Economic inactivity trends in London: Are Londoners aged 50 and over leaving the London labour market? An update
While London’s unemployment rate has fallen to a record low in recent months, the number of economically inactive Londoners (those not seeking and/or unavailable for work) has risen. Previous GLA Economics analysis highlighted a particular increase in the number of older workers leaving the labour market since the coronavirus pandemic. There are now around 88,000 more inactive Londoners aged between 50 and 64 years than in early 2020.
To better understand these trends, the Office for National Statistics (ONS) conducted a detailed survey of 50-70-year-olds in February 2022 – the Over 50s Lifestyle Study (OLS). A second wave of the OLS was undertaken in August 2022 and forms the basis of this supplement. Wave 2 of the OLS only surveyed adults aged between 50 and 65 years, so regional results are not directly comparable between waves.
In wave 1, a large factor in rising inactivity was people retiring: 54% of 50–70-year-old Londoners said they left a previous job to retire from paid work. Retirement as a reason fell in prevalence in wave 2, with only 19% of 50–65-year-old Londoners citing it as the reason why they left a previous job. Although retirement remains a primary reason for inactivity among older workers, it does not appear to be the reason inactivity has risen recently.
Instead, the latest wave of the OLS points to a wider (and potentially less permanent) set of factors driving inactivity among the over 50s in London. Notably, over half (53%) of Londoners aged 50 to 65 years who do not currently have a paid job would consider returning to work in the future – the highest proportion for any UK region or country (Figure A1).
So, what could bring older workers back into work? This supplement explores three factors. Two which could be restricting the ability of older workers to return to the labour market: poor health, and access to workplace support and flexibility. And one – the rising cost-of-living – which could be increasing the need to return to paid work.
Poor health is a key reason for inactivity among the over 50s. In wave 2 of the OLS, 41% of Londoners aged 50 to 65 years reported having a physical or mental health condition or illness, with two-thirds of those saying that it reduced their ability to carry out day-to-day activities. Among Londoners aged 50-65 who were not in employment, over a fifth (23%) said that illness or disability was a reason why they had not returned to paid work.
The OLS suggests that the Covid-19 pandemic itself is now a relatively minor factor for older workers leaving the labour market. While nearly half (44%) of Londoners aged 50 to 65 reported being worried about the pandemic, a relatively small proportion cited it as a reason for having left (8%) or not returned to paid work (4%). Less than 1% of Londoners aged 50-69 years cited long Covid as a reason for not returning to paid work in wave 2.
However, an increase in NHS waiting lists for treatment could be playing a role. Nearly 1 million patients were waiting to start NHS treatment in London at the end of August 2022, up from 676,000 in August 2019. This could be a growing barrier to work. According to the OLS, 14% of 50-65-year-olds in Great Britain were on an NHS waiting list for receiving treatment (13% among Londoners). However, this figure rose to 18% among adults aged 50 to 65 years who had left work since the start of the pandemic and had not returned, and to 35% among those who had left work because of a health condition. Figure A2 shows how the percentage of respondents on NHS waiting lists varies by respondent’s employment over the pandemic.
The direction of causality is not obvious though. And other research suggests that an increase in inactivity due to long-term sickness is part of a longer-term trend which started before the pandemic and is related, in part, to population ageing (rather than being down to more recent factors such as long-covid or waiting times). We might expect similar factors to have an impact in the capital, although trends over time at the London-level are unclear.
Ongoing analysis is needed to monitor the links between poor health and inactivity.
Workplace support and flexibility
Wave 2 of the OLS also shows that flexible working and access to support are key factors in retaining older workers.
Figure A3 shows a striking divergence in the labour market status of Londoners aged 50 to 65 years depending on whether they accessed support from their employers. For those who were currently in work, only 23% had not accessed any of the support listed here. However, that figure rose to 54% among those who had lost or left a previous job. It is concerning that older workers who had left and returned to the labour market also reported a low rate of access to support while working. This could be linked to industry type or employer size.
Job appeal is another factor in attracting older workers (Figure A4). Most Londoners aged 50 to 65 years who would consider returning to paid work were looking for a job that: was in the right location (71%), suits their skills and experience (71%), pays enough (57%), and offers flexible working (57%). More than a third of this group would like a job that offers working from home, while a fifth were looking for a job that fits around caring responsibilities.
Affordability and the cost of living
Among 50-65-year-olds who had returned to work, financial considerations are an increasingly significant factor (Figure A5). Two-thirds (66%) of Londoners who had left or lost a job and returned to paid work said they did so because they ‘needed the money’ while a quarter (23%) cited an increase in their cost of living. These findings suggest that high inflation over the winter could prompt more inactive older workers to return to the labour market.
Financial considerations are also of particular concern among those living in London. For example, among Londoners aged 50 to 65 years:
- 45% said that it was very or fairly likely that they will rely on some paid work in retirement (40% nationally)
- 57% of those who do not currently have a job worried that their cost of living had been increasing (55% nationally)
- 15% of those with debt were somewhat unconfident or not at all confident about being able to meet repayments (11% nationally).
This could be partly related to housing tenure. Only 36% of Londoners aged 50 to 65 years reported owning their home outright, compared to 48% in Great Britain as a whole. At the same time, the proportion renting their home was above average (25% vs. 16% nationally).
What does this mean?
Wave 2 of the ONS’s Over 50s Lifestyle Study suggests that inactivity among older workers in London could be less permanent than previously thought. Over half of Londoners aged 50 to 65 years without a paid job would consider returning to work in the future. This could be good news for employers in the context of a tight labour market, while rising costs could prompt more inactive Londoners to return to the workforce in the coming months.
However, there are also concerns arising from the OLS:
- An increasing number of older workers are inactive due to poor health and potentially waiting for NHS treatment – many of whom will be unable to work. This could be compounded if the cost-of-living crisis further erodes peoples’ health.
- Workplace support and flexibility are important for retaining older workers, but access to support and adjustments remains uneven. There is scope for more employers to introduce measures to make the workplace more age friendly.
- More time with work coaches for jobseekers over the age of 50 could help those who do want to return to the workforce. However, this support will only reach those who are claiming benefits. According to the OLS only 14% of 50-65-year-olds who are not in paid work are on some sort of state benefit (including pension credit).
With a fifth of Londoners aged 50 to 64 years reporting that they were struggling financially in October 2022, it will be important to tackle these barriers to support labour market participation.
 Reasons for inactivity vary by age: people aged between 66 and 70
years are, for example, more likely to have retired from paid work.
 Although, as stated above, these results are not directly
 Whereas for those who left in the pandemic and have now returned to
the labour market 15% are on a waiting list, and 12% of those who are active in
the labour market are on a waiting list. Note: it is difficult to know if
waiting lists are a cause of inactivity or if both inactivity and waiting lists
are driven by other causes.
 This compares to 39% of Londoners aged 50 to 70 years in wave 1 of
 Moreover, according to wave 2 of the OLS, over 4 in 10 Londoners
aged 50 to 65 years paying off a mortgage or loan reported finding it very or
somewhat difficult to afford payments.