Providing retraining opportunities for older workers is essential, as Covid-19 crisis causes biggest annual employment fall for older workers since the 1980s

According to a new report published today (26 Apr) by @ResFoundation, the Covid-19 crisis has led to the biggest annual employment fall for workers over 50 since the 1980s 

The report A U-Shaped Crisis – supported by the Nuffield Foundation – examines the economic impacts of the Covid-19 pandemic on older workers, and how periods of unemployment can affect their prospects upon returning to work.

The backdrop to the crisis has been a period of near continuous employment growth for older workers since the mid-1990s, with men over 50 experiencing only a relatively small drop in employment in the wake of the financial crisis, and employment rates among women age 50-to-64 rising from 46 per cent in 1990 to a record high of 68 per cent on the eve of the pandemic.

However, the Covid-19 crisis has created a U-shaped employment shock, with older and younger workers affected far more than those in the middle of the age distribution.

While the youngest workers (16-24-year-olds) have seen by far the largest fall in employment in the past year (3.9 percentage points), the fall in employment among workers age 50-to-69 has been twice as big as those aged 25-to-49 (1.4 compared to 0.7 percentage points).

A U-Shaped Crisis notes that the cost of losing your job can be particularly high for older workers.

After losing work, older workers take the longest, on average, to return to employment. Six months after becoming unemployed, nearly three-quarters of 16-29-year-olds and 30-49-year-olds (74 per cent and 72 per cent respectively) had returned to employment, compared to fewer than two-thirds of those aged over 50 (62 per cent).

Furthermore, when older workers (aged 50+) return to work following a period of unemployment, they face the highest income hit of all age groups, with typical hourly earnings falling by 9.5 per cent, compared to their pre-unemployment earnings.

This is more than double the 4 per cent earnings hit seen by middle-career workers (aged 25-49), while typical pay growth remains strongly positive (5.1 per cent) for young workers (aged 18-24) returning to work.

Becoming unemployed during the pandemic can potentially have a big impact on older workers’ retirement plans, says the Foundation, either forcing them to retire earlier than they would have planned to, thereby reducing their income in retirement, or forcing them to work longer to make up for lost earnings.

Providing retraining opportunities for older workers can be hugely beneficial, as demonstrated in previous Foundation research.

While the Government has provided extensive employment support in response to the current crisis, the Foundation says it must ensure that this can be tailored to the needs of older workers, and that the quality remains as high as that provided to younger adults.

The Foundation adds that the Government could further strengthen employment support for older workers by providing a tax credit style supplement to overcome the wage penalty they face when returning to work, similar to that provided as part of the ‘New Deal’ in the 2000s.

Nye Cominetti, Senior Economist at the Resolution Foundation, said:

“The Covid-19 crisis has had a U-shaped effect on people’s employment prospects. While the youngest workers have been hardest hit by the crisis, older workers have also been badly affected, experiencing the biggest annual fall in employment since at least the 1980s.

“The cost of unemployment for older workers is particularly high. They take the longest to return to work – with fewer than two-in-three returning within six months – and experience the biggest earnings fall when they finally to return to work.

“In the face of the current crisis, unemployed older workers may have to either work for longer to make up for these negative employment effects, or retire earlier than they planned to.

“The Government must ensure that older workers are not forgotten in the design and implementation of schemes created in the wake of the crisis to help people back into work.”

Alex Beer, Welfare Programme Head at the Nuffield Foundation said:

“The economic downturn following the COVID-19 pandemic is likely to widen existing inequalities and will hit some groups harder than others. As this research shows, along with young adults, workers over 50 have been particularly likely to lose their jobs during the crisis. We urge the government to offer tailored support to older workers, including opportunities to retrain, adequate support to find new jobs and, for all workers, greater rights to flexible working.”

#IntergenerationalAudit – the Resolution Foundation warns of a lost ‘covid generation’ 

The report findings reflect the Resolution Foundation’s annual Intergenerational Audit published last year (7 Oct), as hopes of a V-shaped recovery gave way to the reality of a U-shaped crisis, with young adults and young pensioners most likely to have stopped working during the pandemic.

A U-shaped pattern emerges when looking at the impact of the crisis on people’s jobs. Over half of those aged 18-24 and 65+ who were employed before the pandemic have since stopped working – either by being furloughed or by losing their jobs altogether – compared to fewer than a third of those aged 30-50.

These conclusions where confirmed by findings in the October 2020 publication of EMSI’s Shedding Light on the Labour Market, which showed that whilst the majority of young workers were furloughed, the biggest rise in unemployment was among older workers

The U-shape of this jobs crisis reflects the fact that young and older workers are heavily concentrated in social sectors of the economy that have been hit hardest by public health restrictions.

Focus on retraining programmes that are linked to job creation and align with longer-term policy goals

With large numbers of lower-qualified workers now at risk of losing jobs in sectors like hospitality, entertainment and retail, the Resolution Foundation is calling on the Government to look to training as one way to tackle high unemployment – in particular, retraining programmes that are linked to job creation and align with longer-term policy goals. Their 2020 report “Can training help workers change their stripes?” (18 Aug 20) uses 2012-18 data on adults’ life changes and found that training is strongly associated with an increase in the odds of a person returning to work after a period of worklessness.

Training is strongly associated with an increase in the odds of a person returning to work after a period of worklessness. This link is particularly strong for those with lower-level qualifications, especially younger non-graduate women, but lower-qualified workless adults are half as likely to be in education or training than their higher-qualified counterparts.

Given the positive role that training – particularly qualification-bearing training – can play in helping lower-qualified adults of all ages re-enter a job, the Foundation calls on the Government to look to training as one way to tackle the high levels of unemployment anticipated as a result of this crisis. 

