Steep Departure of Individuals Over Age 50 Triggers £31bn Economic Exodus: Labour's Growth Agenda Imperiled as 437,000 Depart Yearly
According to a recent report from Standard Life's Centre for the Future of Retirement, the early departure of workers aged over 50 from key UK growth sectors is causing significant economic losses and implications. Each year, approximately 440,000 over-50s leave crucial high-growth sectors before the state retirement age, resulting in an estimated £31 billion loss in annual economic output.
The report underscores that nearly one in three employees in these sectors are aged 50 or above, making their departure especially impactful. Sectors such as defence and advanced manufacturing have particularly high proportions of older workers (38% and 36%, respectively), and these industries have witnessed an aging workforce trend over the past few decades. The average worker age in these sectors has risen from 37.6 in 1991 to 44.7 today [1].
This early exit of experienced older workers poses a threat to the UK government's ambitions for economic growth, innovation, and regional development embedded in its Industrial Strategy. Without swift measures to retain and support experienced over-50 workers, the sustainability and expansion of these vital sectors are put at risk, which could undermine broader economic and fiscal goals [2].
The sectors identified in the Government's industrial strategy, including defence, advanced manufacturing, life sciences, clean energy, creative industries, digital, financial services, and professional and business services, employ 3.4 million staff over 50 [2]. The report suggests that if many over-50s could be incentivized or supported to work for longer, the losses to the economy could be reduced.
The study by the Centre For Ageing Better suggested that over-50s with long-term health conditions were being put on the scrapheap due to 'ageist assumptions' [3]. More recently, Reeves has declared a desire to tackle the problem, stating: 'If you can work, you should work' [4]. Former Chancellor Jeremy Hunt announced a big increase in the number of over-50s benefiting from 'mid-life MOTs' [5].
Additionally, the report emphasizes the importance of retaining and upskilling over-50s workers for the success of the Government's industrial strategy, in addition to attracting and training new entrants. Britain has much higher inactivity rates due to illness among over-50s compared to Germany, France, and Italy [6].
He also launched 'returnerships' - a type of apprenticeship targeted at over-50s to cut down the amount of training needed before they can go back to work [7]. The report estimates that the annual cost to the economy due to the early retirement of over-50s in these sectors is £31 billion [2].
In sectors such as life sciences and advanced manufacturing, just over a quarter of employees take early retirement, while in sectors like financial services and defence, about three in ten employees take early retirement, compared to a national average of 21% [2]. Over-50s comprise 31% of staff across key growth sectors overall, with this percentage rising to 38% in sectors such as defence [2].
Workers in key growth sectors typically leave 2.6 years earlier than the average for the wider economy [2]. The report concludes that addressing the issue of early retirement among over-50s in key growth sectors is crucial for the UK's economic prosperity and competitiveness.
- The report by Standard Life's Centre for the Future of Retirement indicates that the early retirement of over-50s workers in key growth sectors like finance, advanced manufacturing, and defense results in an estimated £31 billion loss in annual economic output.
- The industrial strategy launched by the UK government focuses on sectors such as digital, life sciences, and professional and business services, which employ a significant number of over-50s workers, making their early retirement a threat to the strategy's goals for economic growth and innovation.
- To combat the issue of early retirement, the government has introduced measures such as 'mid-life MOTs', 'returnerships', and incentives to encourage over-50s to work for longer in order to reduce the substantial economic losses and improve the UK's competitiveness in industries like stocks, business, and politics.
