Economic Inactivity

Over 3 million people aged 50-64 are economically inactive

There are nearly 9 million people of working age in the UK classed as economically inactive – people who are not in work and are not actively seeking work. The largest proportion of them are young people, primarily students. But just over 3 million are aged 50-64 – one third men and two thirds women.

Eurostat data shows that the reasons for economic inactivity amongst people in the UK aged 50 to 64 are:-

  • Retirement – one third say they are retired.
  • Health – just under one third have ill health or disability issues.
  • Caring – one sixth have caring or other home responsibilities, mostly women.
  • Desire to work – two thirds say they do not want to work.
  • Inability to find suitable work – one fifth say they would like to work but cannot find a suitable job.

Many economically inactive over 50s would like to work

One fifth of economically inactive 50-64s would like to work if they could find a suitable job.

  • This has been termed voluntary non-participation because it is seen as people choosing not to take a job because pay or other terms of employment are not sufficiently attractive.
  • But equally people may feel they are forced to stay out of work because they cannot find a job which suits their personal circumstances and responsibilities, such as for caring.
  • Public policy has tried to discourage non-participation by this group, especially by changes to the state pension age.
  • But this has had limited success and there is need for positive measures to make work ‘work’ for people.

A problem for the UK economy

The UK population is ageing. We need to help people to work longer to support economic growth, increase government revenues and reduce the benefits spend, and build individual pensions and savings.

  • The UK population is ageing. Population growth in the next 20 years will be focused on the older population, with only one fifth of growth in the traditional working age group 15-64.
  • Government estimates suggest that increasing employment of people aged 50 to state pension age by between 5% and 10% could increase GDP by £18 billion.
  • Projections in 2014 indicated that there would be 13.5 million job vacancies over the following 10 years matched by only 7 million young people leaving school or college.
  • Increasing life expectancy will have inevitable implications for age-related public spending. Around £7 billion is already spent on out of work benefits for claimants aged 50 to 64.
  • There is concern that growing numbers of people who have retired or stopped work early will have insufficient pension incomes. The Department of Work and Pensions estimates that there are 12 million people below state pension age heading towards inadequate retirement income and the Fuller Working Lives agenda advocates spending longer in work to provide adequate standards in retirement.
  • Keeping more over 50s in work would reduce public spending and raise more tax and other government revenues. Estimates suggest that if no-one had retired early in the 2000s, tax revenue would have been £4 billion higher at the end of the decade.

Increasing economic participation amongst the over 50s

The solution to increasing participation amongst inactive over 50s who would like to work is to create the right sort of jobs – jobs which those currently inactive will want and be able to do.

  • Jobs will need to be properly paid, quality jobs with real flexibility but also be demanding and with high productivity ensuring all employees earn their pay and work to their potential.
  • Inevitably some people will be unable to balance work with other needs and responsibilities and need to give up work for a time.
  • For them the need is to develop secure and dependable pathways back into work when they are ready to return.
  • Quality jobs are important to ensure that 50+ workers are not working below potential. Working below potential reduces personal income and national productivity.
  • Training and work refreshment may be required to ensure that those who have been outside the workforce for a period are fully able to realise their potential in the current working environment.

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