Older workers are increasingly considering a delay to their retirement plans as the boom in working from home during the pandemic gives them unexpected extra flexibility.
Retirement rates typically surge when workers hit their late fifties and early sixties, with illness and caring duties taking their toll before the state pension kicks in.
However, working from home enables more people to stay employed, according to the Office for National Statistics, taking less time off sick and benefiting from more flexible hours and a lack of commuting.
It could transform parts of the economy if working from home persists after Covid, and boost growth at a time when employers are desperately short of workers.
The ONS estimates that if the employment rate of those aged 50 to 64 matched that of 35 to 49-year olds, it would add 5pc, or £88bn, to annual GDP.
Helen Morrissey, an analyst at Hargreaves Lansdown, said such a move would also benefit households’ finances.
“Anything that enables people to stay in work for longer and benefit from increased income and pension contributions is welcome. Leaving the workforce early can have an enormous effect on someone’s financial resilience in retirement as well as their physical and mental wellbeing,” she said.
“This data shows that the shift to working from home has had a positive effect on older workers in terms of their health and work-life balance. Not having to commute to an office every day frees up time and can also mean you are less exposed to illness. It can mean people are able to work longer than they otherwise would have.”
One-third of workers aged 50 to 69 worked from home in April and May, the ONS said. They tended to report higher wellbeing, a better work-life balance, fewer distractions and faster completion times of work as a result.
Home-workers also typically reported lower rates of sickness absence, while those with a long-term illness are more likely to delay retirement if they can work from home.
However not everyone has been able to benefit. Managers, professionals and office workers – who are often better paid and in better health – were far more likely to be able to move to home-working than those in more routine and physical jobs.
Meanwhile, salaries are set to surge as employers battle to hold onto key workers amid a shortage of key staff.
Employers plan to increase pay by an average of 2.9pc next year, according to a survey by Willis Towers Watson. That would bring pay growth back to a level not hit since 2019 when wages were at last starting to accelerate after a tough decade for employees.
It comes as factories, shops and restaurants have all reported struggles finding the employees needed to keep up with growing demand in the economy. A lack of lorry drivers is leading to shortages of vital goods, leaving some supermarket shelves empty and leaving restaurants such as Nando’s and McDonald’s without sufficient supplies.
Paul Richards, data analyst at WTW, said firms were competing for the best staff.
“As the Covid-19 threat starts to recede and the economy starts to recover, we’re seeing significant year-on-year improvements in pay rises. Employees in some industries are faring better than others, but these are often the industries that were hardest hit by the pandemic, such as leisure and hospitality,” he said.
“Overall the outlook for salaries is strong as businesses start planning budgets for 2022, and many are keen to retain top performing staff with performance-related pay as key areas of the employment market start to hot up.”
Almost half of firms said they are seeking to hire more staff in IT and sales, closely followed by engineering professionals.
By industry, pay is set to rise fastest in the media – up 3.3pc – followed by leisure and hospitality at 3.2pc, and technology at 3.1pc.
Slower growth is predicted in banking, up 2.3pc, while car factories, which have themselves been hit by shortages of components including semiconductors, are also near the bottom with raises of 2.4pc pencilled in for next year.
These are all above the rate of consumer price inflation, which was 2pc in the 12 months to July, indicating workers will get a real-terms increase in earnings.
Bosses may have to rethink their plans if inflation approaches the 4pc feared by the Bank of England later this year, piling on the pressure to hike wages further – but also raising the spectre of a wage-price spiral not seen in the UK for decades.
