The post-pandemic wave of early retirement is the “leading cause of labor shortages” in the UK, according to a Parliamentary report.
The report warns that growing inactivity is a major problem for the UK economy as labor shortages exacerbate inflation, hinder growth and strain public services, the House of Lords Economic Affairs Committee said.
Inactivity has increased by 565,000 people since the start of the pandemic, according to the analysis. The UK workforce has been found to be under pressure due to retirements in the 50–64 age group, deteriorating health, changing patterns of migration to the UK and the impact of an aging UK population.
The report says that the main factor is the increase in pensions among people aged 50-64, and not the increase in chronic diseases, as many previous studies have suggested.
As the UK population becomes increasingly ill, much of the increase in illness-related inactivity is attributable to people who were already inactive, not people whose work became inactive due to illness, the report warns.
This shows that the job situation in the UK is ‘bleak’ and urges the government to think about how to deal with inaction in the labor market to support the economy.
According to the report, it remains unclear why the number of early retirements suddenly increased during the pandemic. This suggests that the holiday regime and rising layoffs may have encouraged some people to retire earlier.
Other possible explanations include increased savings during the pandemic and UK pension flexibility allowing workers to retire earlier.
The Lords’ report warns that the impact of population aging as a contributing factor to UK labor shortages has “not received the attention it deserves”.
Lord Bridges of Headley, chairman of the committee, said: “Why did so many employees leave after years of work? Early retirement seems to be the main reason. Those who are already economically inactive fall ill, making them less likely to return to work. Thus, while other factors that used to mask the impact of population aging on the labor force are now exacerbating it.
“Rising economic inactivity is making it harder to control inflation, hurting growth and putting pressure on already strained public finances. Therefore, it is vital that the government does more to understand the reasons for the increase in inaction and the likelihood that this trend will continue.”
Changes in migrant labor patterns, largely due to Brexit, have created a “mismatch” in the UK labor market, the report said, which has had an acute impact on certain sectors, drawing workers into lower-paid positions in agriculture, hospitality and healthcare. searched.
“In recent years, many EU workers in these positions have left the UK. Their departure was made up for by the arrival of workers from non-EU countries who received visas under a new immigration system that prioritizes skilled workers. This has contributed to labor disparity and exacerbated labor shortages in these sectors,” the report says.
According to a separate study by the Office for National Statistics (ONS), the cost of living crisis will force older people back into the labor market.
According to an ONS report, 42% of unemployed people aged 50 to 65 say they are considering returning to work. According to a survey conducted in August, more than 60% of them would say that they are doing it “for the money.”
Money was the main reason for returning in all age groups, but especially those aged 50-54 (69 percent) and those who felt they lacked the skills to find a job (68 percent) or admit that they pay off a loan or mortgage (68 percent).
Those who are thinking about returning are less likely to pay unexpected but necessary expenses (61 percent) or own their own home outright (57 percent) than those who are not thinking about returning (77 percent and 78 percent, respectively).
The number of economically inactive people of working age who are neither working nor looking for work has increased by more than 560,000 since the start of the pandemic, according to the ONS.
Dr. Emily Andrews, deputy director of employment at the Center for Better Aging, said employers and the government need more support to help people return to work.
“Despite popular images of wealthy baby boomers, many people in this age group are financially unstable and this particular group is considering returning to work. Those in their 50s and 65s who are considering returning home are less likely to be able to afford unexpected expenses than those who are not, and more likely to rent or pay off a mortgage.”
She said three out of 10 older workers who quit during the pandemic said they faced age discrimination in the labor market.
“We need strong government action to reach out and engage older workers in job search, and send a clear message to employers that older workers are good for productivity and a multi-generational workforce is good for innovation.”
The Department of Labor and Pensions said: “Older workers are a huge asset to our economy and labor market. That’s why we’re investing an additional £22 million to support the employment of people over 50 by expanding our Jobcentre Mid-Life APK service and offering one-to-one support from our senior worker advocates.
“As stated in the autumn statement, the Department of Labor and Pensions will conduct a thorough analysis of the level of employment in order to understand what actions need to be taken to counter the increase in economic inactivity. The recommendations of the committee’s report will be considered as part of this work.”
Source: I News
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