The world is being transformed by a longevity transition – a significant shift in how gains in life expectancy are realised. In the early 20th century, most increases in life expectancy occurred early in life, with less than 20% of gains realised after age 65 (Eggleston and Fuchs, 2012[1]; Scott, 2021[2]; Scott, 2021[3]). However, by the end of the 20th century, over 75% of life expectancy gains were occurring after age 65. Attention is often focused on the negative consequences of an “ageing society”, yet the potential benefits from a longevity dividend are immense. There is a need to shift focus from an “ageing society” to a “longevity society”, encompassing the potential benefits of increased life expectancy. The increase in life expectancy has been one of the most remarkable achievements of the past century. In the United Kingdom female life expectancy in 1951 was 71.5 and male life expectancy was 66.4. In 2020‑22 average female and male life expectancy had risen to 82.6 and 78.6 respectively. In 2000 15.8% of the United Kingdom’s population was 65 or over, by 2024 this had risen to 19.6%, and is projected to rise to 25.1% by 2050. Over the last couple of decades population growth has been driven by growth in older people. Between 2000‑22 the population aged 50‑64 grew by 2.5 percentage points, while the population aged 65‑69 and 70‑74 grew by 0.6 and 0.7 percentage points respectively (Figure 1.1). This contrasts with a decline in the population aged below 54. Further, the population aged 65 and above is projected to grow by 2050. This demographic revolution presents both challenges and opportunities for societies worldwide.

Capturing the benefits of a “longevity dividend” could result in economy-wide productivity improvements, but this requires rethinking traditional notions of retirement and work-life patterns (Scott, 2021[2]; Scott, 2021[3]). Two key challenges are ensuring that people are healthier for longer and productive and engaged for longer. Healthier lives mean translating increased longevity into an extension of healthy and productive life, rather than simply adding years of disability to the end of life. Ensuring that people are productive and engaged for longer does not necessarily mean working in the same job or capacity until a much later age, but rather reimagining career trajectories and work patterns to accommodate longer lifespans. The traditional three‑stage life (education, work, retirement) is becoming obsolete. Multi-stage careers allow for transitions, reskilling, and different types of work throughout a longer lifespan. This approach reflects that people may need to leave or reduce their labour market activity due to caring responsibilities etc and that continuous learning and adaptation in response to changing labour market demands may be necessary.

Given the population trends outlined above, employers in the United Kingdom need to realise that the workforce of the future is largely the workforce they already have. Retaining experienced employees not only allows companies to benefit from their skills and institutional knowledge but also mitigates the high costs associated with turnover, such as recruitment and training of new staff. As the workforce ages, retaining older employees through adaptive career strategies is vital for maintaining organisational stability and productivity. Contrary to stereotypes, older workers can be highly productive. Research shows that while individual productivity might decline with age, there are positive spillover effects of an age diverse workforce, such that age‑diverse workplaces have been associated with increased productivity and performance (OECD, 2020[4]).

Career progression plays a crucial role in retaining employees, particularly those who are continuing to work later in life. Offering opportunities for growth, development, and upskilling keeps employees engaged and motivated, reducing the likelihood of attrition. For older workers, career advancement might take the form of mentorship roles, project leadership, or lateral moves that reflect their accumulated expertise. With longevity on the rise, companies must foster environments that not only allow for career development over a longer time span but also adapt to the changing needs and preferences of older employees.

Understanding the age‑related decline in job and occupational mobility is crucial for policy makers. Initiatives that promote lifelong learning and continuous skill development can help older workers maintain their adaptability and mobility in the labour market. Encouraging employers to offer flexible work options may facilitate job transitions for older workers who seek new opportunities while managing other life commitments. Additionally, strengthening measures to prevent age discrimination in hiring and promotion can help ensure that older workers have access to diverse job opportunities. By addressing the factors that contribute to declining mobility with age, policy makers and employers can work towards creating a more dynamic and inclusive labour market for workers of all ages in the United Kingdom. This approach can help maximise the potential of the workforce, promote economic growth, and ensure better outcomes for workers throughout their careers.

