Early retirees will need to be tempted back into work

Older people have become integral to a healthy labour market, so employers must come up with better offers

When the furlough scheme was introduced at the start of the pandemic, the Treasury thought it was looking down the barrel of double-digit unemployment figures. What turned out to be the most expensive giveaway in Britain’s peacetime history – coming in at almost £70bn in total – was designed to keep the link between employers and employees as strong as possible.

It was pricey, but it worked. The unemployment rate peaked around 5pc and fell back down quickly. In Britain the scheme was applauded and abroad it was envied, as it managed to stave off disastrous predictions of an unemployment rate breaching 12pc.

But there was one major caveat. Even those who designed and promoted the scheme will acknowledge now, behind closed doors, that the tricky business of getting people back into the workforce post-furlough was largely overlooked – especially if they were nearing retirement age.

At the last count – July to September this year – there were over 340,000 more economically inactive 50 to 64-year-olds than during the three months before Covid hit the UK. This age group has suffered the biggest exodus from the workforce, followed by the 65 and over group in which an additional 338,000 workers have become inactive. And as the months roll on, we are discovering the extent to which we’re missing their economic contributions.

Over the past four decades, employment numbers have been driven sharply higher by women and older workers joining the labour market. The signs were there early in the pandemic that these were the people who might go missing, with major layoffs taking place in part-time employment and industries, such as hospitality, where these groups tended to work.

There is no longer a shortage of jobs to go round. Indeed, the UK’S vacancy rate hovers near the record high with well above 1.2m positions unfilled. And the jump of over 300,000 workers in the later years of their working life to not working altogether is acutely felt.

There’s no doubt long-term sickness numbers are affecting this cohort. The 400,000 people who have left the labour market because of health problems – raising the number from 2.1m pre-pandemic to 2.5m by this summer – is of course a reflection of the 7m-long waiting list on NHS England.

But while the health crisis will account for some of these missing workers, it can by no means explain all.

Diving deep into the growing number of over-50s leaving the workforce this summer, the Office for National Statistics honed in on a variety of reasons, in many cases obvious but also difficult to address. The majority of 50 to 65-year-olds who had either voluntarily left work or been made redundant during the pandemic “owned their homes outright, and were more likely to be debt free” than people in the same age bracket who had decided to return to work.

This is a difficult economic reality post-covid: while many older workers will be waiting for health treatment to return to work, others have got a taste for the more leisurely lifestyle and have little to no interest in going back to the Monday-to-friday slog. This is supported by the ONS’S data on what might bring this cohort back to the workplace, and that criteria is largely about lifestyle: the most important factors cited in a possible return to paid work are “flexible working hours”, “good pay” and “being able to work from home”.

The “good pay” requirement is more likely to be met now as employers have had to jack up their wage offers to get workers through the door. It’s the lifestyle point that’s going to be harder to address, but that doesn’t mean companies aren’t willing to try.

Easyjet’s new recruitment campaign tries to embrace what older workers say they are looking for, with ads targeted at the over-45s (particularly those in their 50s and 60s) trying to sell the jet-setting lifestyle to “empty nesters”. The campaign has been inspired by a survey showing that three quarters of adults whose children had moved out were looking for a “new challenge”.

Becoming a cabin crew member, the airline insists, fits that description.

How this campaign fares will be very telling. Becoming a flight attendant is certainly not a job that allows much ability to work from home. And the “flexibility” point can be debated, too. Really, it is trying to sell to this cohort a new opportunity – to travel, see the world and reject a calmer lifestyle for a more active one.

This is one of the biggest questions facing Britain right now. Can this vital group of workers be enticed by new experiences, or are we going to have to painfully adjust to a labour market that lacks their contribution? Make no mistake, any process of moving away from these workers will be a difficult one, not least because it makes the prospect of lingering inflation more likely, with the cost of domestic services likely to keep rising for longer owing to a shortage of workers.

Even with this week’s net migration figures showing a rise to over 500,000 people, the major driver of that increase – international students and people in need of humanitarian aid – is not going to translate overnight into workers (and in the case of students who often eventually return home, may not contribute to the labour force at all).

Older workers have become integral to a healthy labour market. There will be no easy replacement for them. But if we’re going to get them back into work, the evidence suggests that far better offers are needed than the status quo.