Over 55s are the secret to GDP growth - PwC

Business people
By Eleanor O'Neill, CA Today

16 June 2016

The UK's GDP could grow by £105 billion if workers put off their retirement a little longer, according to a new report.

The 'Golden Age Index', produced by PwC, presents a weighted average of indicators including employment, earnings and training to analyse the labour market impact of workers aged over 55.

According to PwC's analysis, if the UK could implement a 15% increase in workers aged 55-64 and a 4% increase for people aged over 65, the resultant effect would be a 5.8% rise in GDP.

The UK rose to 18th in the 2014 data and has had a steady presence in the middle of the rankings since 2003, with 58.2% of people aged over 55 in full-time employment.

Of the 34 OECD countries included in the study, Iceland, New Zealand and Sweden came out on top.

Iceland has topped the table every year since 2003 and in the most recent results had 96.5% of people aged over 55 employed.

The employment rate among 55-64 year olds in the UK has remained broadly in line with Sweden during this period, but the gap between the two economies persists, indicating a need for improvement.

Greece, Slovenia and Turkey have remained consistent at the bottom of the board, partially due to widespread unemployment.

The top countries for over 55s employment

Country20142003
1. Iceland96.5%92.5%
2. New Zealand82.2%60.8%
3. Sweden78.2%68.3%
4. Israel78.1%58.1%
5. Estonia76.4%63.1%
6. Norway76.1%68.4%
7. USA74.7%68.6%
8. Chile74.1%57.2%
9. Korea72.3%64.0%
10. Japan70.6%66.7%

John Hawksworth, PwC’s Chief Economist, said: "Rapid population ageing is putting significant pressure on healthcare and pension systems. The UK and many other countries could offset these higher costs by tapping into their older workforce and so increasing both GDP and tax revenues.

"We have made some progress on this front, but there is a lot more to do to match the best performers like Iceland, New Zealand and Sweden.”

For people aged over 65, the employment rates of the UK and Sweden are closer together.

The high incidence of part-time older workers in the UK could also adversely affect earnings, pensions and job security and so enters into the index negatively.

John continued: “In comparison to other EU countries the UK performs relatively well, ranking 6th out of 21 EU countries in our index in 2014.

"This reflects stronger employment growth in the UK than most other EU countries in recent years, including for older workers."

The study revealed trends of offering financial incentives for later retirement, promoting lifelong training and education and tackling age discrimination in the top performing countries.

Israel, Germany and New Zealand have shown the most significant improvement since 2003, primarily driven by an increased employment rate for older workers, especially within the 65-69 age group.

The USA still has the highest ranking of the G7 member countries but has fallen from second place in 2003 to seventh in 2014 as other countries have improved faster.

Source: PwC

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