Increasing the older employment rate is vital for economic sustainability

Jenny Lincoln, Business in the Community Age Research and Policy Manager explains why it is essential that employers adapt to an ageing population and take practical steps to increase the recruitment and retention of older workers. 


The UK’s population is ageing; people are living for longer, and the birth rate has declined year-on-year since 2012. As the population ages and fewer young people enter the workforce, it is imperative to keep people in work for longer. But is the employment rate for older people keeping up with demographic change? And what is the role of employers?

As age structure of the population changes, so must that of the labour force. It would be extremely difficult to financially support a larger retired population with a smaller working-age population. Taxes raised from the working population and a rising state pension age will not be enough to counteract the impact of an ageing population1 – employers must be able to keep people in work for longer.

Indeed, the average age of leaving the labour market has increased over the past two decades, but it is not keeping pace with increases in life expectancy.2 The Office for Budget Responsibility has projected changes to labour market participation rates for older people – and we have taken a closer look at the changes between 2017 and 2022:

  • For the 60-64 and 65-69 age groups, participation rates are expected increase – particularly for women, most likely due to their increased state pension age.
  • However, the participation rates for 55-59-year-olds is projected to decline, for both women and men.
  • Interestingly, for the 50-54 group, the participation rate is projected to decrease for men, but increase for women.3

Table of Labour market participation rates











Despite some increases in the employment rate for older people, the changes are insignificant overall. To adapt to an ageing population, employers need to take practical steps to further increase employment for older people.

This is made even more important by Britain leaving the EU and the potential reduction of immigration. Since 2013, the immigration has filled a gap in the workforce, left by the ageing of the nation’s UK-born workforce. This ageing sees more people leave the workforce, through retirement, emigration or death, than enter it. Mercer has projected the impact of zero migration to the UK in 2030: a 2.5m gap in the workforce. Whilst we can’t make assumptions about immigration levels, we absolutely should start preparing for workforce gaps by retaining and recruiting our older workers.

As the Government’s Business Champion for Older Workers, we have set a target of one million more people aged 50-69 in work by 2022. If this target is achieved, it would equate to a 7 percentage point increase in the labour market participation rate of that age group – far more than the Office for Budget Responsibility’s projected changes.  

Whilst two-fifths of the target will be met ‘naturally’ by demographic change, the remaining three-fifths requires employers to take action, sooner rather than later. This is a target for every employer to work towards over the next five years. It is ambitious, but it is necessary


 1 Alison Maitland and Peter Thomson (2011) Future Work: How businesses can adapt and thrive in the new world of work. Palgrave Macmillan.

 2DwP (2017) Fuller Working Lives Evidence Base.

 3 Office for Budget Responsibility (2015). Labour market participation rates by age and gender - Fiscal sustainability report 2015.