How to fix the participation crisis

The pandemic prompted an exodus of people aged 50 to 64 from the labour market, called by some The Great Retirement. While some have recently returned to work – perhaps feeling the squeeze of the cost of living crisis – the most recent labour market data show that there are still 92,000 fewer people aged 50-64 working than there were at the start of the pandemic. The data continues to paint a concerning picture of economic inactivity amongst this age group, reaching the highest level it has been since 2012.

And this is a dramatic reversal of pre-pandemic trends, which had been seeing steady increases in the proportions of over 50s staying in work for the previous decade and longer. Compare current levels of working among all adults to what could have been expected had those pre-pandemic trends continued, and the Learning and Work Institute has estimated that we are looking at a missing million workers from the labour force.

This is a crisis, and it is a crisis made even more evident when comparing the UK experience with other countries. Thanks to the furlough scheme and other support, the UK saw a relatively small fall in employment compared to other G7 countries in the first phase of the pandemic. But most other countries have now bounced back, and even have employment rates higher than pre-pandemic. The UK in contrast has failed to pull this off, and now unhappily boasts the largest employment rate drop in the G7. Critically, this is not a problem of unemployment – of an increase in over 50s jobseekers unable to find work. In fact, job vacancies in the UK remain at a record level despite some reduction in the last month. Rather it is a crisis of participation – of people not working, but not looking for work either.

So why has this happened, and what can we do about it? For a small proportion, particularly at older ages, it is to be hoped that this has been a positive personal choice to retire early after perhaps reassessing what mattered to them and what they wanted out of life during the pandemic. It’s plausible that some of the slight rise in employment we have seen in the very latest employment statistics is a result of some over 50s returning to the workforce having reassessed whether or not they could in fact afford to retire early given the current and likely future cost of living. But a much more significant factor in the new trends we are seeing is long-term sickness. Around 274,000 more 16-64 year olds say they are not actively looking for work due to long-term sickness than at the start of the pandemic. 

Data on everything from routine operation waiting lists to accessing GP appointments points to an NHS under incredible strain. And recent research from University College London has shown that more than one in three British adults already have two or more chronic conditions in their 40s, such as back problems, mental health problems, high blood pressure and diabetes.

Meeting the needs of the millions of people with chronic physical and mental health conditions both in and out of work is going to be immensely difficult, but it couldn’t be more important, not just to our national health and wellbeing, but also to our economy. This has to include a focus on primary and community care, and on occupational health.

We also need to think differently about how we provide employment support. Current labour market policy interventions focus heavily on unemployment. The Restart programme is focused on long-term unemployed benefit claimants. The Kickstart scheme provides wage support for employers who take on young people at risk of long-term unemployment. Even the welcome recent announcement of investment in employment support for people over 50 is focussed principally on Job Centres – places that the current swathe of people no longer working may have never visited or never intend to visit.

While these are all worthy initiatives in themselves, they aren’t going to solve the participation crisis. We need to change approach. We need to find much better ways to engage and support people to get back into work that works for them.

Work currently underway in Greater Manchester could form part of the answer. The Combined Authority is working with the charity Centre for Ageing Better and the DWP to co-design better approaches with local people over 50. So far, they have prototyped two interventions that offer personalised support in ways that people value and say they want. One is a digital service, which enables people to identify existing and transferable skills, develop career goals and plans, and link them to local employment sectors that are growing and recruiting. The other is a radically different approach to the local procurement of employment support services that aims to remove barriers to small, more holistic and more innovative local providers from winning contracts to provide support.

What these approaches have in common is a desire to meet people where they are, and tailor support and advice accordingly, something that will be critical to support not just active jobseekers but also people who have never accessed DWP services. We will need more of these ideas in the months and years ahead. More local roadshows that bring employability professionals and CV writing clinics out of the job centre and into other settings. More targeted returner campaigns for local industries. More good quality, evidence-based careers guidance and support not just for school leavers but for adults of all ages. More employers actively seeking out people over 50 to fill their vacancies.

As yet, few employers are as enlightened as this. According to a recent poll from the Centre for Ageing Better, only 1 in 6 employers are very likely to introduce policies on age-inclusion in the workplace in the next 12 months. And more than a third of older workers feel their age would work against them in getting a new job. At the Phoenix Group, we’re taking part in a trial looking at how to eliminate age bias from the recruitment process. 

But bringing people over 50 back to work isn’t just about recruitment. It’s also about working conditions. When the Office of National Statistics explored with economically inactive people over 50 what would encourage them back work, flexible working and support for caring responsibilities ranked as the most important things they would look for. Getting serious about offering flexible working can feel difficult for some employers, but work from Timewise and the Institute for Employment Studies has shown it can deliver a return on investment even for sectors like construction, teaching and the NHS in terms of reduced sickness absence and improved retention within just a few years. At the moment, employees must have been employed for 26 weeks before they are entitled to make a flexible working request. We need to change this to a day one right, as committed to in the 2019 Conservative manifesto.

We also need to see more support for people with caring responsibilities. The 2019 Conservative manifesto also committed to introducing five days statutory unpaid carers leave for all workers, but has also yet to be legislated for. Recognising the reality of a two-parent working families, acknowledging that people need time and support to be able to able to care for children, for partners for parents, will be critical to encouraging more people back to work, particularly women on whom the responsibility for unpaid family care so often falls. When Beveridge set out his blueprint for what would become our welfare state, he assumed ‘during marriage most women will not be gainfully employed’, leaving them free to raise children and care for elderly and sick relatives and neighbours. It is the giant outdated 20th century cultural assumption that strangles our attempts at delivering a welfare state and decent employment conditions in the 21st century. 

Finally, we need to think differently about adult learning and skills.

We need a system that supports people to learn, upskill and change careers across their lives. But very little of our current learning and skills provision is targeted at people at mid-life and older. There’s a huge potential untapped market for the education and training providers who see the opportunity to target and tailor courses to help those mid-career and older. In a recent poll we conducted, 79% of people agreed that offering formal training beyond the basic functions of a job has a positive effect on people’s performance at work, and 81% agreed that getting formal training can greatly increase the chances of finding a job for those who are unemployed or at risk of redundancy. But 61% of those in work said they have not been offered any formal training through their job in the last 12 months. Trends in employer investment in training are worryingly in decline, just at a time when investment in skills is so critical to our economic growth.

None of these ideas are quick fixes. None will give the new Prime Minister a chance to don a hard hat and stand in front of some grand new infrastructure project. They are the messy work of recalibrating relationships and expectations. Between people who are ill and the health care system. Between employees and employers. Between people who don’t see how they can earn money again and services that can really help them. But they are absolutely fundamental to fixing our participation crisis and growing our economy.