‘Thousands of older workers dropped out of labour market during Covid’

Read about National Older Workers Week

Older workers are among those who have been pushed out of the labour market due to the pandemic,  according to new research.

Begin again? – the eighth report for The Economy 2030 Inquiry, a collaboration between the Resolution Foundation and the Centre for Economic Performance at the London School of Economics, found that, due to the furlough and other support, the UK is not facing the mass unemployment that many feared, with unemployment just 0.3 percentage points higher than at the start of the pandemic.

However, the country is facing a skills shortage in part driven by a rise in the number of people who are economically inactive – that is, not working or looking for work – of 586,000 since the start of the crisis. The report says this is much larger than estimates of the fall in the number of migrants living in the UK caused by the pandemic.

The report finds that workforce participation has fallen by 1.2 percentage points among 55-64-year-olds since mid-2019 – a bigger fall than in any other recession over the past 40 years. This fall also bucks the trend of the decade prior to the crisis, where those aged over 50 accounted for 88 per cent of the increase in the labour force, says the report.

Younger men have also left the workforce during the crisis. Participation among men aged 25-34 has fallen by 1.6 percentage points over the past two years.

However, the pandemic has seen an increase in labour force participation among women, whose participation rate has increased by 0.4 percentage points. This builds on the pre-crisis trend and means that women now make up 48 per cent of the workforce, compared to 44 per cent in 1992. There has also been a shift of about half a million women from working part time to full time since the pandemic began, notes the report. It adds that this rise in participation is particularly striking among mothers with young children, with participation rates increasing by 5.4 percentage points among mothers with 0-3-year-olds.

The report identifies two key possible reasons for this pandemic-driven boost in economic activity:

• Second earners increasing their hours or entering work to offset a partners’ loss of work. The report finds that 15 per cent of workers, whose partner was furloughed and received less than full pay, had entered work or increased their working hours. This compares to 9 per cent of those whose partner was furloughed on full pay.
• Remote working. 10 per cent of mothers who are part of a couple said that remote working had enabled them to enter work or increase their hours, compared to 5 per cent of coupled fathers and women without children.

The report adds that the rise of remote and hybrid working has enabled people to search more broadly for work – with 7 per cent of workers saying that it has enabled them to look for work in new locations and 6 per cent saying that it has allowed them to look for different types of jobs.

The report, however, cautions that this hybrid working revolution is by no means universal. Less than a third of the lowest-paid workers (31 per cent) and the oldest, aged 55-65 workers (32 per cent), expect to take part in in this new working model, compared to almost two-thirds of the highest-paid workers (66 per cent) and those living in London (65 per cent).

Hannah Slaughter, Economist at the Resolution Foundation, said: “The pandemic has seen older workers withdraw from the labour market – and while anxieties about high levels of Covid-19 may understandably put some off from working today, the danger is they find themselves in early retirement tomorrow.

“While younger men have also exited the labour market, more of their female counterparts have joined the workforce. Mothers in particular have increased their hours for a number of reasons, from the need to offset their partner’s loss of earnings, to new opportunities created by remote working.

“We need to bank the benefits of more flexible working patterns in post-pandemic Britain, and avoid the risk of remote workers being turned into second class staff, as we have done with so many part-time workers.”

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