June 19, 2018
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. The consultancy’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.
In the UK up to 23 percent 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 percent). 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 percent 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, 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.
“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 percent in the South East, to 63.2 percent 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.