Its new report focusing on workers over 50 years old found being sick, injured or disabled was the main reason why employees left the workforce, with retirement following closely behind.
In 2020, the average age of exit for men was 65.3 years and women 64.3, decreasing by 0.2 and 0.3 percentage points respectively in 2021.
The employment rate of people aged between 50 and 64 years old has also fallen slightly 72.1% in 2020 to 71.2% in 2021.
There has been little change in the employment rate of people aged 35 to 49, creating an employment rate gap between the two age groups of 13.9%.
Sarah Loates, director at Loates HR Consultancy, said the figures should serve as a warning to employers.
She said: “Older employees are a goldmine of skills, pragmatism and lived experience, all of which contributes to team diversity and productivity.
“It's important that employers focus on knowledge transfer between younger and older employees to prevent organisational knowledge loss and capture that precious corporate memory.”
The DWP said it was too early to determine if changes over the past year are short-term fluctuations or the beginning of a longer-term trend.
It also found women aged 50 to 64 were considerably more likely than men of the same age to be working part-time.
Cheney Hamilton, CEO of job board Find Your Flex, said the organisation had found evidence of an opposite trend to the DWP’s analysis.
She said: “On our job board, we are seeing an increase of older job seekers re-entering the workforce due to an increase of flexible working options.
“The past two years have taken a toll on mental health and people are starting to feel safer about socialisation. Plus, with an increase in the pension age and those who were previously unable to commute now being able to work remotely, the appetite to get back to work is very tempting."
At the end of June 2021, 1.9 million employees were on furlough, representing 6% of the workforce.
Among workers aged 50 and over, more than 600,000 jobs were furloughed, representing over one third of workers on furlough (34%).
This is compared with one third of older workers on furlough (34%), and up from 31% (nearly 800,000) at the end of May 2021.
The DWP’s analysis was created using data from the Labour Force Survey which is produced by the Office for National Statistics.
