The output of Britain’s economy could be boosted to the tune of tens billions of pounds a year if over-55s were employed at Scandinavian levels, new research published today showed.
The UK could produce as much as £80bn more every year if it matches Sweden’s participation rate amongst workers over 55, according to accountants PwC. That would be equivalent to 4.2 per cent GDP growth every year.
However, the participation rate for over-55s is currently 12 percentage points lower than the Swedes, who top the rankings for EU countries.
The large potential for the UK to improve the participation of older workers is illustrated by the gap between the UK and other comparable nations.
An index compiled by PwC based on employment rates, pay, the gender gap and training shows the UK lagging behind rivals, including Germany, the United States, and Australia.
Iceland tops the ranking among the main developed economies, with New Zealand in second. The UK comes only in 19th among the more advanced economies, just below Mexico.
The UK population’s average age is gradually increasing as the “baby boomer” generation gets older, with the proportion of people over 45 rising from 37 per cent in 1981 to 43 per cent in 2014, with a similar shift in the shape of the workforce, according to the Bank of England.
The productivity of older workers is generally higher than younger people who have not received the same level of training, but changes to the way we work will be required to allow them to continue in the labour force.
Within the UK the participation rate among 50 to 64-year-olds is highest in England, at 70.6 per cent, with Northern Ireland showing the lowest rate. The region with the highest proportion of older workers is the South East of England, one of the richest parts of the country, with 74.5 per cent.
John Hawksworth, PwC’s chief economist, said: “As the number of people over 55 continues to grow steadily and life expectancy increases, the UK needs to make it as easy as possible for people to continue working for longer if they wish to do so.
“This would boost both GDP and tax revenues, so helping to pay for the increased health, social care and pension costs of an ageing population.”
The need to address the rapidly ageing population is growing more urgent, with social and health care costs predicted to eat up a greater share of GDP as people live for longer.
The change in the demographic structure of the UK and other countries will also force modifications on the financial system unless people work for longer or save more, with longer-living pensioners needing a larger overall pension to fund them through retirement.