A new report from the House of Lords Economic Affairs Committee has claimed that early retirement following the pandemic is the biggest cause of labour shortages in the UK.
It examined the jump in economic inactivity – the number of people not in work or looking for work - since 2020.
The report highlighted that retirement, increased sickness, changes to migration and the UK’s ageing population have all contributed to the current tightness in the labour market.
However, Lord Bridges of Headley, chair of the committee, told the PA news agency that the report, titled Where Have All The Workers Gone, found that the pandemic seemed to spark increased early retirement.
He said: “We are unable to say exactly why, but a lot of people over 50 who left work or were furloughed during the pandemic did not come back.
“There are a number of reasons why people left the workforce but as we kept looking it became clear that retirement was the biggest factor, the biggest change from the start of the pandemic.
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“We can’t hypothesise too much, but one potential explanation is that people experimented with different lifestyles during the pandemic – they were forced to stay at home or work fewer hours – and then changed their working lives as a result, even when the pandemic restrictions changed back.”
Lord Bridges added that these findings were "bleak" and that the Government needed to do more to help address labour shortages.
A spokesperson from the Department for Work and Pensions said: “Older workers are a huge asset to our economy and jobs market. That’s why we are investing an extra £22 million in employment support for the over 50s – expanding our Jobcentre Mid-Life MOT service and providing tailored support through our Older Worker Champions.
“As set out at the autumn statement, the Department for Work and Pensions will thoroughly review workforce participation to understand what action should be taken on increased economic inactivity.
“The recommendations from the Committee’s report will be considered as part of this work.”
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