Employers are increasingly looking to older workers and people returning from career breaks to help fill persistent skills gaps and ease labour shortages, according to new research.
Data from consultancy Barnett Waddingham shows that two fifths (40 percent) of UK firms are actively hiring returners, while a third (31 percent) are recruiting older workers. A further 37 percent said they were making specific efforts to retain older staff.
The findings come as organisations face mounting pressures across both their internal workforces and external recruitment pipelines. Nearly four in five employers (77 percent) said they were concerned about employees lacking the skills needed to do their jobs, while a similar proportion (73 percent) reported increasing mental health challenges among staff. Long-term sickness was also flagged as a growing concern by 68 percent of employers surveyed.
Barnett Waddingham, an independent professional services firm that provides actuarial, risk and pensions advice, said employers were reacting by increasing investment in retention and workforce development. Over the past year, 84 percent of firms have raised staff pay, 81 percent have increased their investment in company purpose and values, and 79 percent are offering more training to mid- and senior-level staff.
Julia Turney, partner and head of platform and benefits at Barnett Waddingham, said employers were being squeezed on multiple fronts. “Skills gaps, sickness, a shortage of talent and tightening regulations are all colliding to squeeze employers from every angle,” she said.
She noted that the shift towards hiring older workers and returners was part of a broader effort to stabilise workforces and reduce risk. “Older workers, for example, bring with them a wealth of experience and knowledge that is hugely advantageous to a business, but their needs and wants are notably different from those of younger employees,” she said. “Understanding these workforce nuances will allow firms to target investment effectively and ultimately retain talent while minimising risk.”
Retirement expectations are changing
The increased focus on older workers reflects wider changes in the way people are approaching retirement. Earlier this year, Barnett Waddingham found that over a third (36 percent) of employees had either delayed their retirement or were considering doing so. Financial concerns were a major factor for many, with 34 percent saying they could not afford to retire as originally planned. Others said they wanted to continue working for personal or social reasons.
The trend aligns with data from the Office for National Statistics (ONS), which has shown that employment among people aged 65 and over has risen steadily in recent years. According to ONS figures, more than 1.4 million over-65s were in work in 2023, up from just over 800,000 a decade earlier.
A recent report from the Chartered Institute of Personnel and Development (CIPD) encouraged employers to offer more flexible work arrangements and training opportunities for older staff. The CIPD said that many older workers still faced barriers in recruitment, with age-related bias and assumptions about digital skills or adaptability deterring some organisations from hiring them.
Immigration changes and domestic workforce shifts add pressure
Alongside internal challenges, employers are also dealing with external factors that are reducing the availability of talent. Nearly two thirds (64 percent) of employers said they were concerned about the shrinking supply of overseas workers, particularly since the introduction of stricter immigration policies earlier this year. The UK government has reduced the number of roles eligible for Skilled Worker visas and raised salary thresholds, making it harder for some businesses to recruit from abroad.
Despite this, 45 percent of employers in the Barnett Waddingham study said they currently offer visa sponsorship and are not planning to stop. A further 39 percent said they were raising salaries in an effort to retain or attract skilled overseas staff. However, one in six (16 percent) expect to lose employees as a direct result of the recent visa and immigration changes.
Concerns are also growing around the domestic workforce. Around 62 percent of employers said they were worried about the long-term availability of homegrown talent. Declining birthrates, changing attitudes to work among younger generations and higher rates of economic inactivity among working-age adults have all contributed to a smaller talent pool in many sectors.
Recent government figures show that over 2.5 million working-age adults in the UK are economically inactive due to long-term sickness, with musculoskeletal conditions and mental health among the most common causes. The Department for Work and Pensions has launched several initiatives to encourage more people back into work, including midlife MOTs and targeted support for returners, but employers are still reporting difficulty in finding suitable candidates.
Targeted investment seen as key to retention
With the pool of available workers under pressure, many employers are now focusing their efforts on retention. Beyond pay rises, employers are increasing investment in purpose-driven initiatives and training as a way to strengthen engagement, particularly among experienced staff.
Observers say tailoring support to different demographics is becoming more important. Older workers may value stability, healthcare and flexible hours, while returners might benefit more from reskilling programmes or mentoring. Recognising these differences can help employers get more value from their investment and reduce attrition.
Barnett Waddingham said data-led workforce planning would be critical as employers navigate a more complex talent landscape. “The labour market has bared its teeth yet again, bringing some new, and some familiar, challenges for businesses to contend with when tackling their balance sheets,” Turney said.
