When Seasoned Workers Leave, Productivity and the Bottom Line Suffer

The loss of highly skilled and experienced seasoned
workers is impacting business productivity and
creating financial loss

The Impact of the End of Work

When seasoned workers exit the world of work, they can create a skills and experience gap that is difficult to fill – and may leave businesses battling financial and knowledge lossIt’s no secret that the UK remains gripped in a ‘sticky’ labour shortage that has left 80% of UK businesses struggling to secure the talent they need, or that the nation’s talent shortage has doubled since pre-Brexit and pandemic levels. However, what often gets overlooked in these dramatic headline numbers are the high rates of seasoned workers leaving the workforce, and the impact their exodus has on UK businesses of every shape and size.

Who are seasoned workers?

Seasoned workers are those in the UK workforce over the age of 50 years – this includes employees and the self-employed.

According to the charity, Age UK, more than 3.5 million people aged 50-64 years are now out of the workforce – and it’s a trend that is still accelerating. The reason so many people of working-age are no longer gainfully employed may be varied, but the fact remains that this cohort of ex-workers contains some of the most experienced and skilled talent in the UK, and their ‘brain drain’ is creating a vast hole in the UK labour force that businesses cannot adequately fill – as demonstrated by the more than 1 million open vacancies that persistently remain.

66% of UK employers believe seasoned workers have skills and knowledge that are difficult to replace

Source: CIPD

Unfortunately for UK organisations, the impact of the seasoned worker exodus is not confined to the loss of valuable skills and experience, it also hurts business income and expenditures, decreases industry knowledge and harms business culture. Subsidiary effects include:

£88 billion in lost revenues per year

Average cost of recruiting replacement: +£6000

Institutional knowledge of processes and products lost forever

Proprietary information exposure

Lack of diversity in workforce impacting organisational DEIB policies

This bleak picture is further darkened by the realisation that the loss of seasoned workers stands to impact some of the UK’s largest industries – sectors where the average age of employees is higher than the national average and where seasoned worker losses can be expected to be significant. For men, this means banking and finance, transport, communication, and manufacturing. For women, the sectors most in peril include health and social work, finance and banking, and education. Some of these industries are already reporting record shortages of workers and are failing to deliver on their mandates. However, it’s not only organisations in high-risk sectors that should have concern. Simple demographics reveal that unless all UK businesses can address the rising loss of seasoned workers, the nation’s current talent problems will continue to worsen.

A demographic timebomb? Age is catching up with UK workers. National workforce by age and industry, workers aged 35-49 and 50-64. Source: UK Gov 2022

£105 billion Potential long-term GDP gain for UK from raising employment rates for those aged 55 and over to match New Zealand levels

Source: PwC

A Lose/Lose Situation

When seasoned workers leave the workforce, it can be a major loss for them as well as the organisation.

Whether seasoned workers leave the workforce through retirement, redundancy, health issues or for other reasons, their departure doesn’t just affect the organisation they are leaving, it can impact them physically, psychologically and financially as well. Common issues affecting the UK’s 3.5 million out-of-work 50-64 years olds include:

Deteriorating physical and mental health due to inactivity

Loss of direction or purpose – loss of feelings of ‘identity’

Loneliness

Financial hardship, as private pension pots are often inadequate and state benefits are meagre or hard to access

Worries about losing skills they have acquired through experience and becoming obsolete to modern working practices

50-64 years olds who left work since the pandemic were more likely to have increased worries around finances, such as the rising cost of living and their lack of income or savings than those who left work before Covid-19 arrived

Source: UK Gov 2022

With such a variety of deep and impactful reasons to stay or return to the workforce, it is no shock to learn that nearly 760,000 people aged between 50 and 64 years are either actively seeking work, or are inactive but are willing or would like to work, (a fall from 810,000 in 2021).This is an eager and waiting workforce that could almost wipe out the UK’s current labour shortage in one go. However, many of the vacancies that businesses are trying to fill require specialist skills and knowledge that this cohort of workers do not have.Matching jobs and skills to available seasoned workers, and meeting both business needs and seasoned worker expectations on pay, role and working conditions can be difficult, especially when seasoned workers are less willing to relocate to take up a new position.

Top reasons seasoned workers leaving the UK workforce:

Retirement
Sick or disabled
Caring for relatives or home
Discouraged with job or industry

Source: Commons Library 2023

However, those organisations that can meet seasoned worker needs may tap into a vast pool of valuable and easily transferable ‘human skills’, then use training programmes to upskill and reskill these veteran employees into new roles and industries.

Top ‘human skills’ in demand by employers:

Critical thinking & analysis
Resilience & adaptability
Leadership qualities
Initiative taking
Accountability & Reliability

Source: ManpowerGroup 2023

The fact is, even if some seasoned workers have skills that are no longer relevant to the modern workplace, deep experience and abundant human skills still place many seasoned workers in a strong position for recruitment and retention.