REBA Inside Track: Can reward and benefits stem the over-50s employee exodus?
Generation X are trouble. We are ill-prepared financially for retirement, but that doesn’t seem to be stopping us from dropping out of the workplace.
Dame Sharon White, chair of The John Lewis Partnership, is so concerned about this trend that she called for more action this week to help attract older workers back into employment, saying that an employment exodus of over-50s is fuelling wage inflation.
Wage inflation has countless drivers including food costs, energy prices, changes to overseas workforce recruitment, skills gaps and many other factors that can’t all be laid at the door of the over-50s.
But it’s true that older workers are quitting employment in record numbers, at a time when job vacancies are also at an all-time high. Why have they fallen out of love with work, and how can reward and benefits help?
Covid is not the only culprit
According to the 2022 census, there are nearly eight million 50 to 59 year olds in England and Wales. They are the biggest age cohort in the country. Pre-Covid, the number of over-50s in work grew rapidly, from 6.6 million in 2000 to 10.6 million in 2020.
However Office for National Statistics (ONS) figures show that 87,000 more over-50s became economically inactive (i.e. not in work or looking for a job) in mid-2021, compared to the same period in 2019. The obvious culprit is Covid, but that’s not the whole story.
Chronic illness across all age groups is certainly a core concern, with two out of three economically inactive adults between 15 and 64 kept out of work by long-term illness. This is not down to Covid alone: unlike other countries, the UK’s rate of economic inactivity due to chronic illness has continued to rise even though the pandemic has eased – the figure for the first quarter of 2022 was higher than at any time before the pandemic.
Is it early retirement (despite the lack of funds)? The ONS found that over three quarters (77%) of 50 to 59 year olds who left the workforce in 2021 did so earlier than they’d expected. But when asked why they had left, only 28% in that age bracket said they had retired. Nearly one in five (19%) named stress and burnout; 13% weren’t valued in their job and 14% wanted a change of lifestyle.
Not so quiet quitting
Older workers are not the only ones feeling unhappy about work. Recent research from Gallup showed that just 9% of the UK workforce say that they are engaged – putting it 33rd out of 38 European countries polled. The concept of languishing, coined by sociologist Corey Keyes to describe people who are in the gap between flourishing and burnout, is becoming more widely recognised in the workplace. Quiet quitting, where employees do the bare minimum at work and reject above-and-beyond effort, has gone viral on TikTok (not, I suspect, driven by the over-50s).
The difference is that some older workers are able to act on that disengagement and simply leave work, downsize their lifestyles and rely on pension pots and lifetime savings to sustain them until state pension age.
Bringing over-50s back
The good news is that ONS found that 58% said that they would return to work – if the circumstances were right. Sadly some may also be compelled to come back, given the current cost of living crisis.
REBA’s DEI Benefits Research 2022 found that 47% of employers say the ageing workforce is an inclusivity challenge for them. While age-related conditions such as the menopause are increasingly included in wellbeing strategies, I think there are also other ways that reward and benefits can contribute and help to create a workplace culture that attracts and retains older workers.
- Flexibility – Over two-thirds (69%) of 50 to 59 year old leavers said they would return if they could work part-time according to the ONS, perhaps helping to support that much longed-for lifestyle change. More flexible working, sabbaticals, different retirement models and recognition of lifestyle changes could help to support this.
- Manage workplace pressure – With stress and burnout such a significant reason for over-50s leaving work, addressing burnout risk for older workers (as well as the rest of the workforce) could also have a major impact.
- Rethink chronic illness – Recruiting employees with long-term health conditions who can still work, providing support for early diagnosis, supporting employees who develop chronic illness when in work, and offering benefits that help carers are all valuable options.
- Redesign the employee value proposition for older workers – Research from the CBI found that ageism is still alive and well, and potentially fuelling older workers’ feelings of being undervalued. Only around a third of employers are prepared to retrain staff aged over 50 https://www.cbi.org.uk/articles/labour-shortages-how-a-focus-on-older-workers-can-help/, and two-fifths said they were less likely to recruit staff above that age.
- Offer retirement support – Kneejerk early retirement can significantly damage employees’ future financial wellbeing. Helping employees evaluate flexible working options alongside their retirement choices and expectations will help make sure the decision to change or leave work is fit for the long term.
If losing over-50s from the workplace really is driving wage inflation, then employers can re-evaluate what motivates their older workers, listen more intently to their needs and develop reward and benefits strategies that respond in kind.