Older workers suffer biggest employment fall since 1980s

The pandemic has led to the biggest annual fall in employment for workers over 50 since the 1980s, according to new research.

A new report by the Resolution Foundation – A U-Shaped Crisis – examines the economic impacts of the pandemic on older workers, and how periods of unemployment can affect their prospects upon returning to work.

According to the research, while 16-24-year-olds have seen by far the largest fall in employment in the past year (3.9%), the fall in employment among workers age 50-to-69 has been twice as big as those aged 25-to-49 (1.4 compared to 0.7%).

And it notes after losing work, older workers take the longest, on average, to return to employment.

Six months after becoming unemployed, nearly three-quarters of 16-29-year-olds and 30-49-year-olds (74% and 72% respectively) had returned to employment, compared to fewer than two-thirds of those aged over 50 (62%).

Furthermore, when older workers (aged 50+) return to work following a period of unemployment, they face the highest income hit of all age groups, with typical hourly earnings falling by 9.5%, compared to their pre-unemployment earnings.

Becoming unemployed during the pandemic can potentially have a big impact on older workers’ retirement plans, says the Foundation, either forcing them to retire earlier than they would have planned to, thereby reducing their income in retirement, or forcing them to work longer to make up for lost earnings.

The Foundation adds that the government could further strengthen employment support for older workers by providing a tax credit style supplement to overcome the wage penalty they face when returning to work, similar to that provided as part of the ‘New Deal’ in the 2000s.

‘The Covid-19 crisis has had a U-shaped effect on people’s employment prospects,’ said senior economist, Nye Cominetti.

‘While the youngest workers have been hardest hit by the crisis, older workers have also been badly affected, experiencing the biggest annual fall in employment since at least the 1980s.

‘The cost of unemployment for older workers is particularly high. They take the longest to return to work – with fewer than two-in-three returning within six months – and experience the biggest earnings fall when they finally to return to work.

‘In the face of the current crisis, unemployed older workers may have to either work for longer to make up for these negative employment effects, or retire earlier than they planned to.

‘The government must ensure that older workers are not forgotten in the design and implementation of schemes created in the wake of the crisis to help people back into work.’

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