Why aren’t older workers returning to work?

One of the most persistent changes we have seen since the start of the COVID-19 pandemic is that of higher economic inactivity amongst over 50s (people either not looking for and/or being unavailable to work). The reasons for this are multiple and complex, but the recently published Business, Energy and Industrial Strategy (BEIS) Select Committee report on post-pandemic economic growth: UK labour markets does a good job of outlining the key issues defining the UK labour market today. By synthesizing the evidence submitted to the committee (including ours), it digs down into why we are still seeing over 300,000 more people aged 50 and over economically inactive now than when the pandemic began.

The report highlights how the rise in economic inactivity is mostly driven by older workers retiring, many of whom are relatively financially secure and have no plans to return. It also digs down into the complex relationship between economic inactivity, health and age where poor health is not necessarily causing more older people to leave the labour market but remains a fundamental reason why people can struggle to re-engage with work. Caring responsibilities can make juggling work and personal commitments hard, meaning that some older people, especially older women, leave work and don’t return. More flexible working opportunities being offered by employers could help both retain current employees with caring responsibilities and entice those who are out of work to return.

Forced exits from the labour market

But what lies behind these broad categories of ‘retirement’, ‘health’ and ‘caring responsibilities’? New polling in the report of adults aged 45–60 years shows that despite a ‘better work/life balance’ seemingly topping the charts at 18% - indicative perhaps of ‘retirement’ being the main driver of the exodus – physical health or disability not related to COVID is a close second at 17%. When you combine this with mental health and stress (12%), health then actually accounts for a huge 29% of why older people are becoming economically inactive. Similarly, caring responsibilities play an important part, both in terms of caring for children/grandchildren (8%) or caring for an ‘elderly’ relative (7%) – which when combined come in at a close third at 15%.

For some, of course, retiring is a decision made because of financial security. 13% of those polled said they had left the labour market because they were financially secure enough to do so. However, there are huge inequalities in terms of who does or doesn’t have control over when to leave the labour market. Just over two fifths (41%) of those in the lowest annual household income bracket (less than £28,000) felt they had control over their decision to leave the labour market, as opposed to three quarters (75%) of those in the highest annual household income bracket (more than £48,000).

A lack of choice might relate to worse health. The polling suggests that those who are on the lowest incomes are three times as likely to leave the labour market due to physical health (24%) than those on the highest incomes (8%) and almost three times less likely to leave the labour market for a better work/life balance (11%) than those in the highest income bracket (30%).

Despite this many older people still want to work – almost three fifths (58%) of those polled said they would like to return to or stay in paid work, with over three fifths (62%) of those on the lowest incomes stating this to be the case.

Barriers and solutions

Although a large proportion of older workers still wanting to work, many face significant barriers to doing so. These barriers are varied, including a lack of suitable jobs offering flexible working (22%) or part-time hours (24%), both physical (24%) and mental (14%) health, low pay (20%), a need to retrain (15%) or caring responsibilities for children or grandchildren (10%).

So, what can government do to overcome these barriers? Quick and easy wins include delivering a campaign championing the contribution that older workers make to organisations and the economy and encouraging wider take-up of our Age-friendly Employer Pledge which has now been signed by three government departments including the Department for Work and Pensions. Monitoring and publishing economic participation rates of those aged 50-65, similar to how figures for younger people not in education, employment or training (NEET) figures are reported on, could also help deliver a more focussed response to the issue.

However, larger scale changes to how older people are supported back into work are also needed. At the Centre for Ageing Better we believe that what we need is a new national programme aimed at over 50s. This programme could be based on our extensive research and prototyping work with Greater Manchester Combined Authority and the Department for Work and Pensions, which identified a new approach combining coaching, outreach and digital support as a way to ensure people aged 50+ have access to the best possible, evidence-based support. Funding for this programme should be allocated using a more ‘permissive’ approach, with central government granting funds to combined authorities to develop and deliver their own locally tailored approach to supporting older people who want to return to work.

Making these changes would enable many of those older workers forced out of the labour market to finally think about and begin to return to the workplace. The benefits of this would be far-reaching, not only for individuals and their families but for employers and the wider economy too.

This article first appeared on the People Management website on 18 May 2023: https://www.peoplemanagement.co.uk/article/1823236/why-arent-older-people-returning-work-firms-tackle-this