Addressing Our Ageing Population: Policy Makers’ Influence on Skills, Employment and Health

Increases in life expectancy are having a significant impact on our labour market. Young people entering the workplace can now routinely expect to have careers lasting over 50 years. Our ageing population means that by 2030, there will be an extra 2.7 million people aged over 60 in the UK compared to 2018. In 2020, the average age of workforce exit was 64.3 years for women and 65.2 years for men – an increase of 3.1 and 1.9 years respectively compared to 2000. Increasingly, people are working at four-generation workplaces, as more older workers are expected to delay their retirement into their 70s. 

In our first article of the series, we explored how healthcare employers can adapt to the changing needs of our population, including the growing number of older people. However, the pandemic has made a significant dent in older people’s participation in the labour market. With a shortage of candidates driving record vacancies, how does policy support more older people to remain in work?  

Rising Economic Inactivity

Under-investment in training by UK employers (when compared to other developed nations) has long been a concern for policymakers who are keen to reverse the country’s weak productivity growth. In his recent Spring Statement, the Chancellor of the Exchequer highlighted that UK employers spend half the European average on training their employees, setting out plans to explore whether the current system – including the Apprenticeship Levy - is doing enough to incentivise businesses to invest in workforce skills. 

But some, including the Learning and Work Institute, argue that the Chancellor’s focus misses one of the major after-effects of the pandemic – rising economic inactivity, especially among older people. 

Recent figures indicate that following years of sustained falls, economic inactivity has been rising, with over 2.3 million people of working age currently not in work or seeking work. According to the Institute for Employment Studies, recent months have seen the largest increase in economic inactivity among those over 50 in at least three decades – rising by around 550,000 since the start of the pandemic. 

Meanwhile, vacancies remain at record levels, with over 200,000 vacancies in the health and social work sector alone. Record vacancies are being driven by a shortage of available workers – there are 1.1m fewer people in the labour market now than before the pandemic.

As vacancies remain high, employers need to consider how they retain their staff and ensure that older workers can contribute effectively to the changing workplace 

An ONS study has highlighted those in their 50s were more likely to cite stress, mental health, and changes to lifestyle as reasons for leaving work than those aged over 60; who commonly cited retirement as their key motivation.

ONS also found that those over 50 who would consider returning to work want flexible hours, the ability to work from home and work that fits around their other responsibilities, with 69% stating they would return on a part-time basis. As our population ages, there are more older workers in our labour market and increasingly, employers will need to offer their workers flexibility to retain them.

Tackling Economic Inactivity

The level of economic inactivity among people of working age fell over the decade between 2010 and 2020, from a high of 23.9 percent to 20.6 percent before the pandemic arrived, driven in part by reduced numbers of people taking early retirement – a trend that has been reversed by the pandemic. 

As the Centre for Ageing Better notes, Government support to get over 50s back into work has been historically ineffective; the 2021 Spending Review pledged to enhance support at Jobcentre Plus for older jobseekers but a large share of those who are economically inactive aged over-50 are unlikely to engage with JCP. 

Those in their 50s who have left employment are vastly more likely to be using their savings and pension pots as their main source of income, which creates a longer-term problem if funds fall short, meaning they are ineligible for employment support if they decide to return to work. Unlike younger people, the over-50s are rarely the focus of labour market interventions. 

Retaining and Re-engaging Older Workers

The number of adults participating in publicly funded learning has declined over recent years, from 3.1 to 1.7 million. Data from Skills Bootcamps – a key government initiative offering free short courses designed with employers to enable people to upskill and retrain for occupations and sectors where labour is most in demand – indicates that fewer than 5% of participants are aged over-45. 

Government is placing a high priority on lifelong learning, with the introduction of the Lifelong Loan Entitlement and moves to create a more flexible post-18 education and training offer of short courses and qualifications at higher levels. What is less clear is whether over-50s will seek loan funding late in their careers to upskill and reskill, given they are likely to have fewer years of work during which they can reap the gains arising from a new qualification or skill than those in their 20s, 30s, or 40s. 

However, opportunities remain elsewhere. The Spring Statement confirmed Government’s commitment to maintaining an all-age, all-level apprenticeship system. Since 2017, apprenticeships for older people have been funded at the same rate as young people, prompting a rise in the number of over-50s participating in an apprenticeship as employers use apprenticeships to upskill and retain employees. Through the National Skills Fund, adults can now access a range of level 3 courses for free, restoring an entitlement to funding that was removed by the 2010-2015 Coalition. And though they are under-utilised by the over-50s, Skills Bootcamps still offer free, flexible courses of up to 16 weeks for adults of all age over 19.  

Decisions made by policymakers impact the range of programmes available to be used by employers and the over-50s. With ageing workforces, no end in sight to the current labour shortage, and with economic inactivity among the over-50s continuing to rise, we should expect employers and policymakers to increase their focus on this key labour market cohort. 

The demands of the workplace continue to shift and fewer more so than in healthcare, and some employees may find their place of work completely altered from the one they entered four decades ago. There are constant changes in skills development and the requirements of employers to build and retain capacity, and the demand on providers continues to grow. The responsibility of keeping a team equipped for the healthcare sector of today can be shared by internal resources and external providers, and good management understands that in healthcare, training and learning is never complete. Our next article looks at external providers and how they contribute to training requirements, building capacity and resilience in our healthcare sector.