The premium pound – or the older workers who can boost our economy – need to be tempted back to the office, write Andrew O’Brien
The latest ONS employment figures were released yesterday and they don’t spell good news for the UK economy. The number of people economically inactive has increased, again, with over 400,000 working age people now out of the labour market.
Yet at the same time, we have nearly 1 million job vacancies and one in ten businesses are reporting worker shortages. These are figures that should be keeping every policy maker awake at night.
Underpinning this is a cultural problem, alongside an economic one. For all the talk of returnships and work coaches, it’s clear that if we want older workers to stay in work longer, we need to make them feel like their contribution is important and that their work is valued.
To tackle this we need a radical change in policy direction: show older workers we care by paying those in shortage occupations over the age of 55 an annual £1,000 tax-free “Priority Jobs Bonus”. This would send a clear cultural signal that we value the contribution of older workers and would support around a million people who are contributing in key sectors.
Critically, for a government scrambling around for funds, it would also be more cost effective than the current approach of relying on non-targeted tax cuts.
The contribution of older workers, the “platinum pound”, is already worth a lot to the UK. One third of the UK’s workforce is aged over 50. Despite this, the participation of older people in the UK workforce has fallen since the pandemic and has not recovered. The UK is, as far as we can tell, an outlier. Similar countries such as Germany and Australia have all seen an increase in participation among older workers since the pandemic.
Only a few years ago, employment among older workers was similar in the UK and in Australia. Matching participation in Australia would boost the UK economy by nearly £10bn a year. And matching German levels of workforce participation could be worth £30bn a year – equivalent to the annual economic contribution of Liverpool City Region to the UK.
Unlocking growth is about as critical an economic challenge as has faced our country in decades. In a new report, published today with specialist housing and care provider Anchor, we found that if we deal with this effectively, then a more proactive approach – one that focuses on keeping over 50s in their jobs will be key. In a survey conducted for our report, over 90 per cent of retirees said they were satisfied with being retired. We cannot wait till people exit the workforce before trying to tempt them back in.
Government can help create the right culture through a Priority Jobs Bonus but there’s a critical role for employers to play. We need greater training of line managers on how to manage older workers, and greater access to flexible working. A lack of access to flexible working could drive over 300,000 older workers to exit the workforce. Our research also found that older people can be sceptical about whether businesses value their skills and experience. Schemes such as the Centre for Ageing Better’s Age-friendly Employer Pledge should be given national backing by government and business to make clear that we collectively value the contribution of older workers.
Growing the platinum pound is essential if we are to boost the UK economy over the coming years. Politicians need to make increasing the participation of older workers in the labour market one of their top priorities.