Unlocking the potential of older workers is essential for countries and employers to benefit from multigenerational workforces. Efforts must be intensified to fully integrate older workers into the workforce. Creating inclusive, multigenerational environments within firms, where career progression opportunities and fair working conditions are accessible to workers of all ages, is a key component of this strategy. Facilitating career mobility to enable workers of all ages to change jobs and occupations when beneficial is crucial for ensuring fulfilling longer working lives.

In addition, job and occupational mobility are critical for maintaining a dynamic and adaptive labour market, especially for mid-to-late career workers. Mobility allows workers to find better job matches, improve their skills, and potentially increase their earnings. For employers, a mobile workforce can bring fresh perspectives and adaptability. Moreover, career mobility can contribute to personal satisfaction and well-being, which is particularly important as workers age and their career aspirations evolve.

Employment rates for mid-to-late career workers in the United Kingdom have improved dramatically in recent decades, fundamentally altering the composition of the labour force. Between 2000 and 2023 the employment rate for 50‑64 year‑olds steadily increased from 50.8% to 65% (the OECD average rose from 47.5% to 64%); for 65‑69 year‑olds employment rates have risen from 11.3% in 2000 to 26% in 2023 (the OECD average rose from 15.9% to 28.9%), and for 70‑74 year‑olds the employment rate has risen from 4.7% to 9.3% (the OECD average rose from 8.7% to 16.7%). Employment rates for women have tended to rise faster than for men in most age groups over this period (Figure 1.2, Panel A). The employment rate for women aged 55‑59 has risen by 14 percentage points from 56.5% to 70.4%, and for women aged 60‑64 by 25 percentage points from 25.5% to 50.1% between 2000 and 2023. This trend represents a substantial influx of experienced workers remaining in or returning to the workforce and reflects individuals extending their careers well beyond the conventional retirement age.

However, with the recent increase in inactivity in the United Kingdom, policy makers have focused attention on increasing employment with the current government targeting a rate of 80%. In 2000 the 15‑64 employment rate was 72.3%, rising to 75.7% in 2023 (OECD average rose from 65.5% to 70.1%). In 2023 the 15‑69 employment rate was 71.9% (OECD average was 67.0%). This would require a substantial increase in the rate of employment growth to reach 80% by, for example, the end of the current parliament. The flip side of this increase in employment rates has been a decline in rates of inactivity, particularly for women (Figure 1.2, Panel B). The overall inactivity rate for those aged 60‑64 steadily declined from 61.8% in 2000 to 42.0% in 2019, before climbing to 43.2% by 2023 in the wake of the COVID‑19 pandemic (OECD average was 63.4% in 2000 and 43% in 2023). The pre‑COVID rise in employment among older individuals was primarily due to a decrease in the proportion of people who are retired or unemployed and experiencing long-term health issues.

Several government initiatives have occurred in recent decades aimed at extending working lives, such as raising the state pension age (Amin Smith and Crawford, 2018[5]), revising incapacity benefit programmes (Banks, Blundell and Emmerson, 2015[6]) and eliminating mandatory retirement ages in 2011. Nonetheless, it’s important to recognise that the employment rate for older workers, particularly men, had experienced a significant decline during the 1980s. Although there has been a resurgence in recent years, by 2020, the effective age of labour market exit was still below what it was in 1981 (Figure 1.3). This indicates that, despite progress, there is still room for more older individuals to remain active in the workforce. Additionally, the productive capacity of people in their 50s and 60s is higher today, as these age groups generally enjoy better health than they did in the mid‑1970s.

Despite this progress, older workers still have significantly lower employment rates compared to their younger counterparts, and there are differences by gender, education levels, health status and geography, for example. In 2023 the employment rate for workers aged 55‑64 was 65.0% compared to 84.1% for those aged 45‑54 (both above the OECD averages of 64.0% and 79.9% respectively). There is an almost 10 percentage point gap in the employment rate for men (69.3%) and women (60.9%) aged 55‑64 in the United Kingdom (Figure 1.4, Panel A). While the employment rate for women is very close to the OECD average of 59.0%, the rate for men is below the OECD average of 72.5%.

