New figures suggest it is long-term sickness, rather than early retirement, that has caused a fall in the number of over 50s in the workplace.
Pension consultants LCP say that much of the political attention has been on how to encourage older workers back to work to boost economic productivity, but this has been on the assumption they have chosen to retirement early.
It analysis of different data suggests this may be incorrect – and there needs to be more attention on long-term sickness trends and what can be done to prevent people leaving the workforce in the first place.
LCP figures show that retirement does not explain the significant increase in economic inactivity since the start of pandemic — with government figures showing there are now 630,000 people of working age who have become ‘economically inactive’.
LCP says the data suggest this this is not caused by earlier retirement with figures suggesting that there are fewer people of working age who are retired now than there were at the start of the pandemic.
But it says these figures can be explained from data from the ONS Labour Force Survey data, DWP benefits data – for both Employment Support Allowance (ESA) and Universal Credit – and NHS waiting list data. The indicate that the number of people with long-term sickness conditions has risen by over a third of a million since the state of pandemic, to stand at 353,000. LCP says this accounts for more than half of the growth in inactivity over that period.
The rise in long-term sickness seems to be because more people are ‘flowing on’ to long-term sickness, particularly those previously classed as ‘short-term sick’. LCP says this could reflect NHS pressures as those who would otherwise have been treated or had their chronic condition better managed and able to work now find themselves ‘long-term sick’ as they wait for treatment or live permanently in poorer health.
In addition it says the numbers on sickness-related benefits have been rising steadily, with the growth pre-dating the pandemic, but now worsening.
LCP points out that the growth in economic inactivity is not just about the over 50s, with nearly half (45 per cent ) of the chancellor’s 630,000 figure for the growth in inactivity relates to those aged under 50. It also adds the a large part of the growth among those under 50 is in the numbers in full-time education.
LCP’s report into this data proposes that the government should look at a local level at data on benefit receipt and on NHS pressures to see if NHS bottlenecks mean that more people are getting stuck on sickness benefits and remain ‘economically inactive’ for longer.
The report finds that existing statistics on elective waiting lists provide little clarity as they include large numbers of those over pension age waiting for treatment, and this would not directly help to explain trends in working age inactivity whereas data on GP pressures capturing waiting times for people with chronic conditions such as back pain, depression and diabetes could provide greater insight.
LCP partner Steve Webb says: “There is a real risk of the government ‘barking up the wrong tree’ when it comes to the growth in economic inactivity. Policy solutions which aim to reduce early retirement or to encourage the retired out of retirement are likely to have only limited effect in reversing recent trends.
“Instead, the policy effort needs to be focused around understanding why flows into long-term sickness have grown and on early intervention to prevent people’s health from deteriorating. Without action there is a risk of a growing core of people stuck in long-term receipt of sickness benefits with limited prospect of returning to paid work and damaged prospects for retirement”.
LCP head of health analytics Dr Jonathan Pearson-Suttard adds: “The pandemic made clear the links between health and economic prosperity yet policy does not yet invest in health to keeping living in better health for longer.
“NHS pressures have led to disruption of patient care from increased waiting times for routine surgery to less regular checks for those living with chronic diseases – all likely to be impacting people’s ability to work now and in the future. Joined up and local health and employment data could identify the link between ill-health and sickness benefits in sufficient detail to drive meaningful intervention to prevent this downward spiral. Without urgent and targeted research and action we risk a generation of working age adults with poorer health, employment and productivity as a lasting legacy of the pandemic.”
