Interactive Investor

Oldest workers see biggest employment fall since 1980s

26th April 2021 16:47

Marc Shoffman from interactive investor

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Latest research shows workers aged over 50 take the biggest income hit after unemployment.

Older workers have been hit by the largest annual drop in employment during the pandemic since the 1980s.

A report from the Resolution Foundation think tank warns that after losing work older employees take the longest, on average, to return to work.

Six months after becoming unemployed, almost three-quarters of 16 to 29-year-olds and 30 to 49-year-olds had returned to employment, compared with fewer than two-thirds of those aged over 50, according to the research.

Additionally, when older workers aged 50 and above return to work following a period of unemployment, they face the highest income hit of all age groups, with typical hourly earnings falling by 9.5% compared with their pre-unemployment earnings.

This is more than double the 4% earnings hit seen by middle-career workers aged 25-49, while typical pay growth remains strongly positive at 5.1% for young workers (aged 18-24 returning to work.

The report found that the youngest workers (16-24-year-olds) had the largest fall in employment in the past year (3.9 percentage points).

But the drop among workers aged 50 to 69 has been twice as big as those aged 25 to 49 (1.4 compared to 0.7 percentage points).

The Resolution Foundation also warns that becoming unemployed during the pandemic can have a big impact on older workers’ retirement plans, either forcing them to retire earlier and reducing their income or forcing them to work longer to make up for lost earnings.

Nye Cominetti, senior economist at the Resolution Foundation, says: “In the face of the current crisis, unemployed older workers may have to either work for longer to make up for these negative employment effects, or retire earlier than they planned to.

“The government must ensure that older workers are not forgotten in the design and implementation of schemes created in the wake of the crisis to help people back into work.”

This sentiment is backed by the International Longevity Centre (ILC) which has called for more support to help older workers who have lost jobs during the pandemic.

David Sinclair, director of the ILC, highlights that the government’s Kickstarter scheme focuses on helping young people on Universal Credit find work but says similar support is needed for older workers.

He says: “The government must invest more to ensure that ill health and caring responsibilities don’t make it even more difficult for older people to re-enter the workforce.

“Without further urgent support from government, a huge number of people aged over 50 will find early retirement forced on them.”

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