Workingwise.co.uk's annual survey was published last week and shows that a high number of...read more
A report by Phoenix Insights highlights the wealth inequality behind economic inactivity figures.
The average wealth for 50-64 year olds who are economically inactive due to ill health is just £57,000, less than 5% the average wealth of those who chose to retire early (£1.24 million), according to a report from Phoenix Insights.
The report says these wealth differences suggest older workers who are economically inactive due to illness or caring responsibilities are financially vulnerable and at current savings levels are unlikely to be to be able to afford a ‘moderate’ standard of living in retirement – many may even struggle to achieve the ‘minimum’ standard.
It adds that, with around 1.4 million people aged 50-64 economically inactive because of long-term sickness, there is an urgent need to do more to support people who are able back into the workplace and improve flexible working and absence policies, such as sick leave, so they can continue to build up their assets and save for retirement.
The research found there are wide regional differences when it comes to the reasons behind over 50s leaving the workplace, with a clear divide between the Midlands and the North and London and the South East. For example, 50-64 year olds in Yorkshire and the Humber are twice as likely to have left the workforce early due to sickness or disability compared to those in London and the South East (24% vs 12%). People in London are the most likely to have left the workforce early to look after family (17%).
Phoenix says regional variations highlight the need for Government to give Combined Authorities and others working at a regional level greater responsibility for tackling the drivers of economic inactivity in their area, rather than adopting a ‘one size fits all’ approach.
Catherine Foot, Director of Phoenix Insights, said: “Our latest research shows the Government should urgently develop initiatives to meet the challenges of economic inactivity among the over 50s, or risk a worsening financial vulnerability among our ageing population. This should be approached at a local level as there are huge differences in the drivers of inactivity across the UK.
“It’s important not to dismiss economic inactivity in this group as a case of rich baby boomers choosing to enjoy time on the golf course. Stereotypes like this mask real financial and health vulnerability among a group whose successful return to employment will be critical to the UK’s productivity and prospects for economic growth.
“The demographic fact of our ageing population has been hiding in plain sight for decades, warning us that it is critical that we become much more effective at supporting people to stay in good quality work throughout their 50s and 60s. I hope that this focus on reversing economic inactivity will finally help focus minds and action on this very important issue in our labour market.”
The report says a package of policy measures will be needed to address economic inactivity among the over 50s, citing a poll of 3,000 adults Phoenix Insights conducted last year that shows over half (55%) of over 50s believe older workers are being left behind in employment while just 1 in 7 (14%) say that support for older workers is sufficient to encourage them to remain in or return to work.
Among its recommendations are taking a sectoral approach that recognises the specific reasons people are leaving different industries; creating greater flexibility in work and improving the quality of work and financial advice. It says a long term approach is also necessary, stating that “by improving the experience of work for people below the 50-64 age group, recognising that the reasons people leave the workforce early are a product of issues, such as low job satisfaction or poor health, that develop over time”.