The UK has seen the biggest drop in its employment rate of the major G7 economies, driven by an exodus of over 50s from the workforce, a new report from Learning and Work Institute finds.
The UK moved rapidly in spring 2020 to introduce economic support measures like the furlough scheme. This helped limit rises in employment and meant the UK performed relatively well internationally.
However, since then the UK’s employment rate has stagnated while other countries have recovered quicker. As a result, the UK’s employment rate is still 0.8 percentage points below its pre-pandemic levels, the largest fall in the G7. Yet at the same time, vacancies are at record levels with employers struggling to find enough staff.
The missing piece of the jigsaw is the rising number of people who’ve left the UK workforce altogether through the pandemic. Learning and Work Institute estimates that there are one million fewer potential workers than if pre-pandemic trends had continued.
The biggest contributor to this workforce exodus is people over 50, up 9% since the pandemic started, and those with long-term sickness, up 11%. There are now twice as many people economically inactive due to sickness as there are unemployed people.
But this is not a common picture in other countries. In fact, the report shows the UK is an international outlier, seeing the biggest drops in over 50s in the workforce of ten major countries studied.
The report finds that shortfalls in Government policy have contributed to this. Its Plan for Jobs, launched in summer 2020, is likely to be up to £2 billion underspent. This is because it was put in place to tackle a sharp rise in unemployment that, thanks in part to the success of furlough, didn’t happen.
Learning and Work Institute argues the Government should reinvest the underspends in support for the over 50s and people who have left the workforce to help ease the current recruitment crunch. Otherwise, a short-term saving is likely to become a long-term cost as employers are unable to find the staff they need. Employers too need to think about how they recruit, with many over 50s open to returning to work if the right job is available and they can work flexibly.