UK workforce shrinks after sharp rise in people choosing to leave work

The economic fallout from the coronavirus pandemic has made Britain’s workforce smaller, younger and more female after a sharp rise in people leaving work during lockdown, according to a report.

The Resolution Foundation said that while mass unemployment had been avoided during the Covid-19 emergency, there had been an increase in people who had exited the workforce and were no longer looking for a job.

Reflecting a sharp rise in early retirement among older workers, the thinktank said economic inactivity – a measure of people out of a job, but who are not looking for work – had soared by 586,000 since the start of the crisis.

Alongside a fall in employment in sectors with higher proportions of men in work, such as construction and manufacturing, it said these trends had led to a shrinking of Britain’s workforce, leaving a more concentrated number of women and younger adults to form the backbone of the UK economy.

According to the report, participation in the UK workforce had fallen by 1.2 percentage points among older workers aged between 55 and 64, the biggest drop in any recession for the past 40 years.

In stark contrast, participation among women rose by 0.4 percentage points – building on a pre-crisis trend for rising levels of female employment in recent decades. Highlighting the shift, it said the proportion of women in the UK workforce had risen from about 44% in 1992 to 48% of the total working population.

The figures come amid concerns that women who work mostly from home risk getting caught in a “she-cession” as more men return to the office post-pandemic, gaining a career advantage over their remote-working female colleagues.

Catherine Mann, a member of the Bank of England’s monetary policy committee, said this month that virtual working methods, such as video conferencing, could not replicate spontaneous office conversations that are important to career advancement.

However, the Resolution Foundation found that the shift to remote working during the pandemic had helped some women stay in a job. Finding a sharp increase in official jobs market figures for participation among mothers with young children in particular, it said participation among mothers with children aged nought to three had risen by 5.4 percentage points.

According to a survey of 6,100 adults undertaken by YouGov on behalf of the thinktank, as many as one in 10 mothers who are part of a couple said that remote working had enabled them to enter work or increase their hours, compared with one in 20 coupled fathers and women without children.

It also found an increase in women increasing their hours or entering work to offset a partner’s loss of work.

The report, compiled in collaboration with the Centre for Economic Performance at the London School of Economics and funded by the Nuffield Foundation, said the rise of hybrid working could help maintain higher levels of participation among women.

However, the changes are concentrated among higher-paid workers and those living in London, where there are typically more jobs that can be done from home.

Hannah Slaughter, economist at the Resolution Foundation, said: “We need to bank the benefits of more flexible working patterns in post-pandemic Britain, and avoid the risk of remote workers being turned into second-class staff, as we have done with so many part-time workers.”