Work | State of Ageing in 2020
The proportion of people over the age of 50 in employment has risen over the last 20 years, but this progress masks the large number of people falling out of work prematurely.
The State of Ageing in 2020 is an online report with multiple chapters, capturing a snapshot of ageing today and considering our future prospects. Below, you can get further detail by clicking on the 'Analysis' buttons and you can hover over graphs to access the data.
The over 50s make up a significant and growing proportion of the workforce: a third of all workers are over 50
The employment gap between people over and under 50 years old has been steadily narrowing over the last 20 years. Nevertheless, in 2019, there were around 800,000 people aged 50 to State Pension Age who were not in work but wanted to be. Since October 2020, both men and women are only able to claim their state pensions after their 66th birthday. Yet by the time they are 65, the majority of people are out of work.
The Coronavirus pandemic risks halting – or even reversing – the gains which have been made in the employment of over 50s in the last 20 years, and deepening the struggles of those already out of work. The youngest and oldest workers were the most likely to be furloughed, and are thus the most at risk of losing their jobs now the Coronavirus Job Retention Scheme has wound down.
Historical evidence – from both the last recession, and pre-COVID-19 – gives us an indication of what comes next. Younger workers are likely to be the hardest hit in terms of job losses, but people aged 50 and over who do lose their job will struggle the most to return to work, and are at greater risk of becoming long-term unemployed. It is vital that the government provides targeted and personalised support needed by people in their 50s and 60s to stay, and thrive, in work.
- The workforce is ageing: a third of all workers are now aged 50 or over.
- But the majority of people are out of work by the time they hit State Pension Age: as of September last year, only 40% of men and 30% of women were still working at 65.
- We are facing a long-term unemployment crisis for older workers. There are 2.7 million workers aged 50 or older who have been furloughed. This means that an estimated 400,000 people in this age group are at risk of redundancy as the government’s support for shut-down sectors unwinds.
What needs to happen:
- Government, Jobcentre Plus and local commissioners of employment support programmes need to send a consistent and clear message to employers, job coaches and service providers, and older workers themselves that the over 50s are as entitled to support and good work as younger workers.
- The government’s new back-to-work schemes should include targeted support for workers aged 50 and over, which takes into account the lessons learned from previous programmes about what works – and what fails – older workers.
- This should be backed up by robust standards and oversight of programmes, to ensure that older workers are not being parked or ignored.
- People aged 50 and over with long careers in the hardest hit sectors will need targeted support to retrain and move sectors. We welcome the extension of adult skills funding to targeted Level 3 courses, but there is still much to be done in this area.
- As well as government, employers themselves can take more action. To be age-friendly, employers should end bias against older workers when recruiting, support staff with health conditions, create a culture where people of all ages work well together, introduce more flexible working and encourage career development at all ages.
Work and employment
There are four million more workers aged 50 and over than there were in the year 2000, compared to 1.5 million more workers aged 25-49
- As of Jan-March 2020, there were 9.3 million people aged 50-64 in work. A third of all workers are now over 50.
- In the last 20 years, the number of workers over 50 has increased by nearly two-thirds – from 6.6 million to 10.6 million.
- The number of workers over 65 has almost tripled, with nearly 900,000 more people over 65 in work. One in seven men and one in 12 women over 65 were still working in 2019.
- More than 3.4 million workers over 50 are ‘key workers’ working in sectors such as health care and food distribution.
The employment rate of people aged 50-64 has increased by 12 percentage points since 2000
- The employment rate for people aged 50-64 has been steadily rising for the past 20 years, with nearly three-quarters of people aged 50-64 in work in 2019 (72.8%), compared to 60% in 2000.
- Before the pandemic, the employment gap between people aged 50-64 and those aged 25-49 had narrowed from 20 percentage points in 2000, to 13 percentage points in 2019.
This long-term shrinking of the employment gap has been driven by a number of factors. There are structural factors, such as improvements in health at older ages. Deliberate policy changes have also played a role: the removal of the Default Retirement Age in 2011, and the increases in the State Pension Age which have been taking place since 2010. Overall, it is women’s employment which has seen the greatest gains.
Despite a rapid increase, the employment rate for women aged 50-64 is still nine percentage points behind men
- The employment rate of women aged 50-64 has risen substantially since 2000, from 53% to 68%. This compares to an increase from 69% to 77% for men.
- This means that the gap between men and women’s employment rate in this age group has nearly halved, going from 15 percentage points to just eight percentage points.
The increase in labour market participation among older women has been key to driving the overall increase in the employment rate of people aged 50 and over. This is partly the result of the rapid increase in the women’s State Pension Age since 2011 – when the planned increase from 60 to 65 was brought forward from 2020 to 2018. But there are also longer-term changes at play: women born and raised post-war were more likely to work throughout their lives than the generation before them.