Employment rates for workers with tertiary education are lower in the United Kingdom relative to other OECD countries. The employment rate for workers aged 55‑64 with tertiary education is 70.3%, below the OECD average of 76.7%, and below the employment rate for this group in Poland (91.5%), Sweden (90.5%), the Netherlands (89.9%) (Figure 1.4, Panel B).

The United Kingdom performs better relative to other countries among workers with below upper secondary education. At 55%, the employment rate for 55‑64 year‑olds is higher than the OECD average of 50.4%. However, there is a 15.3 percentage point gap compared to the employment rate for those in the same age group with tertiary qualifications (70.3%). Further, it is also below the employment rate of low educated workers in many countries such as Iceland (69.9%), New Zealand (67.9%), the Netherlands (65.6%), Korea (62.5%) and Germany (60.7%) among others which are higher than 60%.

Employment rates for individuals aged 50‑64 vary significantly across regions and nations of the United Kingdom, revealing notable disparities. The South East of England consistently demonstrates the highest employment rate for women in this age group, reaching 70.1% in 2023 (Figure 1.5, Panel B). In contrast, Northern Ireland has the lowest rate at 60.1%. Among English regions, the East Midlands lags behind with the lowest employment rate at 63.9%. Although the gap between the highest and lowest performing regions has narrowed slightly in recent years, regional variations, with northern cities and towns generally experiencing lower employment rates and higher levels of economic inactivity among older workers compared to their southern counterparts.

Employment rates for individuals aged 50‑64 vary significantly across different ethnic groups in the United Kingdom. Among people in this age group, those from white other and Asian other have the highest employment rates at 78% and 76% respectively (Figure 1.6). In contrast, the combined Pakistani and Bangladeshi ethnic group has the lowest employment rate at 60%, which is 11 percentage points below the overall average of 65%. These disparities can be attributed to various factors that affect employment and opportunities for career progression. Health inequalities play a role, with Bangladeshi and Pakistani individuals reporting lower rates of good self-reported health (Mirza and Warwick, 2024[7]). Discrimination is another significant barrier, as racial and age discrimination compound to create additional obstacles for older workers from ethnic minority backgrounds. Occupational concentration in specific industries or job types can limit career advancement opportunities and make certain groups more vulnerable to economic shocks (Mirza and Warwick, 2024[7]). Educational attainment, while improving for some groups like young Bangladeshis, does not always translate into commensurate labour market outcomes, indicating persistent barriers to career progression.

The persistence of these employment disparities, even among groups with high educational attainment, suggests ongoing challenges in accessing higher-level positions and career advancement opportunities. The intersectionality of race, age, and gender creates compounded barriers for certain groups, further limiting their employment prospects (Mirza and Warwick, 2024[7]). Addressing these underlying issues is crucial for improving employment outcomes and career opportunities for all ethnic groups in the United Kingdom.

Since the onset of the COVID‑19 pandemic, the United Kingdom has experienced a notable increase in economic inactivity among older workers, particularly those aged 50‑64. This trend has bucked the historical pattern of declining inactivity rates for this age group and has raised concerns among policy makers and economists. Between the end of 2019 and the end of 2022, approximately 280 000 more people aged 50‑64 became economically inactive. This increase pushed the inactivity rate for this age group from 25.5% at the start of the pandemic to 27.2% in November to January 2023. Many older workers chose to retire earlier than previously planned. Between April 2019 and September 2022, 154 400 more people in the 50‑64 age group cited retirement as their main reason for not working or seeking work. There has also been a significant increase in the number of older workers leaving the workforce due to illness (Figure 1.7). In the same period, 137 700 more individuals aged 50‑64 reported short- or long-term illness as their primary reason for inactivity. Women were more likely to cite family responsibilities as a reason for inactivity, while men were more likely to mention retirement or health issues.

The increase in inactivity among older workers has not been uniform across all sectors and occupations. Professional occupations saw the largest volume increase in the flow of workers aged 50‑70 years into economic inactivity. Industries such as professional, scientific, and technical activities experienced the most significant changes, with a 4.2 percentage point increase in the proportion of workers moving to inactivity.

