This article first appeared in The Times on February 9th 2022, written by Times Radio presenter Dominic O'Connell.
If you run a business or have a job that involves hiring people, you will know that finding new workers is a real trial at the moment. There are the high-profile examples of restaurants cutting out lunch service because they can’t find enough chefs and waiters, but bosses I talk to in all kinds of companies say that their biggest headache is filling the gaps in their workforce.
This is not what was forecast when the pandemic hit two years ago. There were confident predictions that unemployment would rocket, perhaps reaching levels not seen since the 1970s, and there would be plenty of idle workers to choose from. At the very least the unemployment rate would double, from the pre-pandemic 4 per cent to8 per cent or more. That seemed a safe assumption when the UK was, after all, experiencing its biggest drop in GDP in 300 years.
All those forecasts turned out to be not just wrong but the exact opposite of where we have ended up. One obvious reason why is the success of the furlough scheme. The injection of £70 billion of public money stopped a rapid rise in unemployment that would have done long-term damage and made economic recovery more difficult. There are less obvious factors at work, too.
Over the past year the official employment numbers have presented a paradox: lots of people are in work, yet still lots of vacancies. The number in direct employment (those who pay their taxes PAYE rather than being in self-employment) has grown to new heights — not just a post-pandemic high but an all-time record of 29.5 million. The number of vacancies is also at an all-time high of 1.29 million. That is 500,000 more unfilled jobs than before the pandemic, even though the economy has only just returned to the size it was in February 2020. How can both those numbers be true?
Withdrawal of Older People from the Workforce
The answer is in a phrase that has not yet made it into common use: the great resignation — or, as James Reed, chairman of the employment agency Reed Employment put it when I interviewed him on Times Radio this week, the great lie-down. There are about 1.15 million fewer people in the workforce than before the coronavirus struck. This has something to do with Brexit, with workers returning home because of Britain’s departure from the European Union. A bigger factor, however, has been the withdrawal from the workplace of older people.
Tony Wilson, the director of the Institute for Employment Studies, has ferreted around in the Office for National Statistics’ monthly labour force survey and found that about three fifths of that 1.15 million are people over 50. And while economic inactivity — a category that the ONS defines as people who haven’t sought work for a month, or can’t start a job for a fortnight — has edged up across the board, it is concentrated in the older age groups. In fact, those over 50 account for 80 per cent of all the growth in the economically inactive, which translates into 560,000 older people sitting on the sidelines. It is also worth noting that while the economic inactivity rate for younger age groups now seems to be declining quickly, it is still high for older people.
Why are these workers hanging up their boots, and why are they doing so even when the jobs market is so strong? It has been portrayed as a deliberate choice; workers towards the end of their careers have, because of the pandemic, decided to take early retirement or make some other change in their lifestyle. This is summed up by Reed’s phrase — a mass decision to have a lie-down rather than endure the daily grind.
There are undoubtedly some for whom that explanation is correct, and others who have happily taken voluntary redundancy. The numbers, though, tell a different story. The ONS also asks people why they are economically inactive. Retirement has grown a bit as the reason for economic inactivity but the main increase has been in people who say they are long-term sick or looking after family members. The sudden surge in older people not working appears to have been driven not by silver surfers heading for the beach but by people having the decision forced upon them by circumstances.
All this poses a problem, and an opportunity, for employers trying to fill gaps in their depleted ranks. They now have to focus hard on hanging on to older staff, and cast their net wider in recruitment. Most hiring and human resources policies are, wittingly or not, geared to younger people. When it comes to career planning, job moves within organisations or even in-job training, older workers are often left out. Either they are reluctant to come forward, as they feel they should know the job without needing more instruction; they feel they will be ignored; or they are simply being overlooked.
Professor Matt Flynn, who leads the Centre for Research into the Older Workforce at the University of Hull, says that employers will have to pay more attention to supporting senior staff, and plan for conversations about career development and performance management. Retirement can be a big inhibitor to frank discussions. Workers often don’t want to tell employers their long-term plans for departure for fear they will be passed over when it comes to new projects or promotions. And employers are nervous about broaching the subject; it has been illegal to discriminate on the basis of age since 2010. This is, Flynn, says, based on a misconception. Employers can happily talk about retirement plans without fear of being sued, as long it is part of a wider dialogue about a career path. Some large employers have already adopted phased retirement schemes to encourage openness on both sides.
Retaining older workers is one thing, getting them back into work another. Here, Flynn thinks the key obstacle is not in finding a novel way of tapping into the right demographic — older people can read job adverts just as well as young candidates — but in the next steps: screening and selection. Too many managers approach a job search with a template in their mind of what the ideal candidate would look like, and often that does not include grey hair. And if the search doesn’t provide someone who fits the template, it is often ended rather than widened.
Companies have had to change quickly to cope with the pandemic, taking out loans, switching to remote then hybrid working, and going from physical to online sales. Now they face the unexpected challenge of finding enough staff. Those who learn the trick of keeping older workers, and find a way to lure them back into the workforce, will have a big advantage.