Employment up and largely driven by over 50s in work

Wednesday 17 June 2015

“Employment figures show a steady increase the number of people in work, and this month it continues to be driven by over 50s remaining in or returning to work." said Saga's director of communications Paul Green.

Employment up and largely driven by over 50s in work

“The combination of the abolition of the default retirement age and increases to state pension age have meant that the vast majority (82%) that want to continue in work can do so without fear of being forced out of work.

“The vast majority (85%) of over 50s that are working that have helped contribute to this month’s increase value the opportunity to remain in work in order to use their experience and skills. However it’s worth noting that 79% are also doing so in order to boost their retirement income as many feel that their predicted retirement income is not likely to achieve what they originally anticipated.”

Key points:

 

  • During February – April 2015 the number of people unemployed in the UK fell to 1.81 million. However, despite this decline, the unemployment rate remained unchanged from the previous reading at 5.5%.
  • The unemployment rate for those aged 50-64 fell to 3.2% in the three months to April 2015, down from the 3.4% recorded in the three months to March 2015.
  • 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 6.6% between the start of the last Parliament in May 2010 and February – April 2015, 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 801,000 in the three months to May 2010 to 1.17 million over February – April 2015, a very pronounced rise of 45.6% or 365,000 employees.
    • 50-64 has risen from 7.29 million in May 2010 to 8.22 million over February – April 2015, an increase of 12.3% or 898,000 employees.
    • 16-49 has increased by 3.1% or 646,000 employees, from 21.02 million to 21.67 million.  
  • The number of workers who are 50 or older has been rising steadily. At the start of the previous Parliament in May 2010 some 8.120 million UK workers were 50 or older. That figure had risen to 9.38 million over the three months to April 2015.
  • Figure 2 illustrates that the over 50s’ share of UK employment is continuing to rise. Over the three months to April 2015, we calculate that:
    • 69.8% of all employed people were 49 or younger, down from 70.3% one year previously.
    • 26.5% of all employed people were in the 50-64 age bracket, up from 26.1% one year earlier.
    • 3.8% of all employed people were 65 or older, up from 3.6% 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 February – April 2015, there were 8.22 million employed 50-64-year-olds, versus 7.99 million one year earlier. This compares to 21.67 million employed 16-49-year-olds over February – April 2015, versus 21.52 million over the same period in 2013.
  • Figure 3 shows that economic activity[1] amongst 50-64-year-olds has been gradually trending upward compared to economic activity amongst 18-24-year-olds, which has been generally flat. The economic activity rate amongst 50-64-year-olds is now above that of 18-24-year-olds. Over the three months to April 2015, we calculate that:
    • 71.7% of 50-64-year-olds were economically active.
    • This was above the 70.8% economic activity rate of people aged 18-24.
    • 84.9% of those in the 25-34 age bracket were economically active.
    • 86.9% of those in the 35-49 age bracket were economically active.

   

  • However, both the number of people aged 16-64 considered inactive because of retirement and the economic activity rate of the over 65’s reflect a falling number of retired citizens.
  • Figure 4 shows that the number of women aged 64 and below that are officially classified as retired has been falling considerably over recent years, with 253,000 less women under the age of 65 classified as retired in the three months to April this year compared with the three months to April 2010, when changes in the state pension age for women began.
  • This fall has not been matched by a similar fall in the number of retired men in the age group, in fact there were 15,000 more men under the age of 65 classified as retired in the three months to April 2015 compared with the three months to April 2010. This suggests that the fall is being heavily driven by the changes being made the state pension age for women that began in April 2010.
  • However, changes to the state pension age cannot account for all of the change seen in the number of people retired over the past few years. It is unfortunately the case that 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 utility price inflation – may have forced thousands of over 50s to retire later or come out of retirement.[2]

 

 

 

 

 



 

[1] A person is classified as economically active if they are in employment; defined as a people who did some paid work in the reference week; those who had a job that they were temporarily away from (eg, on holiday); those on government-supported training and employment programmes, or unemployed; defined as those people without a job who were available to start work in the two weeks following their interview and who had either looked for work in the four weeks prior to interview or were waiting to start a job they had already obtained.

 

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

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