Paul Green, Founder and CEO of Over50s Money, discusses what he sees as the only options available for the Over50s after being overlooked by the Government when it comes to financial and commercial support during the pandemic
The number of older people claiming unemployment benefits has doubled as a result of the COVID-19 pandemic and a second wave is expected as the government’s first furlough scheme ends at the end of October.
New research has warned of the risk of a surge in long term unemployment among the over50s, but still no provisions are being made. The report from the Centre for Ageing Better and Learning and Work Institute shows that the number of older workers on unemployment-related benefits has nearly doubled as a result of the pandemic – increasing from 304,000 in March to 588,000 in June – and who knows where the stats will go from there.
Employment support programmes
The report finds that older workers who lose their jobs are far more likely to slip into long-term worklessness. Just one in three (35%) over50s who lose their job return to work quickly, compared to two in three (63%) workers aged 25 – 34. Over50s who are unemployed are twice as likely to have been out of work for over a year than those aged 18 to 24.
Historically the Over50s have always been poorly served by employment support programmes. The Work Programme (introduced following the last recession) saw just one in five (19%) adults in their late 50s finding a lasting job, compared to two in five (38%) young people aged 18-24.
It is probably no surprise then that in my opinion, the economic climate for the over50s is looking very bleak indeed. At the moment, all I hear in the media is about younger people working in hospitality losing their jobs or graduates that will come out of university to a job market that has altered beyond comparison.
Some organisations and businesses will do well of course; if you are doing delivery, then people are going to increasingly become au fait with ordering from home so that they reduce their contact and therefore reduce their risk of infection. Food businesses and essential businesses will do well. But needless to say, people are concerned about their incomes, so they’re going to spend less money on other things, which means across the whole of the country, businesses will be challenged.
So if you’re in a challenged business, and that business has to cut costs, despite the redundancy processes laid down by law, typically, the people made redundant will be the older workers who are more expensive. They’ve been there for a longer period of time so they have gone up salary increments over years. Of course, businesses can’t discriminate against people on the basis of age, but older workers are often the majority of people included in redundancy schemes.
It is true to say that it is often the older workers that will volunteer for redundancy. But historically have done so thinking that they were in a reasonably well-positioned situation to make a little bit of money on the side, by working part-time or as a consultant in some circumstances, before their pensions come in. The problem that people are going to get now is, actually they won’t want to take voluntary redundancy because they would be concerned that they won’t get other sources of income during this COVID period. Because jobs have dried up.
While the government’s immediate employment response to the crisis has focused on younger workers, I want to highlight the need for urgent action to prevent a long term unemployment crisis among the over50s.
Younger people are going to be, statistically, much less likely to suffer bad outcomes from getting COVID. Older people are more likely to have worse outcomes. So it’s particularly challenging for older workers to be re-employed because they are reluctant to go into an office environment because they know that they’ve got their vulnerabilities. And older workers are more likely to have family members, close family members, who’ve got other underlying health conditions.
Investments and savings
There are huge financial pressures on the over50s. Investments and savings have being devalued as a result of the pandemic and ensuing recession; if you look at the savings rates that are available, they are at record lows. They were at record lows prior to COVID, because of the global financial situation, but they’ve now gone down further. There’s talk that the Bank of England will follow some other central banks and move to negative interest rates. We’ve never had negative interest rates in this country. So what does that do for people who’ve got cash that they’re trying to save? It is very, very hard to see how you can make a good return from savings today.
Stock market values in the UK remain depressed, so if you’d invested in stocks and shares, looking to make capital gains out of that, you will have lost money. So people that invested at the peak, have lost something like 20 to 30% of the value of those investments.
Dividends are very hard to track down at the minute. The biggest dividend payers, which were some of the big oil companies like Shell and BP, and big telecoms companies like BT, have either stopped paying dividends, or reduced them by half or more. So a lot of people invested in those big companies because they were a safe source of an income through the years, through dividends, and they’re just not going to get those payments.
