Jeremy Hunt’s plan for retired people to “get off the golf course” is unlikely to lure them back into work, research suggestsThe government is “barking up the wrong tree” by trying to lure people back from retirement to fill gaps in the workforce, a pensions expert has said.
The steep rise in the number of working-age Britons who are “economically inactive” was more likely to have been driven by illness than by people retiring early, according to a report by the consultancy LCP.
Next month’s budget is expected to prioritise efforts to cut the number of people who are neither in work nor looking for a job. Britain is the only major developed country to have suffered a sustained rise in economic activity since the spread of the coronavirus. Jeremy Hunt, the chancellor, has appealed to over-50s to “get off the golf course” and find a second or even third career.
However the LCP report, co-authored by Sir Steve Webb, the former pensions minister, said that “retirement explains none of the increase in inactivity since the start of the pandemic”. Analysis of official workforce statistics found that “there are actually fewer people of working age who are retired now than there were at the start of the pandemic”.
Instead, the report pointed to a big rise in the number of people who are long-term sick as the key factor, especially among over-50s. The number of Britons with long-term illness has risen by 353,000 since the start of the pandemic, more than half of the growth in inactivity in that period.
The report said that this was likely to reflect the state of the NHS because “those who would otherwise have been treated or had their chronic condition better managed and able to work now find themselves long-term sick as they wait for treatment or live permanently in poorer health”.
Webb said: “There is a real risk of the government barking up the wrong tree when it comes to the growth in economic inactivity. Policy solutions which aim to reduce early retirement or to encourage the retired out of retirement are likely to have only limited effect in reversing recent trends. Instead, the policy effort needs to be focused around understanding why flows into long-term sickness have grown and on early intervention to prevent people’s health from deteriorating.”
The research questioned whether measures aimed at the retired would be effective, even if they made up a bigger chunk of the economically inactive. Data from the labour force survey “shows very clearly” that “amongst the economically inactive who would like paid work, by far the largest group is those who are currently inactive because of sickness”.
“By contrast, only a very small number of those who are inactive because they describe themselves as retired would like to work again,” the report added.
It highlighted examples of where poor healthcare could lead to people leaving the workforce. There has been “a big drop off” in people being diagnosed with type 2 diabetes which “means that many will subsequently be diagnosed in a ‘sicker’ state – causing time off work with the initial presenting illness, a longer period to stabilise the condition or in the worst situations a first diagnosis via an emergency visit to hospital with a diabetes-complication; each resulting in a larger impact on one’s ability to work than would have previously been the case”.