How employers can help to tackle economic inactivity among the over-50s

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Catherine Foot

May 05, 2023

4 mins read

Economic inactivity among people aged 50–64 in the UK is a growing concern for some employers. So how can we get more people in this age group back into meaningful work?

Almost one million people aged 50–64 have left the workforce since the pandemic. This increased level of economic inactivity has left some employers with a shortage of skills among their workforce and a reduced talent pool to recruit from. 

It may also have broader socioeconomic consequences, as indicated by the recent Spring budget, which outlined various measures to attract more economically inactive people back into work.

However, the reasons why some over-50s have left the labour market vary a lot. So no single intervention is likely to be effective in supporting them to return. 

Instead, employers will probably need to adopt different measures to target different drivers of economic inactivity.

At the think tank Phoenix Insights, we recently commissioned research to analyse labour force participation in the UK, Germany and the US, to place the UK’s increased economic inactivity in broader context1.

(The full research can be found in our report, Beyond the Great Retirement: Understanding and tackling economic inactivity amongst the over 50s.

In summary, our research indicates the following about the key drivers of economic inactivity:

•    Those choosing to retire early are significantly wealthier than others. People aged 50–64 who have chosen to retire hold median total wealth of almost £1.25 million – more than £500,000 higher than people of this age who still work. 

•    The median wealth for those who are economically inactive because they are looking after their family or home is well below the average for those aged 50–64 (£137,000 vs. £758,000). This suggests that this group is being forced to leave the labour market due to domestic pressures rather than because they feel they can afford to.

•    Those who have left the workforce due to ill health or disability, or to look after their families, are even more financially vulnerable. The median household wealth for 50–64-year-olds who have left work early due to long-term ill health or disability is £57,000 – significantly less than the average for this group. 

•    This raises significant concerns about the ability of many of those who have left work to sustain a decent standard of living in retirement. Unless these individuals can re-enter the labour market and add to these assets, very few of them will be able to afford a comfortable retirement and many may struggle to maintain even a basic standard of living. 

•    The economically inactive have not disproportionately come from any one industry, or the public or private sector. However, the reasons why people are leaving different industries vary a lot. Most people leaving industries such as finance are choosing to retire, but this is true for less than a quarter of administration or hospitality workers. And those working in transport and storage are much more likely to leave the labour market early due to ill health than those working in finance and insurance (32% vs. 2%). 

•    The reasons people have left work vary a lot by occupational role. Very few professional workers leave due to ill health, but this was the most common reason for those in elementary professions or who operated machinery. 

•    There are important differences between genders. Men are more likely to have left work because they are retired, or due to long-term sickness and disability. Women are more likely to give looking after home and family as a reason.

•    Only 12% of respondents disagreed with the statement “older people are left behind by employers”. Despite many focus group participants enjoying work earlier on in life, many said that their experiences in the workplace became increasingly negative with age. 

•    Job satisfaction over time indicates how likely people are to drop out of the workforce. Analysis of data on the job satisfaction since 2009–10 of those who are now aged 50–59, shows that people with prolonged levels of lower average job satisfaction are more likely to have chosen to leave the workforce since the pandemic. In contrast, job satisfaction is seen to increase slightly for those not dropping out of the workforce. 

•    Openness to returning to work – either part or full time – decreases with age. Those aged 55–64 are 10% more likely to want to retire than 50–54-year-olds. 

•    The most popular forms of return-to-work support were more flexible work (64%), support with new technologies (57%) and the opportunity to work from home (54%)


How can employers respond?

Employers who wish to attract more people aged over-50 into their workforce may wish to consider the following five steps:

1.    Taking a sectoral approach 
Recognise the specific reasons over-50s may be leaving your company’s industry. This can help your policies to be more targeted and ultimately effective.

2.    Create more flexibility in work
People value flexible work options, including the ability to work from home and flexible hours. However, there is evidence that people over-50 have less flexibility than other groups. For example, people aged 55–64 are less likely to have the option to work remotely than any group other than those aged 16–24, indicates ONS data.

Providing flexible working arrangements for employees should therefore be a priority, especially given the potential benefit this can provide to those with caring responsibilities, some of whom leave the workforce without financial security.

3.    Improve people’s quality of work 
Any successful response needs to focus on the quality of people’s work, as well as their ability to do it and the financial incentives to continue working.

This is particularly important given the large number of people aged over-50 who have chosen to retire and feel financially able to do so.

Part-time work opportunities can be sparse and low quality, which can lead people in this age group – particularly women – to take jobs below their skill level. Helping employees to develop their skills at work, or enabling them to move to jobs that suit them better, could help with retention. 

4.    Improve the provision of financial and careers advice
There is an urgent need to improve the quality of information people aged over-50 can access when making decisions about their careers and retirement. 

There appears to be a worrying number of people who are economically inactive without sufficient savings to give them a decent standard of living in retirement. 

Ensuring people understand fully when they might be able to afford to stop working should be a priority. The Midlife MOT plays an important role in this but needs to be better promoted, especially to those with lower incomes who are the most financially vulnerable and may be less likely to use it.

5.    Take a long-term approach
Job satisfaction over time plays an important role in people’s decision-making once they reach later life. A large proportion of people aged 50–64 who have more recently become economically inactive due to sickness or disability had pre-existing conditions – suggesting their health had deteriorated over time. 

And reluctance to return to work increases with age – meaning there is an important window of opportunity as people enter their 50s and before this, to make them feel more positive about work and increase the chance of retaining them.

As such, measures that engage people before they reach 50 are an important part of tackling this issue – rather than purely focusing on people aged 50–64 now.

To see our full research on economic inactivity, please read our report: Beyond the Great Retirement: Understanding and tackling economic inactivity amongst the over 50s.) 

You might also find the following articles useful:

How inclusive workplaces can help more of us to prepare for retirement

How to harness the benefits of older workers

1Recently, the think tank Phoenix Insights commissioned research consultancy Public First to undertake the following research: analysis of available datasets in the UK, Germany and the US on labour force participation; polling of over 3,000 adults over the age of 50 in the UK, Germany and US; plus a booster sample of over 1,500 50–64-year-olds who are not in the workforce.


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