Exclusive: Experts weigh in on why more older people are exiting the workforce earlier
The Department for Work & Pensions published a report this morning which showed that, over the past year, older people have been exiting the workforce earlier. Moreover, the employment rate of people aged 50-64 has also fallen slightly.
City A.M. sought the views of six recruitment, HR and financial experts on why this is happening.
Sarah Loates, director at Loates, a HR consultancy, thinks “it’s too early to know” whether the fall in the average age of exit from the labour market and reduced employment rate among people aged 50-64 over the past year “is a short-term blip or the beginning of a longer-term trend,” where older workers are seen as less relevant in the post-pandemic world of remote working.
“This would be a dangerous and economically damaging development, as older employees are a goldmine of skills, pragmatism and lived experience, all of which contributes to team diversity and productivity,” Loates said.
She stressed it is important that employers focus on knowledge transfer between younger and older employees to prevent organisational knowledge loss, and capture that precious corporate memory.
To Scott Gallacher, director at financial planner Rowley Turton, it is quite clear why this trend is setting in
“Unfortunately, financial necessity will be the main reason why many people are working longer. A decade plus of austerity, combined with low interest rates, low annuity rates, the closure of many final salary pension schemes, means that many people haven’t been able to save enough for a comfortable retirement,” Gallacher told City A.M.
Couple financial necessity with increased longevity, and you can see why we are working longer than before. – Scott Gallacher
Nevertheless, “have older people been exiting the workforce earlier over the past year because they’ve wanted to, to make the most of life after the experiences of the pandemic, or because they are being pushed?” wonders Suzanne Noble, co-director at the startup School for Seniors.
As the founder of an organisation that helps people aged 50+ start a business, Noble often hears first hand the stories of people who increasingly feel out of place in the post-pandemic workplace.
“They are seen by certain employers as ante-diluvian rather than digitally native and that’s a dangerous development. People are living longer and need to work longer to stay afloat financially and so it’s no surprise we are seeing many more people in their fifties become entrepreneurs,” she said.
Longer and healthier lives
Historically, people retired at 60 or 65 and died within a few years, commented Joshua Gerstler, a chartered financial planner and owner of his own advisory firm, The Orchard Practice
“As people are now living longer and healthier lives they do not want to spent 20-30 years on the sofa watching Countdown,” he shared with City A.M.
“It is therefore very important to keep yourself busy, as once the mind is not being challenged, it can start to go downhill, and the body quickly follows suit. People are now working longer so that they have a purpose, and so that they can build up enough funds for a comfortable retirement,” Gerstler continued.
“Someone once said, ‘You need enough money to be able to sleep at night, and enough of a purpose to get up again in the morning’. That feels about right to me and goes some way to explain the changing demographic of workforces today,” he added.
Re-entry into the workforce
Cheney Hamilton, CEO of Find Your Flex, does not recognise the report’s findings.
“On our job board, we are seeing an increase of older job seekers re-entering the workforce due to an increase of flexible working options,” he said.
Hamilton does point out that the last two years have taken a toll on mental health and people are starting to feel safer about socialisation.
“Plus, with an increase in the pension age and those who were previously unable to commute now being able to work remotely, the appetite to get back to work is very tempting!” he noted.
Finally, Claire Taylor, founder at Raspberry Flamingo Copywriting And Content Marketing, said it’s too easy to generalise. “As a 53-year old who owns her own business I can hand-on-heart say it’s down to pensionable age and the lack of savings for that generation.”
“On the upside, I find that employing people over 50 has huge benefits as they have a work ethic unlike no other, and they have life experience that they can apply to their roles that makes them more rounded and considered. You get better with age, not worse!”