And yet, although the age for which both men and women are eligible for the state pension will have converged by the end of 2020, women are still less likely than men in this age group to be in work.
While rising employment rates for women in mid-life seem to indicate that more will be able to save for their later lives (which will, on average, be several years longer than men’s), the gender pay gap explored later in this chapter means that many women are still at risk of financial insecurity in retirement.
By the time they are 65, under half of men, and less than a third of women, are still in employment
- The State Pension Age, having just reached 66 for both men and women, has been rising quickly since 2018. But, as of March this year, only 41% of men and 32% of women were still working at 65.
For many, the decision to leave work before 66 is a positive choice: they will have sufficient funds from a private pension, and rich enough social connections, to enjoy a comfortable and fulfilling retirement. But for others, falling out of the labour market is a cause of financial hardship and a risk to wellbeing.
There are three times more women aged 50-64 working part-time than men
- In the year to March 2020, there were over 8.5 million people of all ages working part-time – and three-quarters of them were women.
- This pattern is evident throughout the life course: 41% of all employed women work part-time. This has negative implications for both their income and their ability to save for retirement. Around three million women who are in work earn less than £10,000 a year (the automatic enrolment earnings threshold), largely because they work part-time. This means that a quarter (23%) of female workers are ineligible. If the rules were changed to allow the auto-enrolment threshold to be earned from multiple part-time jobs, an additional 80,000 people would qualify – 60,000 of whom would be women.¹
Employment rates alone do not tell the full story of people’s working lives in their 50s and 60s. For example, people approaching retirement age (particularly women) are more likely to work part-time than at younger ages. The move towards part-time work can be driven by health issues, or by the need to fit work around caring responsibilities – the latter particularly prevalent among women, who are also more likely than men to say they would prefer a full-time job. Indeed, we should not see this move to part-time working as an inevitably negative choice: older part-time workers also say that they are driven by the desire to spend time with their families and relax.
Working part-time might give people the chance to fit work around their lives, but it is the primary driver of disparity between men and women’s pension pots, with pro-rated wages also being significantly lower than that of a full-time employee, hindering individual saving.
One in five workers aged 50-69 are self-employed – more than any other age group
- Self-employment is much more common among people aged over 50 than other age groups: nearly 20% of workers aged 50-64 are self-employed and over a third of workers over 65. For many this will be a positive choice, allowing greater flexibility in work. But there are also negative implications for their financial position, particularly for those at the lower end of the earnings scale.
Older workers are significantly over-represented amongst self-employed workers, with one in five people aged 50-64 working for themselves. Just as with a move to part-time work in later life, the reasons behind this are complex: for some, self-employment offers the independence and flexibility which meets their needs or desires in later life, while others will feel driven towards it by a rigid jobs market and ageist employers.
Whatever the reason, moving into self-employment does often come with negative financial implications. Nearly a third (30%) of people over 55 who are self-employed have no pension wealth, double the figure for employees aged over 55 (14%). The majority of people who are self-employed earn less than those who are in employment. The median weekly earnings of someone who is self-employed when they are aged 55-64 is £200 lower than the median weekly earnings of an employee of the same age.
This means that, as well as missing out on employer benefits such as sick pay and pension contributions, people who are self-employed are often less able to withstand income shocks. This has become an acute issue for many in the wake of Coronavirus. One in four claimants to the Self-Employment Income Support Scheme were aged 55 or older.
There are nearly nine million workers over 50 in England, a third of whom work in public administration, health and education
- Public administration, education and health have the highest number of workers in later life, with nearly three million workers aged 50 or over, where they are also slightly overrepresented: about 36% of this public sector workforce is aged 50 or over.
- While representing a much smaller number of people, agriculture and fishing has the highest proportion of older workers, with nearly 50% of all workers aged 50 or over.
Half of workers aged 50-69 say their job is excessively demanding
- Strikingly, 49% of men and 55% of women in this age group say that their work is excessively demanding. Around a third report that the efforts outweigh the rewards, and that they lack control over their work. But only 13% and 11% respectively report low job satisfaction overall.
The benefits of longer working lives – better individual finances, social connections, economic growth – will not be felt if the work we do as we approach later life is poor-quality work. Good-quality work is also key to retaining people in any jobs for longer. Pay is a key part of this (discussed below), but it is not the only factor.
Our research shows that we want the same things from work in our 50s and 60s as at any age: to be appreciated and rewarded, and to have some autonomy. So, while it is concerning that one in ten workers aged 50 to 69 report low job satisfaction, it is even more so that one in three report a lack of control at work. An even larger proportion report an imbalanced ratio of the effort they put into the rewards they gain, a key indicator of wellbeing at work. Our guide, ‘Becoming an age-friendly employeroffers five key actions for employers to attract and retain this group of workers. But this data also reminds us that a key part of promoting extended working lives will be to focus on improving the basic quality of work for all.
