The pandemic has led to the biggest annual employment fall for workers over 50 since the 1980s, according to a new report published by the Resolution Foundation. COVID-19 has created a U-shaped employment shock, with older and younger workers affected far more than those in the middle of the age distribution.
While the youngest workers (16-24-year-olds) have seen by far the largest fall in employment in the past year (3.9 percentage points), the fall in employment among workers age 50-to-69 has been twice as big as those aged 25-to-49 (1.4 compared to 0.7 percentage points).
After losing work, older workers take the longest, on average, to return to employment. Six months after becoming unemployed, nearly three-quarters of 16-29-year-olds and 30-49-year-olds (74 per cent and 72 per cent respectively) had returned to employment, compared to fewer than two-thirds of those aged over 50 (62 per cent).
Furthermore, when older workers (aged 50+) return to work following a period of unemployment, they face the highest income hit of all age groups, with typical hourly earnings falling by 9.5 per cent, compared to their pre-unemployment earnings.
This is more than double the 4 per cent earnings hit seen by middle-career workers (aged 25-49), while typical pay growth remains strongly positive (5.1 per cent) for young workers (aged 18-24) returning to work.
Becoming unemployed during the pandemic can potentially have a big impact on older workers’ retirement plans, says the Foundation, either forcing them to retire earlier than they would have planned to, thereby reducing their income in retirement, or forcing them to work longer to make up for lost earnings.