The £6bn boost to the economy from getting 50-64-year-olds back to work
There are roughly 1m people between age 50 and state pension age who say they want or need to keep working but are facing a range of obstacles, says Catherine Foot
As the UK awaits the findings of the Keep Britain Working Review which is looking to address economic inactivity due to ill-health and disability, helping more people remain in or return to work to enable our national economic growth should be prioritised.
While the Review’s focus is on health-related barriers, this is a timely opportunity for the conversation to go further.
There are roughly 1m people between age 50 and state pension age who say they want or need to keep working but are facing a range of obstacles. Health is certainly one, but so are caring responsibilities, age discrimination, a lack of flexible roles and ineffective recruitment practices.
The economic and demographic case
Supporting people in their 50s and 60s to find and stay in decent work needs to become an explicit and critical part of how we ensure both financial resilience for individuals, and economic growth for the UK.
People aged between 50 and 64 now account for one in three of the working-age population; this is a demographic shift with serious economic implications. Ensuring they can remain active in the labour market will be crucial to our economic growth. According to recent estimates, raising employment among 50-64-year-olds by just one percentage point could inject £5.7bn into the UK’s GDP each year, while adding £800m to the public purse through increased tax revenues.
It also matters for individuals’ own financial security, enabling people to continue to earn and save, and reducing their need to draw down on their pension savings too early or turn to the benefits system for support. The group of working age adults with the greatest increase in rates of poverty in recent years is people aged 60-65, and those in that group who have fallen out of work but still have years left before they can access their state pensions are most likely to be in poverty.
So, what policies, workplace practices, and cultural shifts are needed to help people in their 50s and 60s stay in employment longer? A complex issue such as this inevitably requires action on many fronts, but two opportunities for positive action are particularly important: increasing opportunities for good quality flexible and part-time work and providing access to careers guidance.
Flexible work
Flexible working is one of the most effective ways to help people extend their working lives. Research from the Office of National Statistics demonstrates that this is a top priority for people over 50 who are not working but want to be. It can allow people to manage caring responsibilities, health conditions, or reduce their hours in the run up to full retirement while continuing to earn and save enough for the retirement they choose.
Increasing numbers of employers are recognising that supporting people to work in ways that help them to manage their wider lives is critical to accessing all of the best possible talent for their businesses. This is particularly true in terms of gender equality, with women more often taking on unpaid care-giving responsibilities outside of work. Employers need job design skills, as well as access to specialist support in areas like occupational health and vocational rehabilitation for staff with health conditions, to do this well.
Careers guidance
The quality of the careers guidance on offer in schools and colleges has come a long way from the careers support people currently in their 50s and 60s might remember from their own school days. But while adult careers guidance has a strong evidence base for its effectiveness, it has received much less policy attention. At a time of rapid technological and economic change, we need to make it easier for adults of all ages, including those in their 50s and 60s, to access the guidance that could help them actively manage their careers and ensure that work remains fulfilling and sustainable for them across what could at age 50 still be 15-20 years left in the workforce.
The government has recognised the benefits of improving career guidance in its ambitions to reform the welfare and employment system. It is doing this by creating a new National Jobs and Careers Service which will bring together the currently separate functions of the National Careers Service and Jobcentre Plus. This has great potential to improve the delivery of adult career guidance by rebranding and extending the reach of the government funded offer to new groups and shifting perceptions of it as a service genuinely aiming to support people into the right work for them, not simply police access to benefits.
Conclusion
As the state pension age begins to increase from 66 to 67 from next April, we urgently need to take evidence-based, strategic and coordinated action to make it realistic for more people to be able to stay in work up until that age. The Mayfield Review’s focus on health is a welcome and much-needed step, but wider action is also needed. Boosting flexible work and improving access to adult careers guidance are also critical. Without action, we risk persistently high rates of economic inactivity as people age, and a growing problem of pre-retirement poverty.
Catherine Foot is director of the Standard Life Centre for the Future of Retirement