Although inactivity in the United Kingdom has recently increased, the rate for 50‑64 year‑olds was 26.8% in 2023, just below the OECD average of 28.4% (Figure 1.8). However, this was much higher than the rate in countries such as Sweden (14%), New Zealand (16.8%), the Netherlands (19.9%) and Germany (19.9%), although it is lower than countries such as the United States (29.3%), France (29.5%) and Italy (33.3%). There is considerable variation in inactivity rates among 65‑69 year‑olds across the OECD. At 73.5% the rate in the United Kingdom is above the OECD average of 70.2%, but well below the rate of most European OECD countries such as Germany (79.3%), Italy (84.9%), and France (88.9%). In Japan, Korea and Iceland the inactivity rate is between 45‑50%. There are also considerable differences in the rate of inactivity across the regions and nations of the United Kingdom. For women aged 50‑64 inactivity is 38.9% in Northern Ireland and 37.2% in Wales, compared to 28.4% in London and 28.7% in the South East (Annex Figure). For men in this age group inactivity is 17.3% in the South East, and almost double at 31.8% in Northern Ireland.

The rapid pace of technological change, including developments in artificial intelligence (AI), and the ongoing transition to a greener economy are poised to significantly disrupt labour markets in the coming years. These shifts are likely to lead to substantial job displacement and the need for workers to adapt to new roles and industries. For mid-to-late career workers, the risks associated with these labour market shifts are especially pronounced. Workers aged 55 and above are more likely to become long-term unemployed after losing their jobs compared to younger age groups (Chan and Stevens, 2001[8]; Deelen, de Graaf-Zijl and van den Berge, 2018[9]; Huttunen, Møen and Salvanes, 2011[10]).

In the United Kingdom the proportion of long-term unemployed (i.e. unemployed for 12 months or more) is generally higher among those aged 55‑64 than those aged 25‑54 (Figure 1.9). However, the share of long-term unemployment among older individuals has declined since 2015, paralleling a similar trend among younger people. The sharp drop in 2020 was due to a significant influx of newly unemployed individuals resulting from the COVID‑19 crisis. Concurrently, the share of all unemployed individuals who are aged 55‑64 has been increasing since 2009, reflecting a higher number of older people remaining in the labour force longer. The increasing trend of older individuals among the unemployed suggests that employment and skills policies need to focus more on this group to prevent long-term unemployment.

The impact of AI on employment and wages is complex and remains a topic of ongoing debate. AI can drive productivity gains, yet the extent to which workers benefit from these gains is uncertain. While some view AI as an avenue for augmenting human capabilities and creating complementary roles, it also has the potential to automate tasks traditionally performed by people. This can lead to a “decoupling” effect, where productivity increases without corresponding wage growth or employment opportunities, particularly in low- and middle‑income occupations. Studies suggest that high-wage and highly educated workers may benefit more, as they are often better positioned to use AI to enhance their productivity (Lane and Saint-Martin, 2021[11]).

Older workers face specific challenges in adapting to the AI-driven job market (Lassébie and Quintini, 2022[12]). They often experience greater difficulty in transitioning to new roles that require advanced digital skills, partly due to lower mobility and fewer incentives for retraining. Although older, more experienced workers in high-skilled positions may benefit from AI, they generally lack the same flexibility as younger workers in adapting to changing task demands. Age‑biased technological change can exacerbate this divide, as older workers may find their roles more vulnerable to automation with fewer options for reskilling. On the other hand AI may increase the value of hard-to-replace skills, such as management experience and tacit knowledge (Autor, 2015[13]), in which older workers may often have a comparative advantage. Recent evidence from a survey undertaken by Generation in the United Kingdom, France, Ireland and Spain shows that hiring managers have a clear preference for younger candidates for roles that regularly use AI tools (Figure 1.10).

Technological changes may also lead to early retirement, depending on job tasks and available employer policies or social insurance systems. Results from the United States suggests that jobs with more automatable skills can influence retirement decisions, though the effect remains modest alongside other factors like income and pension access (Lee, 2023[14]). While automation may drive some older workers to retire early or pursue reskilling, it can also enhance productivity and potentially increase wages, providing incentives to remain employed (Ahituv and Zeira, 2010[15]; Burlon and Vilalta-Bufí, 2016[16]). Whether productivity gains outweigh the need for upskilling in delaying retirement depends on employer-provided training and the availability of unemployment benefits to support workers until retirement (Messe, Moreno-Galbis and Wolff, 2014[17]; Yashiro et al., 2020[18]). Early retirement driven by these factors may pose fiscal challenges for governments due to the high number of long-term unemployed older workers.

