Questions and answers about coronavirus and the UK economy
Questions and answers about coronavirus and the UK economy

How might coronavirus affect older workers?

Recent years have seen considerable efforts to encourage older people to stay in the labour market for longer. With the health risks from Covid-19 rising with age, the pandemic and the economic downturn may affect both their ability and desire to do so.

It will be some time before the full impacts of coronavirus on older workers are evident. Effects are likely to vary depending on individual circumstances, which may act to increase existing inequalities among different groups of older individuals.

We know that the health risks from Covid-19 rise with age. The steep increase in mortality with age has been widely documented: the probability of death among those aged 70-79 is 50 times higher than among under-40s; even among those aged 60-69, the probability of death is 26 times higher; and among those aged 50-59, the probability is nine times higher (Public Health England, 2020).

Estimates for the UK suggest that around one-fifth of workers in occupations with the highest potential exposure to Covid-19 are aged 55 and over, in line with the proportion accounted for by this age group in the working population as a whole. There is considerable variation by occupation, with some groups, such as care escorts and ambulance staff, having a much higher proportion of older individuals. Older workers represent a significant share of all key workers; data from the Office for National Statistics (ONS) show that individuals aged 50 and over account for around a third of this group (see Table 1).

Table 1: Key workers by age band

Table showing key workers by age band

Source: Adapted from Table 2a, Key workers and non-key workers by age bands, ONS (2020) Key Workers: Population and Characteristics, UK, 2019. Author’s calculations for percentage aged 50 and over.

It is clear that the Covid-19 crisis has significant consequences for the labour market, and that differences in labour market outcomes for different groups may well serve to exacerbate existing inequalities (Aitken, 2020). The consequences of Covid-19 for younger workers have attracted widespread attention, with particular concerns for new labour market entrants, and rightly so (Del Bono and Holford, 2020). But older workers are likely to be at risk too, and they may also be disproportionately affected by recession (Bui et al, 2020).

The agenda for extending working lives has been a recurrent theme in the UK and beyond in recent years, encouraging people to remain in the labour market for longer. Both the ability and desire of older individuals to remain in work may well be affected by the pandemic.

Related question: What are the effects of coronavirus on the UK and US labour markets?

Related question: What are the prospects for young people joining the labour market now?

What does evidence from economic research tell us?

Recent research in the United States has explored early signs of impacts of the Covid-19 pandemic on employment of older workers, finding a disproportionately negative impact on unemployment rates for workers aged 65 and over, particularly for women (Bui et al, 2020). A separate US study suggests a sizeable increase in the number of individuals taking retirement earlier than planned (Coibion et al, 2020).

Early evidence for the UK suggests that the pandemic has had greater effects on the pay of older (and younger) workers, compared with those of prime age: 30% of employees aged 60-64 stated that they were receiving less pay following the Covid-19 outbreak, compared with 23% of those aged 35-49 years (Gustaffson, 2020). Claims for unemployment benefit, while increasing most among those aged 25-49, still nearly doubled among those aged 50 and over between February and June 2020 (Centre for Ageing Better and Learning and Work Institute, 2020).

Evidence from previous recessions shows that older workers can be particularly affected in a downturn. Effects on employment have varied: in the UK, it has been noted that while earlier recessions typically hit older workers harder than other age groups, this was not the case in the 2008/09 recession, with only small declines in employment for the over-50s, and increases in employment for those above the usual retirement age (Gregg and Wadsworth, 2010).

In the United States, research has found older workers were less likely than other age groups to lose their jobs in the 2008/09 recession (Johnson and Butrica, 2012).

But older individuals who lose their jobs in recession are less likely to find new jobs than workers of other ages. The duration of unemployment increased for all workers in the 2008/09 recession in the United States, but particularly so for older workers (Neumark and Button, 2013). Furthermore, any new job may also involve a wage cut (Davis and von Wachter, 2011). Some individuals will decide simply to leave the labour market altogether and stop looking for work.

One explanation put forward for the fact that it is harder for older individuals to find new work is that employers can be reluctant to take them on. This may be due to age discrimination, and while there are challenges for research in identifying whether this is definitively the case (Neumark et al, 2017), there remain stereotypes of older workers being less productive than others. Any reluctance to employ older workers may be exacerbated in the current pandemic, when employers may have additional concerns about health risks to older workers.

On the other hand, flexible work is often seen as a way to encourage older individuals to remain in work for longer (Smeaton et al, 2009). It may be that the changes that many employers have had to make in response to the pandemic mean they are now more able to see ways in which work can be done more flexibly. For example, they may be more willing to make adjustments to facilitate working from home.

But there will inevitably still be constraints depending on the nature of work. Survey evidence indicates that older (and younger) employees were less likely than those of prime age to be working from home during the Covid-19 crisis (Gustaffson, 2020). Furthermore, older individuals appear less likely than other age groups to be expecting to work from home more in the future, after the outbreak is over, although the reasons for this are not clear.

Related question: What has coronavirus taught us about working from home?

Related question: Who can work from home and how does it affect their productivity?