Workers aged over 50 are the least likely to receive ‘off the job’ training
- The percentage of all workers who have received training in the last four weeks has declined steadily since 2000. The age breakdown of the workers who do receive training has remained similar.
- Older workers (those aged over 50), are the least likely to take part in training which could allow them to do their jobs for longer, or to retrain in another sector if they are made redundant.
Job-related training offers an opportunity to improve our earnings, our productivity and our satisfaction. As well as ensuring workers are gaining new skills, job-related training improves future employment prospects. It is therefore deeply troubling that older workers are substantially less likely to receive ‘off the job’ training than younger workers, impacting their ability to keep up to date with new skills and gain further employment. Improving the training and retraining offer to people in their 50s and 60s, particularly to those in shut-down sectors of the economy, will be crucial if we want to avoid a long-term unemployment crisis for this group in the wake of COVID-19.
Younger workers are substantially more likely to move jobs than older workers
- The proportion of workers who change jobs is lowest amongst those aged over 50. Job-to-job moves usually result in an increase in earnings, and these reduce substantially in the over 50 group, meaning wages can plateau.
As well as being less likely than younger workers to receive off-the-job training, older workers are also less likely to move jobs than their younger colleagues. While this can mean that those older workers will have more industry-specific knowledge, it can also impact on wage progression, as moving jobs is the main way to secure a pay rise.
Worklessness and unemployment
One in four furloughed workers were aged 50 or older
- In August 2020, 9.6 million people were furloughed: 2.7 million of them aged 50 or older. The Office for Budget Responsibility has estimated that 15% of furloughed workers are likely to become unemployed. That suggests that over 400,000 workers aged 50 or older will become unemployed due to Coronavirus.
- Using a different data source, the Office for National Statistics calculated the proportion of workers who both said they were in employment, and also that they were ‘temporarily away from work’, during the lockdown months of April to June. This shows that those aged 60 and over are particularly vulnerable: 29% of workers aged 60-64 were temporarily away from paid work, as were 35% of workers aged 65-69, and 38% of people aged 70 and over. Some of these – particularly in the older age group – may have been away from work due to shielding, but we still don’t know how many will be willing and able to return to work.
The true impact of COVID-19 on employment is not yet clear. But the latest data shows it is the youngest and oldest workers who are most likely to be furloughed, and so have the greatest risk of unemployment as the Coronavirus Job Retention Scheme ends. But it is the oldest workers who are at greatest risk of long-term unemployment if they do lose their job.
Low re-employment rates for the over 50s is a real concern as we emerge from this crisis
- Data from before the virus hit shows that people aged 50 and over had the lowest re-employment rates of any age group following redundancies. In 2019, 35% of people aged 50 and over who were made redundant were back in employment within three months.
- This indicates that, once out of the workforce, people aged 50 and over have the greatest struggle returning, with a greater chance of falling into long-term unemployment.
People aged over 50 who are unemployed are twice as likely as the youngest adults to be long term unemployed
- People aged over 50swho are unemployed are far more likely to have been out of work for more than 12 months compared to younger adults.
- Almost one in three (29%) older workers out of work have been so for more than 12 months, compared to one in seven (13%) younger workers and one in five (20%) of workers aged 25 to 49.
- This means people aged 50 and over who are unemployed are twice as likely as the youngest adults to be long term unemployed, and almost 50% more likely than those aged 25 to 49.
Put together, these numbers suggest we could have a long-term unemployment crisis for older workers on our hands, as the COVID-19 recession unfolds. It is vital that older workers are given effective support to return to work – and to retrain if necessary.
Right now, we know that people over 50 also tend to have the worst outcomes from employment support programmes. For example, on the government’s Work Programme, which ran from 2011 to 2017, just 21.6% of the over 50s gained a job – the worst result of any group. The government’s new back-to-work schemes must not repeat these failures.
We need a clear message to be sent to employers, work coaches, and jobseekers themselves, that people aged over 50 are just as entitled to support as younger workers. We need targeted, individualised back-to-work support for people in this age group. And we need robust standards of scrutiny to ensure that they are receiving adequate support.
Health is the leading reason for people aged 50-64 to be out of work
- By far the most common reason for people aged 50 or over to be out of work is health: that is the reason given by 54% of people in this age group who are not currently looking for work but would like to work.
- One in five of those people say they are out of work because of a caring responsibility; looking after their family or home.
These numbers are a clear indication of where the biggest opportunities to increase employment for those aged 50 and over might lie. There are as many people aged 50-64 who say they would like to be in work, but are not in work due to health reasons, as there are active jobseekers in this age group. Better support for people with disabilities and long-term conditions could unlock a large section of worklessness for those aged 50 and over – and can often require just small adjustments on the part of employers. Working to tackle the disability employment gap will be key to closing the age employment gap.
