Over-65s increasingly returning to work, but labour shortages still persist

Across the UK we have seen a slight decline in job vacancies, with the number of unfilled posts falling by 34,000 between June and August, the largest quarterly decline in two years.

This apparent easing in one of the tightest job markets in living memory must be placed in the context of an enormous rise in vacancies since August 2020, which have grown by almost a million in the past two years amid an exodus of European workers in the wake of Brexit and the pandemic. Covid also led to many older UK workers exiting the job market early, further exacerbating labour shortages.

The ratio of vacancies for every 100 employees now stands at 4.2, marking the first fall since the period between April and June of 2020. But according to yesterday's figures from the Office for National Statistics, total jobs still exceeded pre-coronavirus levels in June, hitting 35.8 million.

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There has been much talk of an economic slowdown with a number of indicators at historically low levels. Redundancies for example had a small uptick between May and July but are still at very low levels, with the redundancy rate for women close to its record low of 1.7 per one thousand employees.

Confirmation that unemployment has dropped to a low not seen since 1974 is of course welcome news, but should come with a disclaimer in that these low figures have been greatly aided by a rise in the number of people now classified as economically inactive – those who are not in work, and are not seeking work.

Worryingly, those not working due to long-term illness is up by nearly 400,000 since 2019, with 150,000 added to that figure in the last two months alone. Not only is this contributing to acute worker shortages, but it also raises concerns that with increased pressure on the National Health Service, this number could continue rising steadily.

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There is, however, evidence that employment is changing for the over-65s as the number of people in that age bracket who are in work has hit record levels. Nearly 1.5 million over-65s were working between April and June of this year, a rise of 173,000 on the quarter.

The main driver has been the cost-of-living crisis, which is forcing some to return to employment. This has been led by an increase in part-time work, which is up by 18%, and more specifically by a 28% increase in part-time self-employment.

The industry sectors that have seen the largest increase in over-65s returning to work are hospitality, arts, entertainment and recreation.

Meanwhile, worker shortages continue to impact those already in a job. More than a third of businesses say the shortage of labour – which is currently impacting 38% of firms – has meant that existing employees are working longer hours to make up for shortfalls, with a third saying this means they cannot meet customer demand.

Gavin Mochan is managing director of s1jobs.

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