UK could boost GDP by £100 billion by harnessing economic power of older workers
If the UK employment rate for workers aged 55-69 could match the highest performing EU country of Sweden, UK GDP could be boosted by 5.4% or around £100 billion, according to new PwC analysis that compares employment of older workers across 34 OECD countries. PwC’s new Golden Age Index is a weighted average of indicators – including employment, earnings and training – that reflect the labour market impact of workers aged over 55. The UK fell three places in the index rankings from 16th in 2003 to 19th in 2007, retaining this position in 2013. The UK has improved its absolute performance over time but still sits near the middle of the pack as the OECD average has also risen (see chart below). Compared to other EU countries however, the UK scores relatively well (7th out of 21 in 2013).
“Our Golden Age index identifies which countries are leading the way in harnessing the potential of their older workers, including those in the Nordic region, New Zealand and Israel. The UK is only a middling performer, however, while most Eurozone economies except Finland and Germany are lagging behind.
“We estimate that by adopting the policies and business practices in the highest performing countries like Sweden, the UK could boost its GDP by around 5% in the long run, equivalent to around £100 billion at today’s values. This would also boost annual tax revenues and reduce benefit spending significantly, helping to meet the long term health, social care and state pension costs of an ageing population.”
The PwC report builds on a recent UK government review by Baroness Ros Altmann, setting out a ‘New Vision for Older Workers’. Baroness Altmann, who is now Minister of State for Pensions, said that:
“I welcome the publication of PwC’s Golden Age Index as I am keen to promote debate on the part we can all play in creating a future where every older person who wants to work, can.
“It is clear that, as the Government works towards its goal of achieving the highest employment rate in the G7, better management of our ageing workforce will play an essential role.
“We must continue to address the barriers to fuller working lives and where we can learn from other countries in this regard, we should.”
Key index results – Nordic countries lead the way
Nordic countries perform strongly in the Golden Age Index taking three of the top five places. Iceland leads the way, having retained its top position since 2003, followed by New Zealand, Sweden, Israel and Norway.
Chile and Israel shows the most significant improvement from 2003 to 2013, driven by their increased employment rate for older workers. Greece and Turkey fell most in the rankings since 2003, while Eurozone members perform relatively poorly with only three in the top half of the rankings.
As Sweden has one of the OECD’s highest employment rates for older workers, particularly among women, lessons can be taken for other OECD countries in the index. It reflects a series of policy measures including greater financial incentives – e.g. national insurance or payroll deductions for employers that take on older workers – since the early 1990s to counteract early retirement and support older workers as well as a new state pension regime introduced in the early 1990s.
Jon Andrews, head of PwC’s global people and organisation practice, said:
“This group of workers is too often over-looked by businesses and Government, but our research shows there could be big gains for the UK economy from policies directed at keeping people skilled and motivated to stay in the workforce for longer.
“Measures such as tax rebates for companies taking on older workers, increased spending on retraining older workers including digital skills and apprenticeships, and enforcing age discrimination laws more strictly could all be considered as a way to boost participation of people aged over 55 in the workforce.
“Businesses should be thinking about how they can utilise the skills and experience of older workers. More flexibility, job redesign, career breaks and role shifts could help engage this generation and keep them in the workforce for longer. Training, promotions and performance management should not tail away at 50. More should be done to focus on how we can drive innovation and productivity by harnessing the diversity that results from having a broader range of generations working together. Retirement no longer needs to be a one-time event; we could easily see the rise of the part-time pensioner.”
Full press release on pwc.blogs.com
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