Older workers risk bearing the brunt of the post pandemic unemployment hangover

The evidence is growing of just how strong a blow the pandemic has dealt to older workers. The data is painting an increasingly bleak picture of redundancies, unemployment and overall financial vulnerability amongst those in mid-life.

There is no question that younger people were hit hard with job losses, redundancies and furlough in the earlier stages of the pandemic. Encouragingly, however, the Kickstart effect is starting to take hold for this demographic. January’s ONS labour market statistics showed unemployment rates amongst workers under 25 actually fell for the first time since its peak in July-September. The government must now turn its attention to another underrepresented section of the workforce in no less need of help – the over 50s.

The over 50s are not the only age group seeing unemployment levels and rates increase month on month – the same can be said for all age groups over 35.  However, delving deeper into the unemployment data reveals why this is a concern for older workers.

Our analysis of long term unemployment by age shows that unemployed over 50s are two and a half times as likely as other unemployed age groups to be unemployed for at least two years. Some 20% of all unemployed over 50s have been out of work for at least two years compared with just 9% of those aged 25-49 and 6% of 16-24 year olds. Rising long-term unemployment of older workers matters for everyone. There isn’t a set number of jobs in the economy so early retirement doesn’t ‘free up jobs for the young’. In a service-led economy, rising employment creates more jobs in aggregate and this results in higher levels of spending – boosting jobs and the economy further.

Long-term unemployment of the over 50s is a problem for all of us. This is especially true when considering declining birth rates, rising life expectancies and the fact that the over 50s were the engine room of employment growth pre-pandemic – making up nearly 80% of the UK’s employment growth in the decade prior to 2020. If we switch off that economic growth dynamo, we had better hope that we have the ability to turn it back on.

There is a broad misconception that most over 50s are reveling in gold-plated final salary pensions. On the contrary, they are much more likely to have fallen through the gap between the final salary pensions their parents enjoyed and a career’s worth of pensions auto-enrolment from which their children will benefit. Many face a significantly underfunded retirement and are seeing savings decimated by the pandemic. This in turn will lead to a significant long-term drop in their future retirement income – and spending – which risks stalling the UK’s economic recovery for years to come.

One harrowing statistic is that nearly 620,000 over 50s are currently claiming Universal Credit.  Despite three decades in the workplace, this group have less than £16K of accessible savings to their name which enables them to qualify for Universal Credit. This ignores the countless others who are not currently eligible but who are rapidly eroding their retirement savings to help make ends meet.

There are more than 412,000 unemployed over 50s and nearly 645,000 over 55s currently on furlough, with their jobs at risk when the furlough scheme is due to come to an end. 

We recognise the significant funding the government is putting towards helping those in long-term unemployment from April. Support clearly needs to be provided for those unfortunate enough to find themselves in this position. But by waiting for someone to become long-term unemployed we are failing them from the start. By this point, confidence is often low, mental health is suffering and it becomes increasingly hard to get back into the workplace.

For those being made redundant in mid-life, early intervention is vital. The government must take action now to provide more tailored support to this hard working but often marginalised part of the workforce. Bespoke retraining and re-skilling programmes targeted at those recently made redundant would help put them in the best possible position to find new employment for the long-term. Financial incentives similar to the Kickstart scheme, or perhaps reduced employer NI contributions, could be part of another range of measures to help provide support.

What’s clear is that without government intervention, the financial havoc being wreaked on those in their 50s and 60s is only set to get worse in the months ahead. This will lead to hardship and suffering for so many individuals, but the long-term impacts of switching off this growth engine will be felt by the entire UK economy for years to come.