The transition to AI calls for proactive policies to support older and lower-skilled workers who may face disproportionate impacts from automation. Reskilling initiatives and workplace adjustments can help prevent widespread displacement, promoting a fairer distribution of AI’s benefits across the workforce. The success of these interventions will depend on companies’ commitment to supporting their employees through these changes. Specifically, there is a growing need for measures to help older workers transition to new roles, such as targeted retraining, career counselling, and incentives for employers to invest in their development. Such preventative actions aim to reduce the risk of long-term unemployment among older workers and enable their continued, productive participation in the labour market.

Career mobility is widely recognised as a key driver of wage growth and career advancement in the early stages of workers’ careers (Topel and Ward, 1992[19]; Hahn et al., 2017[20]). However, discussions typically concentrate on younger workers, often overlooking the importance of career mobility for those in mid-to-late career. Enhancing career mobility for older workers can potentially lead to more satisfying and prolonged working lives.

As workers age, they tend to experience a decrease in both job-to-job transitions and changes in occupations. Job-to-job mobility rates in 2022 were about 11.3% among workers aged 30‑35, falling to about 7.7% by age 45, 5.9% by age 55, and 3.2% by age 65 (Figure 1.11, Panel A). In the United Kingdom, around 55% of employees felt they had good prospects for career advancement, with similar levels of optimism across England, Scotland, Wales, and Northern Ireland. However, the percentage of employees who felt they had good career progression opportunities rises with age, peaking at 64% for those aged 25‑34, before declining to 33% among those over 65 (Figure 1.11, Panel B). Men aged 25‑44 were significantly more likely than women in the same age group to report favourable career advancement prospects. This difference may be attributed to women in these age ranges taking breaks from work or switching to part-time schedules for childcare, which tends to reduce perceived opportunities for career progression. Full-time workers were more likely to perceive strong career progression opportunities than part-time workers, with 60% of male full-timers and 59% of female full-timers reporting this compared to only 33% and 43% of part-timers, respectively (Figure 1.11, Panel C). Additionally, employees who had completed an undergraduate degree were more likely to see good advancement prospects (60%) than those with lower qualifications, such as GCSEs, where only 47% shared this view.

This decline in career mobility over the lifecycle is largely due to improvements in the quality of job matches between employees and employers. As workers accumulate experience, they are more likely to secure positions that better align with their skills, qualifications, and preferences. Although the quality of a job match is not directly measurable, job duration often serves as a useful indicator. Job retention increases with age, suggesting that older workers are more likely to have found a suitable match with their employer (OECD, 2023[21]). Additionally, the accumulation of firm-specific skills can make it more difficult or less advantageous for older workers to transition to new roles. The value of these skills within their current organisation may outweigh the potential benefits of moving to a new job or career. Family and financial commitments also play a role, as older workers are more likely to have established families and financial obligations that can make them more risk-averse when it comes to changing jobs or occupations.

Conversely, the decline in job and career mobility at mid to late career may also be due to workers facing greater challenges in securing new positions compared to younger workers because of employer biases, and other barriers to accessing the job market or making career changes.

The decline in mobility with age can have significant effects on workers’ labour market opportunities. Job-to-job transitions are often associated with wage increases, so reduced mobility among older workers may lead to slower wage growth compared to their younger counterparts (OECD, 2024[22]). Furthermore, occupational mobility is frequently linked to career advancement, and the decline in such mobility among older workers can limit their opportunities for progression and skill development. This trend also has implications for the broader economy. Reduced mobility can make older workers more vulnerable to sector-specific economic shocks, as they may find it more challenging to transition to new industries or occupations. This can potentially lead to longer periods of unemployment or underemployment for older workers in declining sectors. Evidence suggests that in the United Kingdom, lack of opportunities for career development, feeling undervalued and low pay are major reasons why people aged 30‑64 change jobs (Figure 1.12).

