Will the Budget Entice the Over 50s Back Into Work?
by on April 14, 2023
In the recent budget the Chancellor of the Exchequer, Jeremy Hunt, outlined his plans to encourage the over-50s back into work. We look at why his proposals are needed, how they might work and what could be the best ways of working for this much-needed cohort.
How it stands
The UK is experiencing a severe skills shortage, with around 2.5 million more skilled workers needed to enable the economy to succeed. 13.3% of businesses report a shortage of workers, as of November 2022, according to Government figures. The industries feeling the pinch most are accommodation and food services (35.5%), and construction (20.7%), but there are also vacancies for nurses, pharmacists, vets, care workers, engineers, secondary school teachers and graphic designers that simply can’t be filled. This is not only having a devastating effect on employers – according to the Open University employers’ costs have risen by over £6 billion due to the skills shortage – but also on the wider economy – the Learning and Work Institute estimates that the situation will cost the country £120 billion by 2030.
Why are the over 50s leaving the workforce?
There are many and varied reasons why the over 50s are leaving the workforce.
An ‘Over 50s Lifestyle Study’ conducted by the Office For National Statistics which used data from the 2021 census, makes for interesting reading. The survey asked why people aged between 50 and 65 years of age had left work during the COVID-19 pandemic, and if they had lost their jobs if they intended to return to work after the pandemic finished.
Financial stability and resilience is a primary motivating factor for remaining inactive in the jobs market – 66% of those people who did not intend to return to work were mortgage-free, compared to 42% of people who still had an outstanding mortgage and did plan to resume work.
In the older age bracket, those aged 60-65 were also more likely to be debt-free (62%), compared to the 50-54 age group who still had a mortgage and/or credit card debt (39%). This older bracket were also confident that their pension provisions would meet their needs in retirement (55%) compared with just 38% of 50-54 year olds.
However, it’s not just financial considerations that prevent people returning to work – many more adults aged 50-59 (8%) reported mental health conditions and physical disabilities as a reason not to return to work, compared to the older group (3%).
Of the 58% who said they were thinking about returning to work, the most important considerations were flexible working hours (32%), good pay (23%), and having the option to work from home (12%).
How can Mr Hunt coax the over 50s back into work?
The Centre for Aging Better noted that in 2020 a third of all workers were over 50. As there are almost 33 million people employed in the UK (75% of the adult population), that’s almost 10 million people that the economy can’t afford to lose from the workforce.
Demand for workers is still recovering faster than the supply since the COVID-19 pandemic – the Bank of England’s August 2022 Monetary Policy Report attributes this to fewer people being ‘active’ in the labour market, the slowing of population growth, and the difficulty of recruiting workers from the EU, post-Brexit (its points-based immigration system as well as its seasonal agricultural workers’ visa).
Mr Hunt has already asked for a thorough review of the ‘issues holding back workforce participation’ from the Work and Pensions Secretary – the publication of which is greatly anticipated.
The independent think-tank, Demos, recently published a report entitled, Understanding ‘Early Exiters’ The Case for a Healthy Aging Workforce Strategy, in which it urges the government to develop a strategy to encourage the over 50s to return to work. It has suggested measures such as tax breaks for workplaces providing occupational health support, and closer integration of healthcare with employment support.
The government itself has also taken action and has introduced a network of dedicated 50PLUS: Champions across the country to add to its £22 million fund to support older workers.
Ultimately a combination of support, re- and up-skilling, an end to age bias, as well as flexible working conditions may encourage the over 50s to return to work – in an economy that desperately needs them.
A Better Way to Work
It’s unknown how many of these over 50s will return to work – if health conditions allow, then financial constraints may force many of them to ‘unretire’. For those who do decide to re-enter the job market working through an umbrella company may be their best option for the blend of flexible working, pension provision and security that they might otherwise lack.
If you’re in the position of considering returning to work in later life and you’d like to know more about the benefits of working through an umbrella company, you can call our friendly customer service team on 0333 200 0845, email us at email@example.com or fill out the contact form at the bottom of the page here.