Labour market Back to work? Not if you’re an older carer 12 July 2012 by Giselle Cory Giselle Cory This blog originally appeared on Public Finance The government’s ambition to extend working lives is coming into direct conflict with the extra caring responsibilities imposed on middle-aged people Last night’s BBC One programme, The Town That Never Retired, sent 70-year-olds back to work. Some fell back in love with work, while others found themselves unable to do the jobs they used to do. While mid-70s might be a bit of an extreme working age for some, the rise in the state pension age and other pressures make working at least into your mid-60s a very real prospect for many. But without social care reform, many will be locked out the labour market. More than half of Britons say they want to continue working after state pension age. This is in part because they enjoy the sense of identity they get from the workplace and because many households recognise the growing financial need to work for longer. Older workers are increasingly important for maintaining and bolstering living standards for low to middle income households. Combined with the rising cost of living, wages have stagnated for all but the richest households and long-term growth in salaries for 50 to 60-year-olds is lagging behind that of younger groups. Moreover, for many, the majority of their saving for retirement is done after they turn 50 which makes the later working years critical to building sufficient savings to avoid poverty in retirement. It is not surprising then that more than one in three people on low to middle incomes are worried about managing financially in retirement. Given the propensity to underestimate the costs of retirement, it is likely that many more have cause for concern. However, despite many wanting and needing to work for longer, this is simply not an option for everyone. Over 50s can face the triple challenge of significant caring responsibilities, poor health and, for the unemployed, significant difficulty finding new work. These are all considerable barriers that require some intervention from government to overcome, but it is caring that is most affected by the government’s announcement yesterday in its social care White Paper that social care will be reformed – just not yet. Getting the care system right is crucial to keeping the labour market open to many older people who provide informal care, and more delays to reform go against the government’s agenda of extending working lives. Caring responsibilities and employment decisions are intricately connected: spending a significant amount of time caring is associated with a greater likelihood of dropping out of employment for care givers of working age. As a proportion of the population, more people are informal carers in the UK than across the OECD as a whole, in part because of our poor social care system, and around half of these carers are over 50. Moreover, the OECD predicts a shrinking potential pool of informal carers resulting in a greater proportion providing more time-intensive care. As well as its impact on work decisions, caring also has a significant financial impact on households. Those in their late 50s and early 60s experience the biggest loss in earnings due to caring, and caring for a parent or partner is associated with a greater earnings loss than caring for other relatives or friends. The carer’s penalty for 60 to 64 year olds is more than £13,000 a year (due to either a cut in hours or a change in role or both). Moreover, these older carers face forced early retirement and a reduced pension. As the population ages and both the proportion of older workers and the demand for informal care rise, the need for government and employers to facilitate extended working lives will only become greater. Government has moved some way to encouraging longer working lives, mainly through the increase in the state pension age. Although this is a necessary and positive move in itself, current inequalities in older employment will be exacerbated if other barriers to work are not addressed. This includes better in-work support for those in poor health and back-to-work support for the unemployed, as well as a better system of social care.