Individual circumstances are varied. For some individuals, their own health may have been affected, with a direct impact on their ability to work. Others may find that they have new caring responsibilities, and we know that individuals with caring responsibilities find it harder to combine these with work (Dixley et al, 2019). Older people may also take a different stance on virus-related workplace risks if they consider themselves or those they live with to be more vulnerable.

Financial plans for retirement may also have been affected – individuals may now need to work for longer, as savings and private ‘defined contribution’ pensions no longer stretch as far as anticipated. Indeed, there may well be consequences for other forms of pension too; interrupted work histories as a result of Covid-19 could affect state pensions and private ‘defined benefit’ schemes too.

Some individuals (although perhaps only those in a financial position to do so) may be re-evaluating their plans for work and retirement: ONS survey data indicate that 28% of adults are planning to make lifestyle changes following recovery from the Covid-19 outbreak (ONS, 2020).

While some may need or want to work for longer, a key issue is whether they will actually be able to do so. As discussed above, given the evidence from previous recessions indicating that older individuals are more likely to remain unemployed for longer, those who have lost their job as a result of Covid-19 may find it particularly difficult to return to the labour market. Opportunities for retraining may be more limited for older individuals (McIvor, 2020), and employers may be less willing to hire and train older workers than younger workers.

The broad point here is that individuals who are close to retirement, but not yet retired, may face a shock to their income, whether through a shock to their employment status, their pension or their savings – or a combination of all three. They will have a relatively short time horizon in which to react, and perhaps limited options for doing so. Consequences may therefore be more permanent for older workers, at least for those who are badly affected.

Related question: How will coronavirus affect occupational pensions?

How reliable is the evidence?

Research on the effects of Covid-19 on older workers is inevitably in its early stages, as the crisis continues to evolve. Researchers are limited as yet in the data available to them to explore impacts to date, as many of the official sources of data on the labour market take time to be released. While other sources, such as some of the survey data used in emerging research, can offer valuable first insights, such data may not necessarily be fully representative of the population that it aims to capture.

Some of the earliest evidence is emerging for the United States. Again, these studies (which are also often subject to data limitations) provide useful indications, but findings may not necessarily be transferable to the UK context.

While we can look to evidence from previous recessions as an indicator for how older workers may be affected this time, existing studies show that different recessions have had different impacts. Given the unique nature of the Covid-19 crisis, it is difficult to tell how far findings based on evidence from previous recessions will be applicable this time around.

What else do we need to know?

Not all older workers will be affected equally and it will be important to understand how different groups of older workers fare. For example, while the health risks of Covid-19 are greater for men, emerging evidence suggests that labour market impacts to date may be worse for women (Bui et al, 2020).

The consequences of coronavirus are likely to vary markedly depending on individuals’ existing financial circumstances and work arrangements, and the crisis may serve to increase inequalities between different groups further. Understanding these patterns will be important in ascertaining how best to target support to help the worst affected.

Furthermore, impacts need to be considered not just in the light of individual experiences, but also taking account of the circumstances of the household. There have been growing calls for research and policies on extending working lives to focus on the household, not just the individual (Loretto and Vickerstaff, 2013; Phillipson et al, 2016). This will remain crucial in the context of understanding the effects of coronavirus.

It will be important to consider not just employees, but also effects for the self-employed. There has been considerable growth in self-employment among older individuals over recent years (ONS, 2018), and estimates indicate that around 10% of the self-employed are aged 65 and over (ONS, 2020). Yet statistics released in August show take-up of the Self-Employment Income Support Scheme is lowest among this age group (HMRC, 2020).

Related question: How is coronavirus affecting the self-employed?

Future research will need to explore not only effects on labour market outcomes such as employment and earnings, but also consequences for wellbeing. Even for individuals who do not experience job losses or pay cuts, there may be consequences for the nature of their work, which may affect their health and wellbeing.

Studies are already underway to explore some of the implications of the pandemic for older individuals. The English Longitudinal Study of Ageing (ELSA), which has been following individuals aged over 50 in England since 2002, is undertaking a specific study to explore experiences of the Covid-19 crisis.

The latest wave of the Survey of Health, Ageing and Retirement in Europe (SHARE), which has been following individuals aged 50 and over across European countries since 2004, has been adapted to include new questions on the impact of coronavirus. Both the ELSA and SHARE studies will explore impacts on work but also on access to healthcare, mental health and social networks.

Other valuable sources for exploring the experiences of older people in the UK in response to the pandemic include the Covid-19 survey of participants in the 1958 National Child Development Study (who will currently be around 62 years old), as well as the Covid-19 modules within Understanding Society, which covers all age groups.

Where can I find out more?

Who are UK experts on this question?

  • Sarah Vickerstaff, University of Kent
  • Wendy Loretto, University of Edinburgh Business School
  • Alan Walker, University of Sheffield
  • Kim Chaplain, Associate Director for Work, Centre for Ageing Better
  • James Banks, University of Manchester and Co-Director, Centre for the Microeconomic Analysis of Public Policy, IFS
Author: Lucy Stokes, NIESR
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