Longer working lives also means that as employees get older, initially strong job matches may weaken due to shifting preferences, health issues (including disabilities), caregiving responsibilities, or the decline of certain skills. Older workers are more likely to encounter health-related barriers to employment (OECD, 2022[23]), with chronic illnesses being major factors behind early exits from the labour market (OECD, 2023[21]). As health deteriorates with age, managing work alongside certain medical conditions may become increasingly challenging. While not all individuals with disabilities can continue working, research indicates that many are still willing and able to remain employed, provided they receive adequate support and accommodations (OECD, 2022[23]). However, in some cases, the nature of the job may not allow for effective adaptations. In such situations, job or career mobility – either moving to a different role within the same company or transitioning to a new employer or new occupation – becomes necessary for continued participation in the workforce.

Care responsibilities, initially significant for younger workers due to childcare, may resurface later in life as workers provide informal care for parents and partners. On average, around 13% of people aged 50 and over in OECD countries frequently provide informal care, with 62% of these caregivers being women (OECD, 2021[24]). Informal caregiving contributes to lower employment and earnings levels, particularly among women and older workers (Maestas, Messel and Truskinovsky, 2024[25]). Caregivers often face difficulties re‑entering the labour market after caregiving obligations end, exacerbating employment and earnings disparities (Vangen, 2021[26]). This issue compounds the “motherhood penalty” and the “price of being female”, which create wage divergences between men and women over time due to childbirth (Goldin, Kerr and Olivetti, 2022[27]). With the growing proportion of the population over 65, the demand for caregiving will increase, often without a corresponding rise in publicly funded caregiving. Consequently, workers increasingly seek jobs with flexible working hours to balance work and caregiving responsibilities, preventing early labour market exit.

Evidence suggests that the value workers place on different workplace characteristics evolves with age. Older workers tend to prioritise flexible working environments, including flexible hours and geographical flexibility (Maestas et al., 2023[28]; Hudomiet et al., 2021[29]; Ameriks et al., 2020[30]). For example, (Ameriks et al., 2020[30]) found that older workers in the United States would accept up to a 20% hourly wage reduction for more flexible work arrangements. This preference for flexibility may have been accelerated by the COVID‑19 pandemic (OECD, 2023[21]). Additionally, Maestas et al. (2023[28]) and Hudomiet et al. (2021[29]) found that older workers also prefer jobs with less physical activity and stress.

While job stability is suitable for workers who are content in their current positions and do not wish to change, evolving labour market conditions, driven by population ageing and technological advancements, may compel workers to seek new job opportunities. To navigate these changes successfully, workers need adaptability, mobility and resilience.

Older workers, in general, change occupations and employers less frequently than younger ones. The likelihood of switching occupations over the course of a year decreases consistently with age, dropping from 6% for workers aged 35‑44 to 3.5% for those aged 55‑64, and further down to 3% for individuals in their late 60s (Figure 1.13). Among workers aged 55‑64, approximately 7% transitioned to part-time roles within a year on average between 2018‑22, with about 11% of 65‑69 year‑olds also switching to part-time work. About 1% of older employees moved into self-employment within a year. Part-time work and self-employment are important forms of economic participation for older workers and are common pathways for those transitioning between regular employment and self-employment as they approach retirement.

Earlier generations were less likely to be employed in managerial, associate professional, and technical roles compared to later generations. This is evident from comparing different birth cohorts at the same age, where the share of workers in these roles is lower in older cohorts and higher in younger ones (Figure 1.14). This trend – where younger cohorts have a higher proportion of workers in managerial and professional roles – holds true even when comparing those born in the 1960s and 1970s. It suggests that people nearing retirement in the coming decades are likely to hold jobs in more “advanced” occupations compared to those who retired in the past decade or so.

Focusing on both job quality and employment rates is crucial for mid-to-late career workers, as it ensures not only access to jobs but also meaningful and sustainable employment. While increasing employment rates among mid-to-late career workers is important for economic stability and reducing dependency, the quality of these jobs – such as fair wages, suitable working conditions, and opportunities for skill development – directly affects their well-being, productivity, and job satisfaction. A dual focus helps create a work environment where older workers can continue to contribute effectively while maintaining their health and quality of life.

