This morning our Chief Economist, Dr Nicola Headlam, appeared on the BBC to play fantasy chancellor in the run up to Wednesday’s Spring Statement. Today she was discussing how to bring over 50s back into the work force.
Three members of the public presented their ideas to Nicola, who then gave her expert opinion as to whether they would be effective and if Jeremy Hunt should be considering them in the Spring Budget.
Unemployment has dropped to 3.7% and the number of vacancies in the job market has fallen for the eighth month in a row, though this second figure is in part due to companies withdrawing vacant positions as they are no longer able to afford to take on new staff. Despite these seemingly positive developments to unemployment statistics, the UK is facing the problem of many of the 160,000 workers aged 50-64 that left the job market during the pandemic not returning.
The first idea came from a caller who has retired and would be happy to do part-time work but as most of these roles are minimum wage, and his pension uses up his tax allowance, it is not worth the pay. The caller pointed out it would take him an hour to earn the price of a large pack of butter. The caller would like to see a tax allowance introduced to increase the take home off pensioners working low paying part time jobs.
Dr Nic agreed with this idea. She advised that there are very few options for retired people to work part time and supplement their pensions in a meaningful way. She used the example of a retired teacher who was willing and capable to help in the classroom a few days a week does not have the option to do so. Under the current system they could either volunteer or would need to stay as a full time employee. This lack of flexibility keeps people with valuable experience out of the job market. Dr Nic added that flexibility seems to exist at the top end of the market and that Red Flag Alert data shows that there are over 40,000 company directors 80 years or older.
The second idea strayed from the topic of over 50s returning to work and posited that the current childcare system is not fit for purpose and is actively keeping capable workers from the job market on a long-term basis. People can’t afford childcare fees and childcare providers themselves are failing on a regular basis. A system that does not benefit the providers or consumers needs to be reviewed.
This was a sentiment agreed with by Dr Nic, recent data suggests that the average cost of childcare in the UK is £15,000 a year per child per year. To make it economically viable to return to work you would need to bring home about twice that much, which is well above the national average and unrealistic for the majority of workers. This is a not just a short term problem for parents, as the stay-at-home career tends to be unable to reenter the job market when they would otherwise have decades more of a working life. 40% of grandparents have childcare responsibilities as their children try to return to the job market. Dr Nic advised that a full review is needed of the care system as a whole and many of the G7 countries have schemes around childcare aimed at returning parents to work, as Rishi Sunak has set the target of the UK having the strongest growth in the G7 we should start to look at what they are doing right.
The final idea came from an over 50 that was retraining to enter the environmental sector by completing a PhD. This is entirely self-funded and he would like to see incentives or grants aimed at helping people, especially over 50s, retrain.
Dr Nic pointed out that this is a good example of how peoples’ career paths are changing. We no longer start a job in out 20s and leave 50 years later; people will regularly change careers and roles throughout their career and, furthermore, the line between work and free time is blurring. People would like to see more flexibility in work commitments but are happy to work until they are older; Dr Nic said it’s a strange idea that you work furiously for 50 years and then become completely inactive in retirement. As social norms around working life and retirement are changing so does legislation and it should recognise that over 50s are still able to pivot their career and be able to meaningly contribute to their new field before retirement.
Apprenticeships are an effective and underutilized method of retraining and the Chancellor should not only improve the governments current offerings around apprenticeships but also encourage older people to take advantage of the system.
Three good ideas as to how over 50s can be tempted back into the job the market. On Wednesday we will see if Chancellor Jeremy Hunt addresses any of them in the Spring Statement. Dr Nic will be back on BBC Radio 5 Live tomorrow to discuss the housing crisis.
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