People with the fewest assets are much more likely to have taken early retirement because of their own poor health, or the poor health of others
- The reasons that people take early retirement vary significantly based on wealth. Those who have assets (including property) below average, are much more likely to leave the labour market because of their own ill health, or the ill health of others. Of those with below average wealth, 65% say this, compared to 26% of those with above average wealth.
- People who are wealthier than the average are more likely to say they took early retirement to enjoy life, or to spend time with their family.
Pay and pensions
After hitting their peak in the 40s, median weekly earnings begin to decline in the 50s and 60s – particularly among full-time workers
- Men working full-time in their 40s have the highest median weekly wage, and women in their 20s working part-time the lowest.
- Men working full-time out-earn all other workers, including women working full-time, although this gap is lowest for women in their 20s.
- Women in full-time work in their 50s earn more than £150 less per week than men in full-time work in their 50s, with both men and women working part-time earning a third less than men in full-time work.
This cross-sectional picture does not necessarily represent a fall in wages for individuals as they age. There is partly a cohort effect, with the younger generations (at least, in mid-life) tending to have earned more than the generation before. In some cases, the move to lower-paid work may be a positive choice. The increase in self-employment plays a role. There are also the limitations which face people who do fall out of work in their 50s and 60s: those who fall out of work at this age face, on average, longer spells in unemployment, and may find themselves accepting lower paid work than they were in previously.
The median weekly wage for employed men in their 50s is £250 more than that of employed women in their 50s
- The median weekly wage for employed men in their 50s is almost double that of women, £646.20, compared to £388.10 for women.
- While the employment gap between men and women in their 50s has narrowed since 2000, the gender pay gap remains significant.
- In 2000, employed women in their 50s had a median weekly wage of £278.04, and men’s median wage was £551.78, almost double that of women.
- Despite wages increasing for both men and women since 2000, the gap between men and women’s median weekly earnings in their 50s had only narrowed by £15.60 by 2019.
The gender pay gap is largest for women in their 50s
- The gap in median weekly pay between men and women is highest for those in their 50s, and lowest for those in their 20s.
- Women in their 20s earn around £30 less than men in their 20s, but women in their 50s have a median weekly pay £160 lower than their male counterparts.
The overall gender pay gap for people aged 50 and over is largely driven by higher levels of part-time working among women in this age group – but not entirely, as the above chart shows. Even comparing full-time workers, the pay gap remains. This is at least partly due to the greater likelihood of women taking at least some period of time during their life in either part-time work, or taking a break from work. Part-time wage growth is lower than full-time wage growth, putting those women at a disadvantage, even if they re-enter full-time work. But this is not the whole reason – differences in wage-bargaining behaviours, and the kinds of places women choose to work, may also be contributing factors.
We care about the wages earned by people in their 50s and 60s, because we want people to be able to enjoy financial security at that age. But we also care about it because of how it feeds through into the amount of money we have at later ages, when we are no longer able to work. Being able to save for our retirement is becoming increasingly important. With retirement expected to last longer than it has in the past, and the value of the state pension still relatively low in comparison to earnings, most people will have to supplement their state pension with private pension savings in order to avoid a drastic reduction in income when they retire.
The proportion of employees with a pension has risen by over 30 percentage points since auto-enrolment was introduced
- The introduction of pensions auto-enrolment in 2012 has significantly increased the number of employees who are contributing to a pension in all age groups.
- The most substantial increases have been amongst younger age groups. In 2009, less than half (39%) of 22-29 year olds were contributing to a pension. This has now doubled.
- But the number of people aged 50 to State Pension Age has also increased from 65% to 88%.
The percentage of employees earning between £10,000 and £20,000 who are contributing to a pension has more than doubled between 2009 and 2019 (from 38% to 81%)
- Over the last eight years, since automatic enrolment was introduced in 2012, the proportion of workers who contribute to a pension has risen substantially.
- With the earnings trigger for automatic enrolment into a pension fund set at £10,000, the biggest increase in workers contributing to a pension has been amongst the lowest paid.
Since 2012, all employees over the age of 22 who are earning over £10,000 a year must be automatically enrolled in a pension scheme by their employer. This has led to an increase across the board in the proportion of people enrolled in a private pension – but the key success has been the jump in the number of savers among lower earners. The proportion of workers earning between £10,000 and £20,000 a year who are contributing to a pension has more than doubled in the last decade.
Auto-enrolment will be a core pillar of maintaining the financial wellbeing of lower earners into later life. But it cannot be relied upon. Ultimately, our financial wellbeing in later life rests on our financial wellbeing throughout life. We all need access to good work, and proper progression, that extends into our 50s and beyond, if we are to live comfortably in later life.
¹ Pensions Policy Institute and Now Pensions (2020), ‘Underpensioned Index’, in publication