Why have so many over 50s quit the workforce?

The number of people who are economically inactive has risen steeply since the beginning of the pandemic – largely driven by over 50s quitting the workforce.

This rising inactivity comes at the same time as a very tight labour market, with unemployment low but the number of job vacancies high.

On Tuesday, the House of Lords Economic Affairs Committee described the situation as "bleak" and urged the government to "do more" to understand what is happening.

Yahoo News UK looks the number of over 50s quitting the workforce, and the reasons behind it

What makes somebody economically inactive? To classify as economically inactive an individual has to not be employed and not be seeking work, or be unable to start work. It is not the same as unemployment, where a person doesn't have a job and is trying to get one.

How many people are economically inactive? The number of economically inactive people aged 16-64 has increased by 565,000 people since the start of the COVID pandemic, bringing the total to almost 9 million. This amounts to 21.5% of the working age population.

Who is leaving the workforce? Those aged 50-64 are the most likely to have become economically inactive. There are 302,000 more economically inactive people in this age-group than before the pandemic, compared to 26,000 35-49 year-olds.

Over 50s are quitting in high numbers. The rate of over 50s leaving the workforce has increased since the beginning of the pandemic, reversing the downward trend seen over the last decade. The latest figures show that 57.1% of 50-64 year-olds are now economically inactive.

Why are so many over 50s quitting? According to a report by the Lords Economic Affairs Committee, the increase is being driven by long-term sickness, earlier retirement and the UK’s ageing population. Early retirement is the key driver, with the rate of people moving from employment to retirement increasing more than the movement from employment to sickness.

Why are so many people retiring early? At the moment, experts aren't totally sure. Mike Keoghan, a statistician at the ONS, said there is evidence “the pandemic forced a variety of behavioural changes on people.” According to the ONS's Over 50s Lifestyle Study, 15% of respondents said the COVID-19 pandemic was the main reason for them leaving work, 10% said they wanted a change in lifestyle, and 10% cited mental health and stress.

Will these older workers return to work? Probably not. Almost all the over 50s who have left say they have no intention of working. As labour market economist Jon Boys put it: "They are gone, and they are not coming back."

What does it mean for the economy? Lord Bridges, chair of the House of Lords Economic Affairs Committee, has said the rise in economic inactivity "makes it harder to control inflation; damages growth, and puts pressure on already stretched public finances".

What is the government doing about it? In his Autumn statement, Jeremy Hunt announced the government “thoroughly review workforce participation” and release a report in early 2023. The review will look at participation among all workers, not just over 50s.

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