New figures show that older workers are being severely affected by the economic repercussions of the Covid pandemic – not just by a huge rise in unemployment figures but also facing reduced incomes if they do get back into work.
The implications long term are that anyone saving for their retirement could find themselves either working for longer than they had planned, being forced to use up their savings and/or having to get by on less than they had planned during their retirement years.
The report from The Resolution Foundation demonstrates that, after several decades of rising employment amongst older workers, driven by rising employment among older women, Covid 19 has put that trend into sharp reverse.
Since the onset of Covid-19 in the UK, employment rates have fallen by two percentage points among both men and women in their 50s. A year into the crisis, the impact on employment among women in their 50s has been worse than any of the major crisis periods dating back to the 1980s. For older men, the impact has so far been similar to the crises of the 1980s and 1990s
“Once out of work, older people struggle more than younger counterparts to return to work,” says the report, “and when they do, they typically face a hit to their earnings.”
Over the past 20 years, workers over the age of 50 who become unemployed have faced hourly earnings that are, on average, 9.5 per cent lower than their earnings in their previous jobs.
There are specific reasons to be concerned about the impact on older workers. First, older workers who lose their jobs tend to take longer to return to work. Over the period 1998 to 2020, after becoming unemployed, 62 per cent of those aged 50 and above have returned to work within 6 months, compared to 74 per cent among those aged 16 to 29, and 72 per cent among those aged 30 to 49. Second, once they do return they are likely to earn substantially less than in their previous job.
“In order to help older adults back into work,” concludes the report, “government should ensure that employment support schemes effectively cater to the unique needs – and often higher levels of experience – held by older workers. They should also consider the role of retraining and tax credit supplements for older returners to work.”
The full report can be found here:
If your earnings or employment status has been affected by the Covid pandemic, do make sure that your retirement plans are still on target by updating your RetireEasy LifePlan.