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Older workers who dropped out of the workforce in the early part of the pandemic were likely to have been forced out and to end up in poverty, says a new report from the IFS.
Older workers who became economically inactive in the first year of the pandemic were more likely to end up in poverty than those who became inactive in other years, suggesting many were forced into early retirement, according to a new report.
The report by the Institute for Fiscal Studies finds people aged 50–70 who moved from employment into economic inactivity in 2020–21 were more likely to end up in poverty in that year than those who became inactive in previous years. Measures of self-reported well-being also declined more for recently inactive individuals in 2020 than for those who had been inactive for longer. The report says that by 2021-22, when the labour market disruption and health risk had largely subsided, those who took early retirement were more likely to have done so from choice, with outcomes much more similar to those seen among people who became inactive pre-pandemic.
The IFS says this suggests that there is particular cause for concern for the 2020–21 cohort, many of whom seem to have been ‘forced’ into early retirement, with longer term implications since many may never re-enter the workforce. It says many in this cohort will experience persistently low living standards.
The report also finds that average household income rose by 0.5% in 2021-22, but remained lower than pre-pandemic levels due to a sharp rise in inflation. Income growth was higher among poorer households, in large part due to the £20 a week temporary uplift in Universal Credit [which continued until October 2021] and a fall in housing costs in the pandemic. The share of households in the bottom third of incomes who received disability benefits also rose by 26%, from 12% in 2019–20 to 15% in 2021–22, driven entirely by an increase among working-age households.