What is the ‘great retirement', and should we be worried?
As the labour market recovers from COVID-19, we are starting to see that a significant proportion of older workers are not returning to work. But have these people really retired?
Until the labour market was disrupted by COVID-19, people had been working for longer. This was for a variety of reasons, including longer life expectancies and more flexible job options. As a result, in the UK’s strong and vibrant pre-COVID workforce, nearly 1 in every 3 workers was over 50 years old – and those numbers were set to increase.
Yet, as the labour market recovers, we're starting to see that a significant proportion of older workers are not returning. Furthermore, although job vacancies are high, it appears that many of the over 50s falling out of work are not looking for another job. According to the latest labour market statistics, there are now 180,000 fewer over 50s in work than before the pandemic. In September 362,000 in this age group were unemployed, and 3.5 million people aged 50-64 were classed as ‘economically inactive' – meaning they had chosen not to seek work. Now, new ONS figures show that the proportion of people age 50-64 living in a household where everyone works has fallen 2.9 percentage points since the start of the pandemic.
In some quarters this has been labelled the ‘great retirement’. But have these people really retired? Or should we all be more worried – because many of these folk will not be enjoying the cosy retirement we might like to envisage.
The first problem is that we need to engage workers of all ages and generations in work. Put simply, there are not enough young people flowing into the labour market to fulfill its requirements on volume alone.
It’s deeply worrying to see over 50s falling out of the workforce in such great numbers, and none of us can afford to see this trend unaddressed.
This isn’t just a question of maths, however. There are personal costs too. Many people who are leaving the labour market are likely to lose out, not just financially but also in health, social connections, and a sense of purpose. Many will not be simply choosing retirement out of a desire to stop working: there is strong evidence from our projects in Manchester and the West Midlands that older workers feel rejected by the labour market and struggle to find a way back to work.
We need central government to broaden their current focus on young workers by putting greater emphasis on the need to invest in all age groups – which will, in turn, benefit the young too. They may also need to look again at where funding for employment support has been allocated as, thanks in no small part to the furlough scheme, we don’t find ourselves in quite the position of unemployment that was forecast when allocations were made. Older workers who are not currently engaged will not get access to the programmes that have been put in place so far, so we need an intervention that reaches out and re-engages them.
We need employers to think differently about recruitment and retention too. Employers must move away from using age labels to guide working practices and priorities. Instead, more emphasis and value needs to be placed on the establishment of a multigenerational workforce as a goal. Greater diversity of experience, generations and skills will give employers an important opportunity to harness the talent that different age groups bring to the workplace, and improve productivity and profitability.
It’s deeply worrying to see over 50s falling out of the workforce in such great numbers, and none of us can afford to see this trend unaddressed. We all want to see a labour market we can access and contribute to in a meaningful way throughout our working lives – however long we want them to be.