How do we get Britain back to work? Tackling our high rates of economic inactivity has been described by the Secretary of State for Work and Pensions Liz Kendall as “the greatest employment challenge in a generation”, and a white paper has been published to set out the government’s strategy for addressing it. The challenge is indeed a serious one. The proportion of workers who are economically inactive – not working and not actively looking for work – has risen by 1.7 percentage points compared with pre-pandemic levels.
While there was an immediate post-pandemic phenomenon of more workers retiring early, more recent data points to ill health and disability as the principal cause. Those working in and around labour market policy agree that turning this around will take substantial system change. We will need to get better at intervening early, supporting workers when their health and abilities change to remain in work, and making it easier for people who have spent time off sick to return to their previous employment.
We will need to change the culture of and access to our public employment support service, separating out the policing of access to benefits and providing a new guarantee of employment and careers advice for those who need it, and in places they can find it. And we will need to give greater powers to local areas to design and target the employment and skills support that their citizens need, working in close partnership with local employers, and better integrated with the local health system and housing providers. One particular group not getting sufficient attention, however, are people in the decade or so prior to becoming eligible for the state pension.
The government has set a long-term ambition of an 80 per cent employment rate. But employment for people between the ages of 25 and 49 rarely falls below this rate already. The age groups currently falling well short of this target are young adults and workers over 50. For some in both these age groups, not working could still be a “good” choice. More young people are staying in education for longer, and some people in their fifties and sixties can afford to retire. But for those older workers who want and need to work, there can be significant barriers. More than one in three people in this age group report they have experienced some form of age discrimination, from the insidious sense of being increasingly sidelined or overlooked as they age, to discrimination in hiring practises that reject candidates for being “over-qualified” or not matching a particular narrow education and career trajectory.
This age group prizes flexible or part-time work, but access to such roles is limited. The careers advice and support which is currently available isn’t working for them, with only one in ten of this age group having accessed support from job centres. Turning around the employment prospects of workers in their fifties and sixties isn’t just important for its contribution to our national employment rate and for economic growth. It is also important for the individuals themselves, not least because of the critical contribution extending working life can have for enabling people to retire on a decent income.
According to the government’s own estimates, at least two in five working age people are under-saving for retirement, a figure that rises to 44 per cent of those set to retire in the 2030s and 2040s. So, whether it is to avert a future crisis of poverty among pensioners, to improve UK productivity or to increase tax revenue, it is undeniable that reversing the worrying rise in economic inactivity among our middle-aged and pre-retirement workers must be a priority.
Related
