‘Great unretirement’ driving over-50s back into work amid soaring living costs

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The number of people returning to the workforce has reached a record high in a sign that the cost-of-living crisis could be forcing people to top up their incomes.

A net flow of 48,000 people moved out of economic inactivity and into employment between the three months to September and the three months to December, the Office for National Statistics (ONS) said.

This was a record-high movement of economically inactive people into the workforce, the ONS said.

Economic inactivity refers to people who are not in the workforce but have not been looking for a job, meaning they would not be defined as unemployed.

The movement was driven by young people aged between 16 to 24, and people between 50 and 64.

However, the wave of over-50s returning to jobs could be reflective of the “great unretirement”, experts suggested.

The phrase has been coined after the pandemic ushered in a wave of people quitting their jobs, known as the “great resignation”.

The ONS has pointed to a reversal of that trend in recent months, suggesting that people who previously chose to leave work are since seeking to plug the holes in their finances.

Helen Morrissey, head of pension analysis at Hargreaves Lansdown, said: “The great unretirement helped drive a record number of people back to work.

“After an exodus from the workplace during the pandemic, more people are swapping the sofa for the office chair again.

“The rising cost of living will be playing a part as people are realising their pensions may not go as far as they had expected.

“However, we also know some of these people stopped work because of long-term sickness, so better health may have encouraged them to reconsider a return to work.”

It comes as people’s real wages continue to be outstripped by rising prices.

The ONS data showed average regular pay growth hit 6.7% in the three months to December, the strongest growth rate the UK has seen outside of the pandemic.

With the consumer prices inflation (CPI) rate reaching 10.5% in December, it means that the average worker’s wages are still not keeping up with the soaring cost of living.

Once CPI is taken into account, the ONS said regular pay fell by 3.6% compared to the previous year – among the largest falls in real pay since comparable records began in 2001.

Pay growth graphics
(PA Graphics)

Andrew Bailey, governor of the Bank of England, said earlier this month that inactivity among 50 to 65-year-olds was dragging on the UK’s labour supply and “weighs on the economy’s potential”.

He acknowledged that many were making a lifestyle choice to retire early while others were affected by long-term illness which means they may never return to work.

Stephen Lowe, group communications director at retirement specialist Just Group, said: “It’s a worry that the recovery in the labour market is so anaemic for the over-50s, with businesses struggling to recruit and many people struggling with cost-of-living increases.

“It raises questions about how much support is being given to helping them get back into work and whether the Government could do more to bring the skills and experience back into the workforce to help drive economic growth.”

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