A PriceWaterhouseCoopers Report looks at what boosting economic power of older workers means for government and business.
In a recent press release, the accounting and financial services firm PriceWaterhouseCoopers reports in its most recent Golden Age Index by “extending the employment rate for workers 55 years plus could increase the gross domestic product by $2 trillion among Organisation for Economic Co-operation and Development 34 member countries [OECD].
To achieve that increase, according to PWC research OECD members would have to equal the economic power of older workers in Sweden.
Golden Age Index measures how well countries are harnessing the economic power of older workers.
First, the potential long-term GDP boost varies significantly across countries, from around 1% in Korea and 2% in Japan to around 16% in Greece. Other countries lagging behind in the index could also experience large gains, such as Belgium (13%) and Slovenia (12%). Given its size, the US has the largest potential absolute gain of around $0.5 trillion (around 3% of GDP).
John Hawksworth, PwC Chief Economist and author of the report, states:
“Between 2015 and 2035, the number of people aged 55 and above in high-income (OECD) countries will grow by almost 50% to around 538 million. It’s good news that we are living longer, but rapid population aging is putting significant financial pressure on healthcare and pension systems. To offset these higher costs, we think older workers should be encouraged and enabled to remain working for longer. This would increase GDP, consumer spending power, and tax revenues.”
But what about the potential impact on the employment of young workers and women? Asks PWC’s Hawksworth: “The clear positive correlation between country scores on our Young Workers and Golden Age Indices suggests that the employment of older workers does not crowd out younger workers. And our research also indicates that the flexible working policies offered by the best-performing countries in the Golden Age Index also incentivize women to remain at work for longer.”
The Nordic countries once again perform strongly on the index, with Iceland topping the list and Sweden in fourth and Norway in sixth place. Denmark (13th) and Finland (14th) don’t perform quite as well as their peers, but still, make it into the top half of the OECD rankings.
Israel has climbed one place to third since last year, Korea and Japan have each climbed two places to seventh and eighth respectively, Australia is up four places to 12th, and Germany up two places to 15th.
For governments across the OECD, the priorities include:
--reforming pensions systems and providing other financial incentives to encourage later retirement;
--support training/retraining of older workers, particularly in response to technological changes such as increased automation; and
--introducing measures to combat age discrimination in all aspects of employment.
Carol Stubbings, PwC global People & Organisation head, comments:
“For employers, flexible working and partial retirement options can pay dividends, as can redesign of the workplace to meet the needs of older workers. Flexible working policies can incentivise women to remain in work longer, so having the right policies in place will increase the employment rate of those over 55 and may help to reduce the gender pay gap which is shown to increase with age.
“The life experience of older workers and the skills they have acquired throughout their career make them hugely valuable to the modern workforce. To build on this, leading employers will offer older workers opportunities for development, including reverse mentoring schemes on digital skills and apprenticeships.”
Methodology: The PwC Golden Age Index combines national performance on the following labour market indicators (with relative weights shown in brackets): employment rate for 55-64 year olds (40% weight); employment rate for 65-69 year olds (20%); gender gap in employment for 55-64 year olds: ratio women/men (10%); incidence of part-time work for 55-64 year olds (10%); full time earnings for 55-64 year olds relative to 25-54 year olds (10%); average effective exit age from the labour force (5%); and participation rates in training: ratio 55-64 to 25-54 year olds (5%).
SOURCE: A copy of the PwC Golden Age Index is available at www.pwc.co.uk/goldenage.
PWC is a network of firms in 157 countries with more than 223,000 persons, who deliver quality in assurance, advisory and tax services.