The UK could boost its GDP by £100 billion by increasing the employment rate of workers aged 55-69, an analysis by PwC shows. PwC’s Golden Age Index shows that Iceland, just as in the previous two indexes, is the best performing country when it comes to harnessing the economic power of older workers, followed by New Zealand and Sweden. According to PwC, the UK can learn from Sweden as it is the EU country that has the highest employment rate of those older than 55 years.
In its ‘Golden Age Index’, professional services firm PwC explores the labour market impact of older workers (those aged 55-69) and measures how well countries are doing in harnessing the potential of these workers. The index is a weighted average of national performance of 34 OECD* countries on seven labour market indicators, including employment, earnings and training.
The index shows that the Nordic countries are leading the way, taking three of the top five places. Iceland secured, just as the previous two indexes, the number one spot, with an index of 93.4, followed by New Zealand (79.9) and Sweden (78.2). Israel jumping seven places to fourth, and Norway closes the top five. Japan, which was found on third place in 2007, fell six places to ninth place.
Turkey has the lowest score on the index, having dropped two places to thirty-fourth, followed by Slovenia (down from twenty-seventh place) and Luxembourg. The Slovak Republic, which was the lowest scoring country in 2007, saw its index place improve and is now found in twenty-eight place.
The UK is found in nineteenth place, a spot it has retained since the 2007 index – when it fell from its sixteenth place in 2003. The country has seen its index score improve over the last decade, from 50.3 in 2003 to 53.6 in 2007 and 58.1 in 2013. While this is the case, the country is still an average player as the OECD average also increased.
For less well scoring EU countries, Sweden can be seen as an example, as it has the highest employment rates for older workers in the EU. According to PwC, if the employment rate for workers aged 55-69 in the UK (50%) could match that of Sweden (69%), the UK could boost its GDP by 5.4%, which equals £100 billion. “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,” explains John Hawksworth, PwC’s Chief Economist.
“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,” adds Jon Andrews, Head of PwC’s Global People and Organisation practice.
He goes on to say: “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.”
* OECD = Organisation for Economic Co-operation and Development.