High number of retirees driving up job vacancies
More people are rushing into retirement
A sharp rise in the number of people choosing to retire during the pandemic has been a big factor in the current shortages of labour, according to new data.
Those in their 50s and 60s who were not in paid work, nor looking for paid work, since just before the onset of Covid-19 grew by more than a quarter of a million to 36.5% of this age group.
This reversed a decades-long trend which had seen economic inactivity among this age group fall from 47% in 2000 to 42% in 2010 and to 35% by early 2020.
The most important reason for the increase in inactivity was a sharp rise in the number of people deciding to leave work for retirement, according to the Institute for Fiscal Studies. Leaving work due to ill health can explain only a very small proportion of the increase, and the rise in inactivity is not driven by a lack of job opportunities. Many people are simply deciding to retire earlier.
The think tank said it is too early to say whether this presages a new trend to earlier retirement, but if it does “the consequences for both the economy and the public finances could be substantial.”
The research by the IFS is funded by the Economic and Social Research Council. The evidence suggests that many more people made a lifestyle choice to retire during the pandemic.