U.K.: Pensioners Stay at Work and Send Up Number of Jobless

LONDON (The Times), August 17, 2006: PENSIONERS are flooding back into the labour market after they retire to compensate for plummeting pension values. The trend, combined with an influx of immigrants, is leading to a phenomenon in which employment and unemployment are rising at the same time. Official figures released yesterday showed unemployment rising at its fastest rate since the end of the last recession. The rate reached 5.5 per cent in the three months to June, the highest for six years and equivalent to 1.68 million people. Yet employment figures increased by 42,000 during the same period to reach 28.94 million. Economists say that the phenomenon is set to last, with more people accepting that if they want to maintain their living standards in retirement, they will have to work longer. “A breakdown of the growth in employment shows people beyond conventional retirement age are staying on at work or returning to the workforce after a few years out. That is a key factor in the rise in employment,” said Ben Broadbent, economist at Goldman Sachs. “They are working beyond retirement age because their pensions have been disappointingly low, or they already accept the message that people will need to work longer.” In the past 18 months total employment has risen by 351,000, the figures show. Mr Broadbent said that more than a third of those jobs had gone to people older than the normal retirement age of 65 for men and 60 for women, representing a 12 per cent employment rate increase for that age group. Economists believe that many of the remaining 208,000 jobs have gone to immigrants from EU countries in Eastern Europe. Michael Saunders, head of European economics at Citigroup, said that trend was also set to last. “It is unlikely that the inflow of migrant labour will slow significantly any time soon, unless regulatory barriers are imposed. UK pay levels remain several times higher than those in Eastern Europe, low-cost flights are easily available, a growing number of specialist job agencies facilitate employment of Eastern Europeans in the UK, and there is no limit, quota or restriction on their employment in the UK,” he said. Official figures suggest that about 150,000 workers arrive in Britain every year, although this month the Local Government Association said that this was a gross underestimate. About 270,200 registered to work in the UK in the last financial year. Immigration from Eastern Europe is also set to grow, with Romania and Bulgaria joining the EU next year, although the Government has not agreed that they will enjoy the same rights to work as other members. Yesterday’s figures showed that the number of people claiming jobseeker’s allowance, an alternative measurement of unemployment, rose for the sixteenth time in 17 months to 957,000 last month. Average earnings including bonuses rose by 4.3 per cent in the quarter to June, up from 4.1 per cent the previous month. Richard Brooks, of the Institute for Public Policy Research, said: “The conventional wisdom is that in the short term at least, immigration depresses wages at the low-skill end of the labour market, but there is no evidence this has taken place. More and more people are clearly being tempted into the labour market with the prospect of more well-paid jobs.” By Rosemary Bennett and Gabriel Rozenberg Copyright 2006 Times Newspapers Ltd.