UK staff who work from home could retire later and deliver 5% GDP boost

Britain's pandemic-induced work-from-home trend could encourage older workers to stay in the labour market for longer, delivering a billion-pound injection to the Covid-battered UK economy , official data suggests. If the employment rate of people aged 50 to 64 matched that of those aged 35 to 49, it would add more than 5 per cent to UK gross domestic product (GDP), or £88 billion, the Office for National Statistics estimated. “The early exit of older workers from the labour market, between the ages of 50 and prior to state pension age, can negatively impact an individual’s future financial security and is also detrimental to the wider economy,” the ONS said on Wednesday. “Previous research has shown that flexible working is a factor in enabling older workers to remain in the labour market for longer.” In June and July of last year, older workers toiling entirely from home were more likely to say they were planning to retire later compared with those not working from home, the ONS said. From a business perspective, the majority of older workers say their productivity increases when they work remotely. Meanwhile, employers are more likely to attract and retain older workers and see a decrease in absenteeism if they offer flexible options. Tom Selby, head of retirement policy at AJ Bell, said stopping work early is a voluntary decision in some cases and less voluntary in other instances as it can be caused by challenges such as ill health. “Worryingly, although perhaps not surprisingly, people who work in low-paying or physically intensive sectors are six times more likely to stop working before state pension age because of ill health than those working in other professions,” he said. “What’s more, women are more likely to stop working early than men, potentially further perpetuating the gap in pensions between the sexes.” About 18 per cent per cent of women aged 50 are considered "economically inactive" compared with 9.6 per cent of men, the ONS said. At 64, this figure rises to 58.6 per cent for women and 44.9 per cent of men. While the government and Bank of England have been lauding the strength of the labour market as evidence of a dynamic recovery from 2020's biggest fall in output in more than 300 years , they are facing a post-pandemic challenge. With 1 million job vacancies and about 2 million people either losing their jobs, leaving the workforce or still on furlough, hundreds of thousands of employees are preparing for life after state support over the next six weeks when the government wage programme ends on September 30. The nationwide staff shortage is 14 times the normal level, ONS data released earlier this week showed, with economic growth in the country hampered by the discrepancy between vacant positions in vital industries such as haulage, construction and food processing – which previously relied on European Union citizens – and those with the highest level of furloughed workers. Between 700,000 and 1.2 million workers were still on furlough in late July, the ONS said, while another 490,000 people have left the labour market since the fourth quarter of 2019 and are categorised as “inactive.” Seven in 10 businesses finding it more difficult this year to fill vacancies said this was due to a lack of suitable applicants, a survey conducted by the ONS in early August said. Meanwhile, men and women classed as economically inactive once they are 50 are less likely to report “good” or “very good” health than those who are employed or unemployed, which is why finding ways to encourage older workers to remain on the payroll is so important, analysts say. During the pandemic, 45 per cent of women over 50 and 38 per cent of men in the same age bracket switched to remote working with those in managerial or professional occupations the most likely to work from home. This was particularly beneficial for those with caring responsibilities, such as for elderly parents, or those with ill health. The ONS data found that 10.9 per cent of over-50s with a long-term health issue, disability or infirmity who work from home were more likely to retire later than those not working from home. Politicians should focus on support for people in their 50s to stay in the workforce for longer, Mr Selby said, as stopping work early can affect people’s health and wellbeing. “Stopping working in your 50s – when in theory your earning power and ability to save should be at its highest – could also have a significant impact people’s retirement outcomes,” he said. “In many cases it will mean making your retirement income stretch for much longer, meaning you have to live for less in your later years."

UK staff who work from home could retire later and deliver 5% GDP boost

Early exit of over-50s from British workforce could wipe £88bn from country's economy