Britain’s stagnant workforce, with 270,000 economically inactive over 50s, is keeping our productivity down. But to get them back in the labour market, we need to let them stay out of the office, writes Ben Cope.
Rishi Sunak and Jeremy Hunt don’t have much room to play with. Within 18 months, they must do the impossible and convince a distrustful public that the Conservatives have solutions to problems of their own creation. In a tight corner, it’s unsurprising they look like men a hurry, announcing significant policy interventions on an almost weekly basis – from new legislation on small boats to a deal in Northern Ireland. But haste breeds mistakes, and the Chancellor looks set to make a costly blunder in the upcoming budget.
Reducing economic inactivity among the over 50s will rightly be a priority in the budget. But Hunt’s interventions look set to miss the critical reason rising numbers of older people are staying at home: a lack of flexibility. Hunt should legislate on workers’ right to work flexibly by making companies disclose flexible working options upfront in job adverts. This would improve the proposed system of forcing workers to start a job before making a request.
Getting this right matters. Fewer over 50s are in work than before the pandemic. This is a problem, and one unique to Britain. There are 270,000 more workers aged 50-64 years old who are economically inactive than before the pandemic, a much greater rise than any other age group. This reduction in the workforce reduces the tax base and makes it harder for companies to fill vacancies. This is not the case in France, Germany or the United States, who have all recovered from their initial lockdown-induced unemployment shocks.
Fortunately, the government recognises the importance of the situation, trailing several policy proposals in the press in recent months. A combination of these proposals will likely form the backbone of Hunt’s Budget. The centrepiece of this policy package is expected to be annual health checks for older workers, provided by subsidising occupational therapists at small and medium-sized enterprises. This is designed to address the rising number of Britons signed off as “long-term sick” since the pandemic.
But policy aimed at improving health misses the cause of the problem. The fall in employment among the over 50s hasn’t been caused by an increase in the long-term sick. Research by the Institute for Fiscal Studies has shown that the majority of this rise has come from those who weren’t in work anyway. Instead, increasing economic inactivity has been caused by the “Great Resignation”, where wealthier workers decided they’d accumulated a large enough pension pot to quit the rat race. A report by the Resolution Foundation showed that the over 50s seeking early retirement are skewed significantly towards higher earners. These people aren’t ill; they’re rich.
To get the over 50s back to work who don’t need the money, Hunt should create an environment where it’s easier to get a job they want. Flexibility is the way to do this. Reports by the Resolution Foundation and the Centre for Ageing Better show older workers value flexibility more than any other age group.
Hunt may argue the government is already doing enough to improve flexible working. In December, the government lent its support to the Employment Relations (Flexible Working) Bill, which includes several provisions to make flexible work more accessible. For example, it will remove the 26-week qualifying period before employees can request flexible working, allowing them to request flexible working on day one, and require employers to respond to requests within two months, down from three.
But this doesn’t go far enough. Is it realistic for a wealthy 60 year old who wants flexible work to take up a full time, office-based role for two months while their new employer decides whether to accept their flexible work application? Clearly not. If they don’t have to, they just won’t take the job. Instead, that same 60 year old should be able to go into their first interview knowing what flexible working options are on the table, and (should they get the job) know that they would be enacted from day one. Hunt would be wise to set Britain’s would-be older workers free by granting them this flexibility in the Budget.
This policy would require foresight from employers to think about flexible working options for every vacancy, but doing so will unlock a pool of untapped talent. If firms are serious about valuing the experience of older workers, this shouldn’t be cause for concern.
Conservative election guru Isaac Levido has told the Tory top brass that though there is a “narrow, steep path to victory”, they must act at speed. In such a tight spot, it may seem counterintuitive that the best solution to a pressing policy concern is to offer people more flexibility, but if it’s results the Conservatives are after, it’s the path they must take.