Improving employment of workers over 55 could boost UK GDP by £180bn

Jun 19, 2018

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  • UK ranks 21st out of 35 countries in PwC’s Golden Age Index
  • Iceland tops the table followed by New Zealand and Israel
  • Across the OECD there is a potential $3.5 trillion economic prize from longer working lives
  • Up to 23% of UK jobs currently held by 55+ workers could be displaced by automation technology in the next decade
  • South East of England has highest older worker employment rate in the UK at 75.3% compared to 63.2% in Northern Ireland

GDP could be boosted by around £180 billion a year if the UK could match New Zealand’s employment rates for the over-55s. While employment of older workers has improved in the UK in recent years, it still ranks only 21st out of 35 OECD countries according to new analysis from PwC.

PwC’s 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. Iceland tops the rankings followed by New Zealand and Israel. For the OECD as a whole, there is a potential $3.5 trillion economic prize from matching New Zealand’s employment rates for the over-55s.

While the employment rates of 55-64 and 65-69 year olds have improved in the UK, rising by 8 and 9 percentage points respectively since 2003, many OECD countries still outperform the UK and have advanced at a faster rate over this period.

John Hawksworth, chief economist at PwC, comments:

“The UK needs to pick up the pace in increasing employment for older workers to keep up with the likes of Germany, which has climbed the rankings from 21st to 14th place in our Golden Age Index over the past 10 years, while the UK has slipped a place from 20th to 21st.

“There are clear economic gains to be made from getting more over 55s into the workforce and, with automation advancing, it is more important than ever that we ensure older workers are able to participate fully in the UK jobs market.”  

In the UK up to 23% of jobs currently held by 55+ workers could be displaced by automation technology in the next decade. In particular, technology is likely to be used to complete tasks such as clerical support and simple decision making. This potential risk to older workers is greater than the average for workers of all ages in the UK (20%). Older female workers face a higher risk of job automation compared to their male counterparts within the next 10 years.

Looking further into the future, expectations for technological advancements in physical labour and problem solving of dynamic issues could further increase the risk associated with job automation to an average of 32% for older workers by the mid-2030s. But the report also emphasises that AI and robotics will boost economic growth, leading to new job creation for workers who can adapt to these new technologies.

John Hawksworth says:

“The ability to adapt to new technologies and a rapidly evolving working environment is crucial for people looking for employment in later life. AI technology can boost economic growth, generate more labour demand and support longer working lives.

“However, our estimates suggest that, on average, older workers could face a somewhat higher risk of job automation compared to other age groups. Measures to support lifetime learning and retraining for older workers will be critical to maximising the gains from these technologies.”

In the UK, there are considerable disparities in the employment rates of older workers across the country, ranging from 75.3% in the South East, to 63.2% in Northern Ireland.

PwC’s analysis suggests there are three key reasons for these differences:

  • Economic performance: regions with lower older worker employment rates tend to be the lower performing regions in terms of GVA per head and have lower overall employment rates too.

  • Educational attainment: regions with a greater proportion of older workers with degrees tend to have higher employment rates.

  • Gender disparities: lower older worker employment rates are often driven by lower female employment rates, with these low-performing regions tending to have a greater disparity between male and female employment rates. For example, in Northern Ireland, the difference between female and male employment for over 50s is around 12 percentage points.

Ends.

Notes to editors.

PwC Golden Age Index rankings:

Ranking

Country

Raw Index Score

2003

2007

2015

2016

2003

2007

2015

2016

1

1

1

1

Iceland

93.1

93.7

99.5

98.7

9

3

2

2

New Zealand

61.1

71.8

84.7

85.3

13

11

3

3

Israel

58.3

66.0

80.6

82.3

8

2

5

4

Estonia

63.7

73.9

78.8

81.8

3

4

4

5

Sweden

68.4

71.5

80.1

81.2

5

7

8

6

Japan

67.1

70.6

76.2

78.6

7

6

7

7

Korea

64.3

71.0

77.3

77.7

4

8

6

8

Norway

67.6

70.0

77.9

77.3

2

5

9

9

United States

69.0

71.0

75.0

75.9

14

12

10

10

Chile

57.4

66.0

72.1

74.5

11

15

13

11

Denmark

59.8

59.6

68.0

70.5

17

9

12

12

Latvia

48.6

67.7

68.5

70.4

10

14

11

13

Switzerland

60.9

63.0

71.2

70.4

26

21

15

14

Germany

36.9

47.6

66.2

68.0

16

16

14

15

Finland

51.2

58.5

66.4

66.8

12

10

18

16

Portugal

59.4

66.9

62.7

66.4

21

18

17

17

Australia

45.7

55.0

64.7

66.3

15

17

16

18

Canada

53.6

58.2

65.6

66.1

6

13

19

19

Mexico

64.7

65.7

62.5

63.2

22

23

22

20

Czech Republic

43.5

45.8

59.3

62.5

18

20

20

21

United Kingdom

47.8

51.1

61.4

62.1

19

19

21

22

Ireland

47.3

54.7

60.3

61.1

28

27

23

23

Netherlands

34.6

42.5

56.4

58.3

31

26

24

24

Austria

32.3

43.3

55.0

56.3

25

22

26

25

Spain

42.5

46.5

52.5

54.3

24

25

25

26

France

42.7

44.9

53.3

53.9

30

31

27

27

Hungary

32.3

36.1

51.1

53.4

33

33

29

28

Slovak Republic

29.7

35.4

48.6

51.9

29

29

28

29

Italy

32.9

36.6

49.5

51.5

27

35

30

30

Poland

35.5

32.2

48.0

50.1

35

30

31

31

Belgium

28.8

36.5

47.7

49.6

20

24

32

32

Greece

46.2

45.1

46.4

48.9

34

28

33

33

Slovenia

29.4

37.2

44.5

48.2

32

32

34

34

Luxembourg

30.0

35.4

41.1

38.8

23

34

35

35

Turkey

43.4

34.0

36.5

38.4

OECD Average

50.0

55.6

63.9

65.4

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%).

These indicators are normalised, weighted and aggregated to generate index scores for each country. The index scores are on a scale from 0 to 100, with the average OECD value in the base year of 2003 set to 50. However, the average index values for 2007, 2014, 2015 and 2016 can be higher or lower than this 2003 baseline.

Data are taken from the OECD. We focus mostly on the 55-64 age group for data reasons. We do, however, include total employment rates for 65-69 year olds in the index and look at all workers over 55 in calculating potential boosts to GDP from higher employment rates for older workers (with New Zealand as the benchmark in this year’s report, replacing Sweden in earlier reports as the latter has fallen down the index to fifth place now. Iceland isn’t used as it is deemed a special case given very high employment rates that are not feasible for many OECD countries to match). UK regional data are from the ONS and tend to be for somewhat different age groups (e.g. 50-64 rather than 55-64).

The latest data available across the broad range of OECD countries covered are for 2016. This updates the previous year’s index, which was based on data up to 2015. But we do look at some more recent data for the UK analysis.

A copy of the PwC Golden Age Index will be available from Tuesday 19th June 2018 at www.pwc.co.uk/goldenage​.

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