With the jobs market likely to shrink in those sectors hit hardest by lockdown, the report notes that policy makers should also prioritise interventions that can help the newly redundant to make a career change. 

Fewer than 2 per cent of 25-59-year-olds participate in this kind of intensive training each year, in part because of longstanding practical and financial barriers that prevent adults from returning to intensive education and training.

The UK is ill-prepared to deliver large-scale retraining programmes, and the UK’s inexperience in supporting workers through career changes does not leave policy makers with a clear roadmap for tackling unemployment, although short, specific training as part of job creation schemes could help those in hardest-hit sectors. Short courses in social care and ‘green jobs’ are likely to help workers move out of coronavirus-hit sectors.

Sector Reaction to the U Shaped Crisis Report

Association of Employment and Learning Providers chief executive Jane Hickie said:

“AELP’s views on the response required to rising youth unemployment has been well documented and the latest Budget employer incentives for apprenticeships were welcomed.  Therefore we are pleased that the Resolution Foundation has today shone a light on the plight of older workers and the need for more adult retraining.  AELP has two main recommendations: firstly, the system for adult training must be simplified because it is currently far too fragmented with too many government initiatives which are confusing for employers and learners.  The National Skills Fund offers us an opportunity to do this and we believe that we should be moving towards the return of individual learning accounts underneath the Fund but this time properly regulated.

“Secondly the government should be doing a much better job of managing the Adult Education Budget which should be funding the retraining needed.  Instead of us reading about Treasury clawbacks of the existing budget, the money should be reallocated to the providers that can deliver more retraining and ministers should make the budget much more demand-led.”

Kirstie Donnelly, CEO City & Guilds Group Comments: 

“We have repeatedly called out the lack of support for older workers who have lost their jobs as a result of the pandemic. Whilst it’s right that the Government focuses on supporting those at the start of their careers who have suffered so much this past year, older workers are also struggling and need tailored support to help them retrain into new careers in growth industries. The idea of starting all over again at an older age is often harder and we know that there can be prejudice against hiring older workers, particularly women. We recently launch our Building Bridges towards future jobs research which surveyed people across the UK to understand their willingness to switch career and the barriers they faced in applying their skills to new roles.

“Those over 55 were most likely to think that their skills would not be useful in other job roles or industries and also showed the least confidence in the jobs market in 2021 with three quarters believing it would be worse than 2020. Over 55s also had the least confidence in their digital skills with a third stating digital skills are their weakest area.

“Much of the government support is also reliant on people only having achieved below a level 3 qualification which is less likely as you get older. We believe that the best way of helping everyone back into work, no matter what age they are, is to help people to identify their transferable skills and to support them with short skills training interventions, that helps people transition from one occupation and enter jobs in growth industries. Our Step Into courses, available for anyone through the FutureLearn online learning platform, are a great way for people to understand what skills and attributes are needed for roles in social care, digital and construction where there are right now real job opportunities and real skills shortages.”

David Hughes, Chief Executive of the Association of Colleges said:

“Today’s report shows that it’s not just young people feeling the severe impacts of the pandemic; older people who have lost their jobs need support retraining and upskilling too. Colleges train hundreds of thousands of adults every year and as we begin to rebuild the economy, they will be critical to that effort. Opportunities for adult training and learning plummeted in the last decade as funding was cut, so the government’s Plan for Jobs ambitions must bring investment older people who will require quick and targeted careers support and training. The research today is a good reminder why the adult education budget threshold decision last month was so damaging in clawing back funds just when colleges need them most.”

Stephen Evans, Chief Executive of Learning and Work comments:

“This report reiterates some of the findings of our earlier research. In particular, that past employment support has been less successful for the over 50s. With the Government now announcing the contractors it has chosen to deliver its Restart programme to help long-term unemployed people find work, it’s essential we ensure this and other support helps all those out of work. We also need better support for retraining and improving skills to ensure a full recovery from the pandemic that benefits all age groups.”

A government spokesperson said:

“Older workers are a huge asset to this country, and heading into the pandemic a record number of over 50s were in work. 

“As we build back better we’re helping hundreds of thousands of older workers to retrain, build new skills and get back into work through our Plan for Jobs and our 50 Plus: Choices Offer.

“Our 50 Plus Choices strategy is supporting around 600,000 claimants over the age of 50.

“As part of this, our 50 Plus Champions will continue to provide dedicated support to Work Coaches to offer tailored support and advice to older workers – they are the experts in signposting people to the support that’s right for them.

“We’re also piloting mentoring circles with local employers for jobseekers over 50 where they’ll be able to boost their network, job search skills and confidence – enabling them to move back into work.

“Age-based discrimination is illegal and decisions about recruitment, selection and promotion, should be based on the skills required for the job.”

Agata Nowakowska, Area Vice President EMEA atSkillsoft said:

“The significant decline in the employment rate for the over 50s means it is crucial that older workers aren’t forgotten in government initiatives to help people get back to work. Indeed, the advantages of a workforce that successfully blends youth with experience are hard to dispute. Mature colleagues have practiced communicating ideas, working with people at different levels of an organisation, and troubleshooting issues. In short, ‘maturity’ and lived experience remains invaluable to an organisation, bringing a depth of thinking that provides balance to a younger workforce and makes for a very strong team.

“Multiple studies have found that gender, ethnically and culturally diverse organisations perform better. A University of Zurich study, for example, found that an increase in age diversity can have substantial positive productivity effects, particularly in innovative and creative companies. Employers who invest in the wisdom brought to the workplace by maturity can foster the attributes that many contemporary business leaders say they value the most. From creativity and innovation, to emotional intelligence and an ability to cope under pressure, investing in workplace maturity is always money well spent.”