Over the past couple of decades, the United Kingdom has experienced a prolonged period of wage stagnation, with minimal growth in real wages for most workers. This trend has been particularly pronounced since the global financial crisis of the late 2000s. Between 1970 and 2007 real wages grew by 33% per decade from 1970 to 2007 (Resolution Foundation & Centre for Economic Performance, 2023[31]). Between 2010 and 2023 average real wages grew by about 2.5%, well below growth of almost 15% in the United States, and 12% in Germany and Norway (Figure 1.15). Some estimates suggest that the average worker has lost out on approximately GBP 10 700 per year in potential wage growth due to this prolonged period of stagnation (Resolution Foundation & Centre for Economic Performance, 2023[31]). This weak wage growth is consistent with weak productivity and investment growth, and some suggest that it is a major cause of the rise in labour supply that has driven rising employment (Bell and Gardiner, 2019[32]).

Despite the overall trend of wage stagnation, there has been some positive movement at the lower end of the wage distribution. The introduction and subsequent increases in the minimum wage, particularly the National Living Wage (NLW) introduced in 2016, have played a crucial role in boosting earnings for the lowest-paid employees. Between 2011 and 2019, the earnings of low-earning employees grew twice as fast as median earnings (Low Pay Commission, 2020[33]). Its real value for those aged 25 and over has increased by 60% since 1999 and 20% since 2015. This policy has not only affected those earning the minimum wage but has also had spillover effects, indirectly boosting wages for workers earning slightly above the minimum wage.

However, it’s important to note that while the minimum wage has helped protect the earnings of many low-paid workers, not all workers are covered. A growing fraction of low earners are missing out on these benefits. For instance, about a quarter of the lowest fifth of earners are now self-employed and thus not covered by the minimum wage. Additionally, cuts in tax credits have offset gains from minimum wage increases for the poorest working households. This underscores the persistent nature of the United Kingdom’s wage growth challenges and the need for continued efforts to boost productivity and address economic inequalities.

Spatial disparities in wages across the United Kingdom are also significant and persistent, reflecting deep-rooted economic inequalities between different regions and local labour markets. These disparities are particularly stark when comparing London to other parts of the country. In 2023, average wages in London were 50% higher than those in places such as Leicester and Blackpool, highlighting the considerable economic divide between the capital and some coastal and rural regions (Figure 1.16). While these wage disparities are substantial, it is important to note that they are not uniform across all income levels. Much of the difference in wages between areas is driven by higher-paid workers. For instance, in 2019, the top 10% of earners in London were paid GBP 37 per hour, which was over 80% higher than the GBP 20 per hour earned by the top 10% in Scarborough (Overman and Xu, 2024[34]). In contrast, the wages of the bottom 10% of earners were relatively similar across the country, ranging from GBP 8 to GBP 9 per hour (Overman and Xu, 2024[34]). This suggests that spatial wage inequality is particularly pronounced at the upper end of the income distribution, contributing significantly to overall regional economic disparities.

Younger employees, particularly those aged 16‑20 years, are most likely to be in low pay, reflecting that you must be at least 23 years old to receive the National Living Wage, with approximately 55% falling into this category (Figure 1.17). The proportion of employees in low pay then decreases sharply for older age groups. For those aged 21‑24 years, around 20% were in low pay, while for the 35‑44 age group, it drops to about 8.9%. From age 45 and above, the share of workers in each age group in low pay starts to rise, particularly for women. At age 55‑64, 15.5% of women are in low pay (8.8% of men) and at age 65 and above, 19.6% of women are in low pay (15.9% of men).

Beyond pay and job tasks, a significant consequence of changing jobs at older ages is a shift to part-time work, although the reasons differ from those of younger workers. On one hand, part-time work can offer valuable flexibility later in life and serve as a pathway to retirement. There is substantial evidence that older workers highly value flexible working conditions (Ameriks et al., 2017[35]). This flexibility allows older workers to balance work with family responsibilities, such as caring for elderly relatives, or to pursue other interests part-time. On the other hand, some workers may work part-time because they cannot find full-time jobs. In such cases, part-time work may not provide sufficient income to meet financial needs and may offer fewer opportunities for upward pay progression. Research indicates significant underemployment among older workers (Bell and Blanchflower, 2021[36]). The shift from full-time to part-time work associated with job changes can also explain the change in job task content experienced by older workers.

