New data shows an increase in over 50s employment. But some changes merely reflect movement between categories, and there are other indications that the story may not be what we think.
So what are over 50s employment trends today – more at work or just working longer?
New data release
The new March 2018 ONS UK labour market data release tells an interesting story about over 50 employment. The report showed that employment for the over 50s has reached an all-time high of 10.1 million, the result of an established trend of rising employment and decreasing unemployment and economic inactivity in this age group.
However, in a very short-term comparison with last month’s release, earlier trends have apparently reversed. These changes are small and have arisen in the currently reported quarter only. However, the question arises as to whether this represents a blip or a change in the trend. The factors underlying the changes in the data are of some interest and, if continued, might indicate a shift to increasing employment of over 65s, possibly at the expense of those aged 50 to 64.
So are we looking at increases in the numbers of over 50s at work? Or are we instead observing the impact of over 50s already in work simply electing to work for longer?
The long term trends
The trends in over 50s employment have been positive. DWP analysis published last September (here) clearly showed the rising trend in over 50s participation in the labour market over the last 30 years. Across all age bands, there has been a steady increase in over 50s employment, from 55.8% in 1984 to 71.2% in 2016 (71.3% at January 2018 per ONS here). At the same time unemployment and economic inactivity (those out of work but not actively seeking work) have trended down.
The most marked increases have been in female participation, but female employment over 50 remains lower than for men. Male employment has been more affected by economic conditions and trends have been less stable as a result.
Employment rates after 65 have also trended steadily upwards, from around 10% to 18% today. Average age of exit from the labour market has risen from 63.2 to 65.1 for men and 60.8 to 63.6 for women.
Getting granular – unpicking the detail of the new data
An analysis of the March 2018 ONS UK Labour Market data release (here) at a granular level starts to suggest that some possible counter-trends might be emerging, although numbers are small and the changes relate only to the trend this quarter.
Is employment increasing for 50-64 year olds or for 65+?
The movements between the last quarter Oct-Dec 2017 and the current quarter Nov 2017-Jan 2018, for employment are:
50+: 10,034,000 to 10,081,000
50-64: 8,851,000 to 8,867,000
65+: 1,183,000 to 1,214,000
This shows clearly the record level of employment for the over 50s which broke the 10 million level in the Oct-Dec 2017 quarter. The January 2018 data shows a further increase to 10.08 million. This is a welcome trend and indicates that employers’ willingness to employ older workers is increasing. The story on employment remains good.
However, looking at the data in more detail offers an interesting perspective. While employment rates for 50-64 year olds and for the over 65s both increased, the increase was greater for the over 65s. Of the 47,000 increase in workers over 50, 66% of the gain was in workers over 65, which rose by 31,000 compared to only a 16,000 increase for 50-64 employees.
Looking at employment rates for the two age groups a difference can again be observed. The employment rate for 50-64 year olds was stable at 71.3% but rose for over 65s from 10.1% to 10.3%.
These changes in these numbers are small and only observed in the latest quarter. They might be a blip. However, they do offer the interesting thought that employers might be electing to retain existing employees after the age of 65, and this might account for increases in over 50s employment just as much as movements into the workforce from unemployment or inactivity.
Who is struggling most to find work – 50-64 year olds or over 65s wanting work?
Turning to unemployment, the changes between Oct-Dec 2017 and Nov 2017-Jan 2018 are:
50+: 302,000 to 307,000
50-64: 280,000 to 289,000
65+: 22,000 to 18,000
Unemployment for over 50s has actually increased along with the increases in employment. This would appear to be contradictory, but arises from changes in the number of people economically inactive. Unemployment rose by 5,000 for over 50s to 307,000. For 50-64 year olds it went up by 9,000 289,000. But for over 65s, unemployment decreased by 4,000 to 18,000.
This indicates that while the number of those seeking work between the ages of 50 and 64 increased, the number of over 65s seeking work declined. Does this indicate over 65s are finding it easier to find work than 50-64 year olds?
Do changes in inactivity reflect changes in employment or unemployment?
People move between unemployment and economic inactivity depending on whether they say they are actively looking for work. The changes in inactivity Oct-Dec 2017 and Nov 2017-Jan 2018 are:
50+: 13,784,000 to 13,786,000
50-64: 3,282,000 to 3,272,000
65+: 10,592,000 to 10,484,000
Much of economic inactivity for the over 50s relates to those who are retired. Most of the over 65s can be assumed to be in this category, although employment and unemployment figures for this group suggest that not all over 65s see themselves as retired today. And economic inactivity in this age group declined in the quarter ending in January 2018. So the decrease in unemployment was not simply mirrored by an increase in inactivity. This provides further evidence of the increase, and impact on over 50s economic activity data, of extending working lives past state retirement age.
Regarding the pre SPA population, economic inactivity has also declined. However, it is noticeable that the 10,000 decline in economic inactivity in this age group recorded in the quarter ending January 2018 is virtually equal to the 9,000 increase in unemployment. The total number of people aged 50-64 outside employment was virtually unchanged, decreasing by only 1,000.
So what do the numbers tell us?
Is it good news for 50-64 year olds out of work or for 65+ wanting to stay in work?
There seems to be potential evidence that growth in over 50s employment may in fact reflect increases in employment after 65, at least in the autumn/winter periods of 2017 and 2018. Looking at the ONS data for earlier in 2017 and 2016, there is a possibility of some seasonality in over 65 employment, with lower levels in the summer. So these changes may not represent a trend. However, it is important that we closely observe the granular data here to be sure that we understand what is actually going on.
Data and academic studies have both evidenced the increase in economic activity levels after 50 and the extension of working lives after 65. Both are welcome trends as they suggest that people have more flexibility to work when they want, or need to. However, some of the research on extended working lives has pointed to more success being achieved by higher socio-economic groups.
If the hope is that employment will provide for greater financial security in retirement, it is important that the detail in the published data is understood to prevent false assurances.