Early retirement ‘driving skills shortage’
Those who took early retirement are being called back to work
Workers taking early retirement form the largest number of people classed as economically inactive and depriving companies of badly-needed skills, according to new research.
The figures showed that around 346,000 people aged 50-64 are currently economically inactive in Scotland, which represents the highest number since comparable records began.
Over half (52%) of over 50s in Scotland who have left the workforce since the beginning of the Covid-19 pandemic took early retirement.
This compares to a UK average of 49%. The Southwest of England had the biggest number of early retirees (57%).
Sickness and disability accounted for 19% of workers in Scotland retiring early.
Many of those who left work early are also leaving themselves short of a comfortable retirement and may have to return to work in their later years, says Phoenix Insights.
Analysis by the group revealed that, at current savings levels, savers could face a shortfall in retirement, as as one-third (31%) of adults in Scotland have no pension provision at all.
The average pension wealth among 50–64-year-olds in Scotland is £157,500, which is almost £100,000 short of what is needed for a ‘moderate’ retirement income if retiring at the state pension age.
Given this, Phoenix Insights suggested that there may also be a proportion of over 50s who have chosen to retire early, but are now looking to re-enter employment amid the cost-of-living crisis and to make up any potential gaps in savings they have identified.
Phoenix Insights director, Catherine Foot, stated: “Economic inactivity across the UK has remained stubbornly high since the coronavirus pandemic, with over 300,000 individuals between 50 – 64 currently out of work and not looking to return.
“Across Scotland, a majority of these individuals have taken early retirement, while others have left the workforce due to ill-health, job dissatisfaction, or caring responsibilities.”
“It’s important not to dismiss economic inactivity among this group as a case of rich baby boomers choosing to enjoy time on the golf course.
“Stereotypes like this mask real financial and health vulnerability among a group whose successful return to employment is critical to the UK’s productivity and prospects for economic growth, and hugely beneficial to support people’s long-term finances.
“Around one in three people in Scotland have no pension provision at all, and at current savings rates, many will fall short of a decent standard of living in retirement.
“The UK government announced several measures to encourage over 50s back to work in the Spring Budget, but more targeted action is needed.
“To enable those in their 50s and 60s to remain in meaningful work for longer, we need to make work more accessible for a wider group of people, with greater flexibility and opportunities to recruit, retrain and retain colleagues.”
Fall in permanent staff placements
There was a fall in permanent staff placements across Scotland for the second consecutive month in March.
The reduction was fuelled by ongoing economic uncertainty, which resulted in increased hesitancy among companies to commit to new hires.
The latest data from the Royal Bank of Scotland Report on Jobs survey also showed temp billings fell for the sixth month running.
In terms of labour supply, there was a further sharp fall in the number of candidates for permanent vacancies, while temp staff availability fell at the weakest pace in the current 25-month period of contraction.