The Great Unretirement: Seniors flock back to work

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  Quantumrun Foresight
• June 12, 2023

Insight highlights

The COVID-19 pandemic sparked an unprecedented exit of seniors from the workforce, disrupting the increased labor force participation among older individuals. However, with financial pressures rising post-pandemic, many retirees are considering returning to work, a trend dubbed the 'Great Unretirement.' While potentially helping to alleviate talent shortages in various sectors, this shift calls for an inclusive multigenerational approach in workplaces, policy adjustments to prevent age discrimination, and initiatives for lifelong learning.

The Great Unretirement context

The COVID-19 pandemic led to a significant exit of senior individuals from the job market in numerous economies, disrupting a long-standing trend of increasing workforce involvement among this age group. However, with a looming cost-of-living crisis post-pandemic, many are making a comeback into the workforce, a situation colloquially known as the 'Great Unretirement.' Historically, studies in the US indicated a rise of 3.3 million retirees between January 2020 and October 2021, much larger than predicted.

However, a CNBC survey revealed that an overwhelming 68 percent of those who opted for retirement during the pandemic are now open to rejoining the workforce. Meanwhile, in advanced economies, the participation rate for individuals aged 55-64 fully recovered to its pre-pandemic figure of 64.4 percent in 2021, effectively nullifying the downturn caused by the pandemic. However, for those over 65, the rebound has been slower, with the participation rate improving to 15.5 percent in 2021, which is still slightly lower than the pre-pandemic apex.

Meanwhile, in Australia, over 179,000 individuals aged 55 and over made a comeback into the workforce between 2019 and 2022. This re-entry into the workforce is often driven by necessity, potentially due to the escalating cost of living. This theory is supported by the fact that, in the year leading up to March 2023, household inflation experienced a significant rise of 7 percent.

Disruptive impact

Senior workers are poised to play a crucial part in resolving the talent shortage in advanced economies. Take the UK, for example, where the retail sector is grappling with a significant talent deficit. At John Lewis, a company in this sector, almost a quarter of the employees are now over 56. The firm has enhanced its appeal to older workers by offering flexible working hours to accommodate their caregiving responsibilities. The OECD projects that by fostering multigenerational workforces and providing more employment opportunities to older individuals, GDP per capita could see a substantial increase of 19 percent by 2050.  

Governments will likely create or update labor laws to accommodate an increasingly older worker demographic. However, the implementation of these laws may be challenging. For example, in the US, the Age Discrimination in Employment Act (ADEA) has been in place since 1967 to prevent age-based bias in employment. However, signs of age discrimination persist, particularly during the hiring process. Similarly, the European Union has had a directive prohibiting employment discrimination based on age since 2000. Despite this, there are several exceptions and challenges related to enforcing this directive by national and European courts.

The need to have reskilling or upskilling programs for senior workers will also be critical, particularly for those experiencing technology fatigue. There may also be an emerging business opportunity to create workstations, equipment, and other accessibility features tailored toward older employees.

Implications of the Great Unretirement

Wider implications of the Great Unretirement may include: 

• A multigenerational environment that could foster greater understanding and mutual learning between younger and older workers, breaking down age-related stereotypes and fostering a more inclusive society.
• Increased consumer spending and contribution to economic growth. Their added income could also alleviate any financial stress from rising costs of living or insufficient retirement savings.
• Policy changes related to employment, social security, and retirement age. Governments might need to consider policies ensuring fair employment practices for older workers and preventing age discrimination.
• Increased demand for workplace training in new technologies, pushing companies to create or expand programs that help older workers adapt to technological advancements.
• Increased competition for jobs between younger and older workers, potentially raising unemployment rates among younger workers.
• A strain on workplace health provisions and the wider health system, given the greater likelihood of health issues among older workers.
• Shifts in retirement planning strategies and financial products, with a focus on flexible work and phased retirement options.
• The education sector developing lifelong learning courses and programs tailored to older workers.

Questions to consider

• If you’re a retiree who went back to work, what was your motivation?
• How can governments address the labor shortage without relying on retirees returning to work?