The Squeezed Middle – How Inactivity Among Young and Old is Burdening Working-Age Brits

A new alarming report by the former chief economist of the Bank of England, Andy Haldane, highlights how Britain’s “sandwich generation” of middle-aged workers are being squeezed by rising inactivity among the young and old.

Haldane, now chief executive of the Royal Society of Arts, warns that soaring long-term sickness is putting huge financial and caregiving strains on those aged 35-50. As younger and older generations increasingly drop out of the workforce, the burden is falling heavily on those in the middle.

The post-pandemic surge in long-term sickness is forcing middle-aged workers to pay higher taxes and take on far more responsibilities caring for children and elderly parents. The UK has 2.6 million people out of work due to sickness, accounting for nearly 30% of economic inactivity.

Haldane points to NHS data showing 20% of 17-24-year-olds reported a mental health condition last year. He argues failures in education are contributing to poor job prospects and mental health issues for many young people. Lifetime implications are huge, as health and unemployment problems often persist throughout life.

Early retirement during the pandemic has also driven up economic inactivity among 50-64-year-olds by 300,000. The government is pushing to get early retirees back to work to fill labor shortages.

But Haldane says the UK’s skill system is “ill-equipped” to retrain older workers. He argues we should view aging as an opportunity, not a threat, to grow the economy.

With interest rates rising and recession risks growing, the squeezed middle faces further pain. Haldane warns higher borrowing costs are here to stay, unlike the ultra-low rates of the past 15 years. As rates rise, middle-income families will have less to spend.

This combination of trends spells trouble for middle-aged workers who find themselves caught between dependent children and parents, stagnating wages, rising costs, and growing tax burdens. The sandwich generation is carrying the economic burden of young and old. Without action to improve education, health, and skills training, their squeeze will only intensify.

The Roots of Youth Inactivity

The roots of the youth inactivity crisis highlighted by Haldane lie partly in failures of the education system. Successive governments have overly focused on boosting academic achievement while neglecting the development of broader skills and aptitudes. This has left many young people emerging from school or college woefully unprepared for the world of work.

Mental health support in education has also been inadequate. Schools and universities have struggled with underfunding and lack of prioritization of mental health services. The transition to online learning during the pandemic exacerbated issues of isolation, anxiety, and depression for many students.

On top of these systemic issues, the pandemic itself has been hugely detrimental to young people’s employment and mental health. Repeated lockdowns and disruption to education and socialization have scarred an entire generation. The full impacts may not be evident for years to come.

Haldane argues that current failures will blight young people throughout their lives. Struggling to find work or falling into economic inactivity early on can permanently damage career prospects and earnings potential. It also significantly increases risks of unemployment and poor mental health in the future.

With youth inactivity surging, the UK economy is losing out on the dynamism, innovation, and growth that young people can potentially generate. But the sandwich generation is left to pick up the tab.

Rising Burdens from An Aging Population

While failures with youth are partly to blame, inactivity among older segments of the population is also squeezing middle-aged workers.

With sustained increases in life expectancy, the UK has seen a dramatic demographic shift towards an aging society. There are now over 12 million people aged 65 and over, accounting for 18% of the total population.

While rising longevity is a positive development overall, it has also led to skills shortages and labor force exits among older workers. Early retirement has been an attractive option for many older people, especially amid the upheaval of the pandemic. But this feeds into a loss of experience and talent from the workforce.

Alongside this, health challenges associated with aging mean over 2 million people aged 50-64 have dropped out of work for sickness reasons. This adds further pressures for tax-paying workers who must support growing numbers of economically inactive older people.

At the same time, middle-aged adults are facing greater burdens caring for elderly parents. Unpaid care work has risen substantially among 45-64 year olds. This “parentcare” often comes on top of ongoing childcare responsibilities.

Haldane argues the UK’s skill and social care systems are poorly designed to meet the needs of an aging population. Insufficient retraining opportunities mean exits from the labor force are too often permanent. And inadequate social care puts more pressure on middle-aged family members.

Together, these trends are squeezing the sandwich generation from both sides. While supporting the young and old, their own needs are being neglected.