There will also be many older people that were hoping to retire, that are now having to delay their retirement whilst others are going to have to be taking it early because they don’t feel there’s anything more out there for them. The impact of that is quite complicated and it’s difficult to estimate. You’ve definitely got some people who will be thinking, “Well, actually, I can’t afford to retire now because I thought that I would have been able to use these savings to do something, whereas I can’t.” But you’ve also got other people who will be made redundant, or will lose their job, or their small business will fold, and they will be forced into retirement at a period where their pension plans are probably not sorted out. So actually, they’re going to be forced into retirement with less income than they thought they were going to have, which probably means that they’re going to look at several years of hard existence.
My advice to those who are over50 and worried about their future, whether they’ve actually lost their job at the moment, or are on furlough, would be to think very carefully and consider all the options; maybe even consider things that they haven’t thought were options before.
Become an entrepreneur
For example, one of the big opportunities for people who are over50 is to use their world-of-work experience and become an entrepreneur. Just because you spent your entire career working for somebody else, doesn’t mean that you haven’t got valuable skills that you might be able to harness and put into a small business yourself.
I personally think that if you get five years down the path from here, you’ll be able to look back and you’ll say, “Well, actually, do you know what? The winter of 2020/2021 is actually a time when quite a lot of older people became financially independent because they started to set up a business that would generate an income for themselves.” Many will have a skill that they have been using in a bigger company that could be used in a smaller company.
So if you were a designer, a marketeer, somebody who had those types of skills that are easy to maybe freelance, or pool with some other professional skills, then create a smaller business that actually sells services to bigger companies. The advantage is that bigger companies are reducing their fixed cost base because they maybe make these resources redundant, but then they buy services as and when they need them. A very typical outcome is a well-liked mature member of staff who takes redundancy but can sell services back to the company that made them redundant.
Caring for elderly parents
Another big issue that will apply to people in their 50’s and 60’s is elderly parents. Because of the pandemic, there is an understandable reluctance to move relatives into care homes due to all of the problems that existed in the spring and the early summer. This leaves a burden of care to people that were not expecting necessarily to take on their parents or in-laws. It is yet another thing that will increase social isolation, reduce the available options to work, and will be another drain on the planned finances for retirement.
For those types of families and situations, there is some help available of course. The local council should do an assessment and come up with a plan that enables people to be supportive of parents in their home. Plus, if they are caring for someone, there are a small number of benefits such as the Attendance Allowance, which is paid at two different rates, depending on whether someone needs care only during the daytime, or whether in the day and the night time as well. Those particular ones are not means-tested benefits, so that’s available to everybody. But things like having a carer come, for example, to help you get an older relative out of bed in the morning and maybe put them to bed in the evening, that is means-tested, because that’s a council-run service. But it can be applied for.
If I could get my moment in front of the government, I would be asking them to spend as much money on the over50’s as they are doing on the under 24’s and to develop, with using the same amount of money, schemes that are relevant to the over50’s; support for older workers to retrain, including an entitlement to funding for a qualification up to level 3 – the equivalent of A-Levels – for all older workers. Back to work support which meets the needs of the over50s including effective incentives and robust oversight to prevent older claimants being left behind.
It’s important that the over50’s are not seen as a group of people with skills that were ‘suitable for yesterday’, but not relevant for today; particularly technical skills, as the economy’s moved significantly online as a result of COVID and older workers need skills that enable them to operate as well as younger workers in an online economy.
Support for small businesses
Another support package that I want to see from the government would be support in setting up small businesses in two forms; one should be education, and the other should be business startup loans. Older people should be able to put together a credible business plan and not need to necessarily go to a bank for that. There should be a pot of government money which can be allocated to support these people as they start this journey.
Do I think that these options are likely to happen? I think it’s unlikely that it will happen soon, but I think it may happen later on. What we’ve seen from the government so far, is them responding at the point they need to, and not a moment earlier. To me, there seems to be a lack of thinking through outcomes. I think it’s really predictable that older workers are going to suffer during this long COVID period, and nobody is talking about them and how to support them through this. Now is the time to address the issue, before it becomes an emergency.