Older women in the labour market
Authors: Ian Brinkley
08 May 2014
The Labour Party has drawn attention to the fact that unemployment amongst women between 50 and 64 has increased since the last election. Taking a more politically neutral period confirms that the number of women over 50 went up by 38 per cent between Dec-Feb 2010 and Dec-Feb 2014. In contrast, unemployment among older men went down by 18 per cent. The unemployment rate measured by the ILO definition went up for older women from 3.2 to 3.9 per cent, while the unemployment rate for older men went down from 6.1 per cent to 4.8 per cent.
By this measure, older women seem to be missing out from the general fall in unemployment and their relative position compared with both younger women and older men has deteriorated.
Other labour market indicators however show a more complex picture. Over the same period employment for older women went up by nearly 380,000 or 11 per cent, while employment for older men went up by just over 250,000 or just over 6 per cent. The employment rate – the share of women in this age group were in work – increased from 60.5 per cent to 65.7 per cent. Employment for older women has grown by more than any other age group in the labour market and both employment levels and employment rates are significantly higher than just before the recession.
Some of the rise in employment among older women reflects changes in the demographics of the workforce driven by ageing. There is also an underlying structural increase in participation by older workers. We can easily see the demographic effect by looking at the next age group in the published statistics, women aged 35 to 49. There were just over 4 per cent fewer women in this age group in Dec-Feb 2014 compared with Dec-Feb 2010. In contrast, there were just over 3 per cent more women between the ages of 50 and 64.
Another important reason is that people are staying in work longer, partly reflecting less generous private pension provision and recent reforms which increased the state retirement age for women in 2010. According to researchers at the Institute for Fiscal Studies (IFS) that latter has resulted in a modest increase employment for both men and women and somewhat higher unemployment for older women compared with what would have otherwise occurred. Another factor is that falling hourly real pay and reductions in some benefits may increase incentives for older women to stay in work longer and also encourage older women to seek employment to restore household finances or compensate for redundancies amongst other family members.
So how do we reconcile these starkly contrasting stories of record employment growth and rising unemployment? One clue is what is happening to those not in work or actively seeking work who are classified as the ILO as “economically inactive”.
We have seen a big fall for older women with the numbers counted as economically inactive falling by 10 per cent and the inactivity rate – the share of the age group neither in work or actively seeking work – dropping from 39.5 per cent to 34.3 per cent. Some of this fall may be attributable to welfare reforms intended to move some economically inactive people on long term disability benefits into the active labour market. Whatever the underlying reasons, we are seeing a big increase in older women participating in the labour market, and that is showing up in both higher employment rates and higher unemployment rates.
Will this persist? Unemployment among older women had started to rise before the recession, moving up from 2.2 per cent in Dec-Feb 2005 to 2.7 per cent in Dec-Feb 2007 and then to 4.3 per cent by Dec-Feb 2012. However, unemployment has since then been falling, dropping to around 3.9 per cent in Dec-Feb 2014. This is not by as much as for some other age groups and older men, but even so it is moving in the right direction.
The Labour Party has also been critical of the performance of the Work Programme in helping older women claimants move into sustainable employment. Whatever merit there is in that charge, it is clear that for some women there is a significant problem of growing long term claimant unemployment – nearly 37 per cent of women over 50 claiming benefit had done so for more than 12 months in March 2014. This is a problem that current policies have so far failed to adequately address.
The Government may say that the new measures recently announced that focus on the very long term unemployed will help reverse this trend. That remains to be seen. We would expect long term unemployment to fall as overall unemployment continues to decline. The debate about how much of that fall can be attributed to specific Government labour market policies, whether alternative interventions would have produced better results, and how much would have happened anyway will run and run.
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