Andy Haldane warns about the pressures of long term sickness on middle aged workers
Former Bank of England chief economist, David Lewis, said that Britain’s “sandwich” generation is forced to pay for the inactivity of older and younger workers.
Andy Haldane warned that the rising long-term illness was putting ever greater demands upon those aged 35 to 50.
He said: “Right Now, we have pressures on the young and the old. This puts pressure on the people in the middle.”
The sandwich generation is responsible for supporting the young as well as the elderly in both financial and non-financial aspects.
He said that the post-pandemic increase in illness means that people between 35 and fifty years old have to pay more taxes and assume greater caregiving responsibilities.
The UK is the only advanced economy where the percentage of people who are employed or seeking employment remains lower than it was before Covid.
According to official data released last week, over 2.6 million Britons have been out of work due to long-term illness.
Now, 29.6pc are unemployed or looking for work. This is up from 25.2pc prior to the pandemic.
Mr Haldane cited NHS data that showed 1 in 5 17-24-year-olds had a mental illness in 2022.
He said: “Our educational system fails a large number of young people.” This leads to mental health issues because it creates poor job and lifestyle prospects.
He said that UK desperately needed more investment to avoid the “blight of short-termism” which was leading to “crumbling school” “congested road” and overburdened hospital.
Mr Haldane expressed his concern about the long-term implications of young people who are unable to begin or continue working because of mental illness.
He continued: “We are aware that inactivity and health problems persist. You are more likely to face this problem in your lifetime if you fall into poor health or become unemployed at a young age.
The UK employment rate is 1.1 points lower than it was before Covid, at 75.5pc.
According to the ONS, 462,000 people will have left the workforce due to long-term illness between 2019 and 2022. The ONS said that this was more than ten times the increase predicted of 40,000 due to people living longer.
An increase in early retirements during the pandemic contributed to Britain’s increasing economic inactivity. The number of Britons between 50 and 64 years old who are unemployed has increased by 300,000. This is equivalent to an increase of 3.5 million compared to pre-Covid.
Jeremy Hunt has been fighting to put early retirees to work again and to fill the shortages on the job market.
Mr Haldane said that the UK needs to reassess its view of an ageing population.
He said: “People who live longer lives are a good thing, as long as they’re healthy and active.
Our skill system is not equipped to help a person aged 50-60 retrain and reenter the workforce. We should see ageing not as a threat, but rather an opportunity that can lead to growth, not a drag.
Separately Mr Haldane warned borrowers that they will face painfully higher borrowing costs as rates are unlikely ever to return to the lows seen in the 15 years following the financial crisis.
The announcement comes just ahead of Thursday’s Bank of England meeting, where policymakers are expected to raise rates to 5.5pc for the 15th time in a row.
Mr Haldane stated that the interest rates are likely to settle at their current level over the long-term, which means that borrowers will not see the low mortgage deals from the last 15 years.
He said: “What’s happening now is that interest rates are returning to a level closer to normal.”
I don’t believe that the norm is the 0pc or 1pc or 2pc we’ve seen in the past couple of decades, but somewhere closer to what we see now.
In recent months, Mr Haldane who served as chief economist at the Bank of England from 2014-2021 said that the chances of the UK entering a recession have increased.
He added that the “lion’s portion” of monetary tightening by the Bank had yet to reach people’s accounts.
Mr Haldane stated: “The pool of savings has disappeared, if there was one, for many people.” If they pay an additional £1,000, £2,000, or £3,000 for their mortgages that money will come from reducing spending elsewhere.