Why Employment Is Falling And How To Fix It

As the UK debates the State Pension Age and confronts rising long-term sickness, a stark reality is emerging: older worker employment is falling just as the economy needs it to rise. Here’s what leading experts said must change at the opening session of the recent Re:Work Live Conference in London, a showcase of career transition services and ideas under the banner #careerscanchange.

Why Older Worker Employment Is Falling

The UK is living longer than ever, but its systems for supporting longer working lives are not keeping pace. Employment rates for people aged 50–64 have stalled at around 71 percent, below pre-pandemic levels and well behind countries such as Sweden, Japan, and Germany. Long-term sickness has risen sharply, and more than 2.8 million people are currently out of work due to chronic illness—many of them in their 50s and early 60s.

Opening speaker Patrick Thomson, Head of Research for the Standard Life Centre for the Future of Retirement framed the challenge: “We have an ageing workforce that is both an opportunity and a warning. If we fail to support people in their 50s and 60s to stay healthy, skilled, and connected to work, the costs—to individuals, employers, and the state—will only grow.”

The slowdown is not the result of a single issue but a convergence of health pressures, structural inequalities, skills gaps, and patchy employer practice.

The Health Crisis Undermining the UK Workforce

Naomi Clayton, Chief Executive of the Institute for Employment Studies, highlighted a reality that many policymakers still under-appreciate: “We’ve seen some of the biggest increases in work-limiting illness among older workers anywhere in the OECD. Other countries are helping people with health conditions stay in work longer. The UK is moving in the opposite direction.”

Three trends stand out:

• a rise in long-term sickness among people aged 50–64
• higher exit rates from work due to health
• more people trying to manage work while juggling multiple chronic conditions

The challenge is systemic. NHS delays, diagnostic backlogs, declining healthy life expectancy, and uneven access to occupational health support all feed into a national competitiveness problem—not just an HR problem.

Clayton stressed urgency: “We now need government to move from analysis to action—quickly.”

Why Flexible Work Still Fails Older Employees

Flexible work is essential to longer working lives. Yet too many older workers lack access to the kinds of flexibility that matter most: predictable hours, adjusted responsibilities, reduced physical strain, and redesigned roles.

“It’s no use offering flexible working to somebody whose real challenge is lifting, standing, or heavy tasks,” Clayton noted. “Job design is the missing piece.”

Industries facing acute labour shortages—care, transport, retail, hospitality—are also those with the weakest flexibility structures. The result is predictable: people leave earlier than they need to.

The flexibility gap is now a major driver of inequality in later-life employment.

Midlife Careers: The Confidence and Skills Gap

Sarah Ellis, co-founder of Amazing If and part of a coalition of firms brought together under #CareersCanChange, brought the human dimension into focus. Her work with thousands of employees shows that mindset barriers often keep people stuck—or push them out—long before capability does. “The most common phrase we hear is, ‘I’m too old to change,’” she said. “But it’s not age that stops people—it’s the story they tell themselves about age.”

She highlighted the “confidence gremlins” familiar to many midlife workers:

• I’ve lost relevance
• I’m not digitally fluent
• I don’t have the right experience
• I’m not sure where I’m needed anymore

Ellis offered a powerful reminder: “You can’t think your way into a new career. You act your way into one.”

She shared an anecdote of a senior colleague planning early retirement—only to discover a group of graduates were panicked about losing their most trusted mentor—illustrated how frequently older workers underestimate their value.

A deeper challenge is emerging too: declining investment in adult skills. Midlife workers disproportionately occupy roles most vulnerable to automation or physical strain, yet receive the least training. The UK is drifting toward both an age cliff and a skills cliff simultaneously.

The State Pension Age Dilemma

Dr. Suzy Morrissey, Independent Reviewer of the Third State Pension Age Review, underscored the policy complexity ahead. Her mandate is not to set a new pension age, but to outline the factors that must inform future decisions.

“We have a universal pension age, but non-universal realities,” she said. “People do not arrive at 66 in the same physical condition, with the same work history, or the same financial resilience.”

Her warning was clear: “We cannot assume that raising the State Pension Age by a year means people will work one year longer. That is not what’s happening now, and it will not magically happen in the future.”

Inequalities—regional, health, and gendered—are widening, not narrowing. Women, in particular, are more likely to leave work due to caring responsibilities, have lower pensions, and experience earlier health decline.

The pension debate will only intensify as longevity increases and healthy life expectancy stagnates.

How the UK Can Rebuild a Future-Ready Workforce

Catherine Foot, Director of the Standard Life Centre for the Future of Retirement, urged a more integrated approach.

“We’ve doubled life expectancy in a century,” she noted, “but we haven’t doubled healthy life expectancy, workforce participation, or people’s sense of security in later life.”

She argued that retirement is often described as a cliff edge—but for many, the real cliff arrives much earlier, when health, caring responsibilities, or ageism push them out before they wish or can afford to leave.

Foot emphasised what employers routinely overlook: the productivity upside of older workers—stability, experience, emotional intelligence, and crucial institutional knowledge.

The panel converged on five priorities:

1. Scale workplace health interventions
2. Make flexibility the default
3. Support midlife career redesign
4. Confront ageism directly
5. Align pension policy with unequal ageing realities

Thomson closed the discussion with a simple truth: “Longer lives don’t automatically translate into longer, better working lives. We have to design for it.”