Headline employment figures mask a darker side of long term unemployment

Wednesday 16 October 2013

It’s clear that the abolition of the default retirement age is starting to have a positive impact on the attitude of employers towards older staff demonstrated by a 6.1% increase in the number of over workers between the ages of 50-64.” said Paul Green, director of communication for Saga,

Headline employment figures mask a darker side of long term unemployment

“In addition there has been a marked 27.0% increase for of people over 65 in employment which is great news for those that either want or need to continue working past the old retirement age.

“However, these successes along with the increase in the headline employment figures mask a darker side to unemployment.  Regardless of age those that find themselves in long term unemployment find it extraordinarily difficult to re-enter the job market.  Changing attitudes to older workers took many years, but eventually their skills, experience and work ethic have become highly valued by employers thanks, in part, to significant changes by the government of the day. 

“If you continue to do the same thing, you will end up with the same outcome.  Government need to focus on the new employment crisis and consider more creative ways of encouraging employers to recruit some of the significant talent that has been consigned to the unemployment scrap-heap, or sofa in this case.  Suspending NI contributions for those taking on the long term unemployed, for both the employer and the employee, could recapture this enormous workforce who, in many cases, is desperate for the opportunity to re-enter the workforce.”

Saga Flash Employment indices – October 2013 bulletin

Key points:

  • The UK-wide unemployment rate (for persons aged 16 and over) during June-August 2013 was 7.7%, down from 7.9% a year earlier.[1]
  • Figure 1 illustrates that the contribution of the over 50s to the job market has been steadily rising. The total number of workers in the UK grew by 3.2% between the start of this Parliament in May 2010 and June-August 2013, with employment for the over 50s rising faster than for younger workers. Over this time, the number of workers aged:
    • 65 or older has risen from 800,000 in May 2010 to 1.016 million over June-August 2013, a very pronounced rise of 27.0% or 216,000 employees.
    • 50-64 has risen from 7.289 million in May 2010 to 7.737 million over June-August 2013, an increase of 6.1% or 448,000 employees.
    • 16-49 has increased by 1.3% or 275,000 employees, from 20.841 million to 21.116 million.
  • Figure 2 illustrates the over 50s’ share of UK employment is continuing to rise. Over the three months to August 2013, we calculate that:
    • 70.7% of all employed people were 49 or younger, down from 71.4% one year previously.
    • 25.9% of all employed people were in the 50-64 age bracket, up from 25.4% one year earlier.
    • 3.4% of all employed people were 65 or older age bracket, up from 3.2% 12 months before.
  • Employment is not a zero-sum game and the over 50s have not been squeezing young people out of the job market. The number of employed over 50s is far lower than the number of employed 16-49-year-olds. Over June-August 2013, there were 7.737 million employed 50-64-year-olds, versus 7.519 million one year earlier. This compares to 21.116 million employed 16-49-year-olds over June-August 2013, versus 21.125 million over the same period in 2012.
  • Figure 3 shows that 50-64-year-old workers are more active in the labour market than their younger counterparts. Over the three months to August 2013, we calculate that:
    • 63.5% of all people aged 16 or older were economically active.
    • 71.0% of all people in the 50-64 age bracket were economically active.
  • Figure 4 presents a more troubling finding, suggesting that if older workers become unemployed, they are more likely to get trapped in long-term unemployment than their younger colleagues:
    • The number of long-term unemployed people aged 49 or younger stood at 2.101 million over the three months to May 2010, the start of the current Parliament – marginally higher than the 2.072 million figure recorded over June-August 2013. This indicates a slowly improving labour market situation for this age group.
    • By contrast, from the start of the current Parliament to June-April 2013, the number of long-term unemployed people aged in the 50-64 age bracket has risen from 367,300 to 390,400. This is a 6.3% or 23,100 person rise.
  • The number of workers who are over 50 has been rising steadily. At the start of the current Parliament in May 2010 some 8.089 million UK workers were 50 or older. That figure had risen to 8.753 million over the three months to August 2013.
  • At first glance, this paints an uplifting picture of over 50s’ lot in a challenging job market. Faced with the financial crisis, the Eurozone sovereign debt crisis and austerity budget measures, these data suggest that businesses have turned to older workers – perhaps valuing their skills, experience and conscientious attitudes.
  • However, on closer inspection, it gives more cause for concern. Many over 50s may have chosen to continue working, postponing retirement, not because they wanted to, but because economic necessity forced them to. Falling living standards – caused by low interest rates, subdued pension returns and elevated inflation – may have forced thousands of over 50s to retire later or come out of retirement.[2]

Ends


Editors Notes:

Full Saga flash employment indices including report, analysis and charts


[1] A person is classified as economically inactive if they are unemployed and not looking for work. This definition will include: (i) retirees; (ii) all people aged below 16; and (iii) all school, college and university students who are no engaged in part-time/full-time work and who are not looking for such work.

[2] See: Gustman, Steinmeier and Tabatabai (2010); Goda, Shoven and Slavov (2010) and Banks, Crawford, Crossley, Emmerson (2012).

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