The Policy Response

Haldane stresses that inactivity among youth and old age groups will have economic consequences for years to come. Sustained action across education, healthcare, and labor markets is needed to relieve pressure on the sandwich generation.

On education, funding for careers guidance, vocational training, and mental health support should be prioritized. Improving services and outcomes for marginalized students could help tackle youth unemployment.

To reengage older workers, policies around lifelong learning, retraining opportunities, flexible work, and “unretirement” will be key. Retaining and retraining older staff could boost business productivity while reducing dependency.

The government must also invest heavily in healthcare and social care. Improving mental health services for young people and expanding elderly care provision would benefit vulnerable groups while easing family pressures.

In terms of labor markets, continued post-pandemic recovery efforts are needed. But supporting flexible opportunities that allow sandwich generation workers to balance work and care is equally important.

Haldane emphasizes that inactivity among young and old will act as a drag on growth unless addressed. But fresh thinking and investment could turn ageing and youth employment into opportunities. This would relieve the sandwich generation while boosting prosperity.

Preventing a Squeeze into Poverty

There are real risks that the sandwich generation could slide into poverty unless greater support is provided. Middle-aged workers already face stagnating wages, rising living costs, and growing care burdens. Adding further tax rises to support younger and older dependents could cause serious financial hardship.

With poor wage growth and weakening job security, middle-income households have little savings to fall back on. Multiple pressures could see many spiral into debt, mortgage stress, and deprivation.

Women in midlife are particularly vulnerable, as they tend to take on a disproportionate share of caring duties. Single parents are also at higher risk. There are already over 2 million single parent families in the UK, which could signal significant future child poverty issues.

For middle-aged adults close to retirement, falling into economic difficulty now could wreck future pension plans. With savings depleted, ever-increasing numbers of retirees may find themselves dependent on already-stretched welfare systems.

Preventing widespread poverty among the sandwich generation will require a broad policy approach. Generous childcare provision, elderly social care, flexible work arrangements, midlife training schemes and targeted financial support will all play a role.

After years of underinvestment, the UK must treat the squeezed middle as an urgent priority. Their welfare is tied to that of the younger and older generations they care for. Failure to act now virtually guarantees increased hardship across the age spectrum.

An Issue of Intergenerational Fairness

At its core, the growing pressure on the sandwich generation is an issue of intergenerational fairness. Younger and older age groups are increasingly reliant on working-age taxpayers to fund their services and benefits. But there is little reciprocity.

Amid austerity policies, generations entering adulthood have seen key services cut to the bone. From housing to healthcare, costs have been offloaded onto individuals. Elderly groups have been sheltered for longer, but face their own crisis as social care collapses.

Meanwhile, vital workers in midlife have experienced a decade of wage stagnation and are now hit with tax rises, inflation, and rising care bills. As the Bank of England chief economist makes clear, this is unsustainable.

A fairer distribution of costs and opportunities is urgently required. The generational divide has been exacerbated by short-term policymaking. The wider social contract between young, middle-aged and elderly needs repairing.

This will mean asking all groups to contribute more. But it should also bring greater security for all. Quality education and employment for youth, expanded care services for the elderly, and decent pay and respite for midlife workers must be the shared objectives.

Only by balancing responsibilities and privileges across society can we prevent families and individuals from slipping through the cracks. Robust and far-sighted policies can ease pressures on the sandwich generation and set the UK on a path to intergenerational justice. But decades of neglect and misprioritization will be hard to overcome.

Conclusion

The Bank of England’s stark warning on rising youth and elderly inactivity reveals a generation under strain. As the UK’s population ages and gaps in education, mental healthcare and skills training leave many young people marginalized, middle-aged workers are picking up the tab.

Only a comprehensive policy approach focused on improving education and skills, investing in healthcare and social care, generating flexible job opportunities, and easing cost of living pressures can prevent millions of families from sliding into poverty.

With intergenerational fairness breaking down, a new social contract is needed to share costs and opportunities more equally. After years of austerity and underinvestment, reversing this painful squeeze on working-age adults must now become a priority. Supporting the sandwich generation is critical for Britain’s economy and society.