In the United Kingdom, there is a growing trend towards reduced working hours for older workers as a form of flexible working arrangement. Part-time work is the most common form of flexible working among older employees, allowing them to maintain a better work-life balance while continuing in roles that interest them. The proportion of individuals working part-time increases with age in the United Kingdom, with the trend being more pronounced among men than women. Among women, part-time employment rises from 7.5% in the 25‑34 age group to 16% in the 55‑64 age group (Figure 1.18). For men, the share grows from 12% among 25‑34 year‑olds to 25% among 55‑64 year‑olds and rises even higher to 43% for those aged 65‑69. This rise could result from older workers staying in the labour force longer or moving to part-time jobs as they age, or a combination of both.

Historically, working time reductions have been an important way that late career workers have adapted to working beyond the age of 65 in the United Kingdom (Lain, 2016[37]). Many older workers choose to reduce their hours as a way to phase into retirement gradually, manage caring responsibilities, or accommodate health concerns. Employers are increasingly recognising the benefits of offering flexible working options to retain the valuable skills and experience of older staff members. However, it’s important to note that while reduced hours can benefit many, it may not suit all older workers, and access to such arrangements can vary across different sectors and job types.

Motherhood is widely recognised to have a significant adverse impact on women’s career prospects, affecting both wages and career progression (Healy and Heissel, 2020[38]; Kleven et al., 2019[39]; Barth, Kerr and Olivetti, 2021[40]; Goldin, Kerr and Olivetti, 2022[27]). This so-called “motherhood penalty” stems from a combination of direct discrimination by employers and indirect factors, such as reduced working hours or career breaks to manage childcare duties. Career interruptions are more frequent among women with low to medium skill levels, possibly reflecting the lower financial opportunity costs of stepping away from the workforce (OECD, 2021[41]).1

People in their 50s are more likely than those of other ages to provide unpaid care, although rates in 2021 were below that in 2011 (which may be due to COVID‑19). This care often involves supporting parents, partners, other family members, or friends due to long-term health conditions or illnesses. In the United Kingdom, women consistently bear a disproportionate burden of caregiving responsibilities throughout their lives. During their younger years, women are significantly more likely to be the primary caregivers for children, with around 9% of women providing unpaid care at age 30‑40, compared to 5.8% of men in this age group (Figure 1.19). This trend continues into later life, where women are again more likely to assume caregiving roles for elderly parents or partners. At age 50‑60, about 20% of women are providing unpaid care, compared to 13% of men. This persistent gender disparity in caregiving has far-reaching implications for women’s careers and financial stability, contributing to gender pay gaps and reduced pension accumulation. Informal caregiving responsibilities can create barriers that make changing jobs more challenging.

The United Kingdom has relatively weak employment protection legislation compared to many other developed countries. This is evident in several key areas, such as the ease of hiring and firing. The United Kingdom has some of the most flexible hiring and firing regulations among OECD countries. Employers face fewer restrictions when it comes to dismissing workers, with shorter notice periods and lower severance pay requirements compared to many European counterparts. This flexibility is often cited as a factor contributing to the United Kingdom’s relatively low unemployment rates.

The United Kingdom also has limited protection against unfair dismissal. While the United Kingdom does have laws against unfair dismissal, the qualifying period for such protection is relatively long. Employees must generally have worked for their employer for at least two years before they can claim unfair dismissal. This leaves many workers, particularly those in temporary or short-term positions, with limited recourse against arbitrary termination.

The coverage of collective bargaining has also declined over recent decades, with only 26.9% of workers covered by collective agreements, compared to an EU average of 60.5%. This reduction in collective bargaining power has contributed to weaker employment protections for many workers, particularly in the private sector.

These factors combined have led to the United Kingdom being ranked relatively low in terms of employment protection stringency by international organisations. For example, the OECD’s Employment Protection Legislation index consistently places the United Kingdom among the countries with the least restrictive regulations (Figure 1.20). While this flexibility is often touted as beneficial for economic dynamism and job creation, it also raises concerns about job security and worker rights in an increasingly precarious labour market.

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