How can we unlock longer working lives?

How do we get Britain back to work? Tackling our high rates of economic inactivity has been described by Liz Kendall, the Secretary of State for Work and Pensions, as ‘the greatest employment challenge in a generation’.

The challenge is indeed a serious one. Since the pandemic, the proportion of workers who are economically inactive has risen by 1.7 percentage points, equating to 850,000 more people out of the workforce, with ill health and disability appearing to be the principal cause. We remain the only G7 nation to have failed to return to pre-pandemic levels of employment – something likely to be both caused by and contributing to our sluggish economic performance.

Turning this around will take substantial system change. We will need to intervene early, supporting workers when their health changes to remain in employment, and making it easier for people who have spent time off sick to return to work. We will need to reform our public employment support service, enabling those that need employment and careers advice to access it.  And we will need to give greater powers to local areas to design and target the employment and skills support that their citizens need, working in close partnership with employers.

One much-needed area of focus is the specific issues facing workers in the decade or so prior to becoming eligible for the state pension. Almost 30 per cent of people aged between 50 and 64 are not currently working, with around half a million of them saying they want to work.

But there can be significant barriers to work for this age group. More than one in three report they have experienced some form of age discrimination at work or in applying for jobs. This age group prizes opportunities for flexible and part-time work, but access to such roles remains limited. And currently available employment and careers advice isn’t working for them, with only one in ten having accessed support from job centres.

Turning around the employment prospects of workers in their fifties and sixties isn’t just important for its contribution to economic growth. It’s also important for the individuals themselves – not least because of the critical contribution extending working life can have in enabling people to retire on a decent income. According to the government’s own estimates, at least two in five working-age people are undersaving for retirement, a figure that rises to 44 per cent of those set to retire in the 2030s and 2040s.

So whether it’s to improve UK productivity or avert a future crisis of pensioner poverty, it’s undeniable that reversing the worrying rise in economic inactivity among our middle-aged and pre-retirement workers must be a priority.

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