same benefits that New Zealand employers are experiencing.