PwC’s new Golden Age Index – 5 things you need to know
June 24, 2015
One of the key megatrends affecting the UK and most other developed countries is an ageing population. Harnessing the potential of older workers will therefore become an increasingly important source of competitive advantage for both nations and businesses.
To explore how the UK compares with other OECD economies in this regard, PwC has developed a new ‘Golden Age index’ comparing how well they are utilising workers aged 55 and over. The index includes relative employment, earnings and training rates for older workers for 34 OECD countries over the period since 2003.
We have produced a full report on this index but for now, here are 5 things that stand out from our analysis:
1. The UK sits near the middle of the pack: Over time, the UK has improved its absolute performance on the index moving from a score of 50.3 in 2003 to 58.1 in 2013 (see figure below). However, the other OECD countries in our study have, on average, improved by a greater amount. As a result, the UK fell three places in the rankings from 16th in 2003 to 19th in 2007, a position it retained in 2013.
2. Potential £100bn boost to UK GDP: Sweden is the best performing EU country on our index and we estimate that if the UK had older worker employment rates equal to Sweden’s, GDP could be around 5.4% higher, which is roughly equivalent to £100 billion at today’s GDP values. This would be a welcome boost to the UK as tax revenues would pick up and welfare payments would fall. This would free up funds that could be allocated to areas such as health and social care or state pensions which would help to support an ageing population.
3. It’s good news for Scandinavia, but not so good for the Eurozone: In 2013, Sweden and Norway took two of the top five places in our index representing a strong performance for Scandinavia. However, things are not so bright for the Eurozone. Greece was one of the biggest fallers in the index, moving from 19th place in 2003 down to 29th in 2013. To make matters worse, only three Eurozone members appear in the top half of the rankings.
4. Government policy could help to realise the benefits of an older workforce: Governments can take steps that would allow their economies to benefit from older workers, and boost their index scores. These could include offering tax rebates for companies taking on older workers, increasing spending on retraining their ‘Golden Age’ workforce and enforcing age discrimination laws more strictly.
5. Businesses can gain from employing older workers: Businesses who make better use of the skills and experience of older workers could gain a competitive advantage at a time when their customer bases are also ageing. However, in order to do this, businesses will need to be flexible in areas such as job design, invest in training for older workers and tailor employment reward packages to make staying in work an attractive proposition.
This analysis complements our earlier Women in Work index, which looked at how well countries were performing on female labour force participation and gender pay gaps.
In both indices, Scandinavian countries occupy many of the top places, while the UK’s relative performance remains middling compared to the OECD average, despite some improvement over time in absolute terms. This indicates great potential for further improvement if UK government policies and business practices can match best practice around the world.