We have repeatedly heard about potential consequences of the UK’s ageing workforce, as well as how employers can adjust for this change and continue to look towards older demographics for work opportunities.
Now, a new report from PwC has estimated that Britain could be helped by a 100bn economic boost if employers were to tap into this ageing workforce effectively.
The government has previously noted that the changing age profile of the UK workforce will be the most significant development in the UK labour market, with a third of workers predicted to be over 50 by 2020. If businesses focus more on adjusting for this, it could help the government avoid a cash crunch as these changes will result in ever-increasing healthcare and financing pensions costs.
Jon Andrews, head of the UK’s human resources consulting practice at PwC, said: Our research shows there could be big gains for the UK economy from policies directed at keeping people skilled and motivated in the workforce for longer.
By targeting an increase in the numbers of older people in employment, this could boost tax revenues and reduce benefit payments significantly”, the PwC report said.
To assess how the UK fares when compared to other countries, PwC has compiled a Golden Age index to see how well they are using workers aged 55 and over. It assesses relative employment, earnings and training rates for older workers for 34 OECD countries over the period since 2003.
The results so far indicate that the UK is very much middle of the pack when it comes to utilising the ageing workforce though it has improved its absolute performance on the index from a score of 50.3 to 58.1 in ten years (2003 to 2013). PwC found that the other OECD countries assessed in the study, have increased on average by a greater amount. So, the UK has dropped down the rankings from 16th where it stood in 2003 to 19th by 2013.
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The UK could look to the example of Scandinavia, with Sweden the best-performing EU country on the index and Iceland the top-ranked country overall.
This is particularly notable as the country has previously been pointed as a region where the older demographic is enjoying working and doing so for longer. In 2012, it was said that over half of those between 60 and 65 in Iceland still work, though this fell considerably among 70 to 74 year-olds.
The MD at the Confederation of Icelandic Employers, Vilhjlmur Egilsson, has said employers are encouraged to hold onto workers for as long as possible no matter their age, and that older workers are appreciated and valued by Icelandic businesses.
There has been a focus on in-service training aimed at those in work with room to improve targeted approaches towards older workers and providing them specific initiatives.
This is perhaps somewhere both for the UK, and the other euro zone countries, to take heed. David Cameron appointed pension expert Ros Altmann as business champion for older workers and then pensions minister after the general election in May. She welcomed the PwC report, saying she was keen to promote debate on the part we can all play in creating a future where every older person who wants to work, can .
There’s still much to be done in the way both of changing employers’ perception of older workers and to boost motivation to make people want to stay in work for longer.
Read more on the older demographic:
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John Hawksworth, PwC’s chief economist, said: Our Golden Age index identifies which countries are leading the way in harnessing the potential of their older workers, including those in the Nordic region, New Zealand and Israel.
He added that while the UK is a middling performer, most euro zone economies except Finland and Germany are lagging behind .
PwC said if the UK had older worker employment rates comparable to Sweden’s, the GDP could be around 5.4 per cent higher or around 100bn at today’s GDP values. As a result, tax revenues would obviously pick up and welfare payments would fall.
The report advocated governments adjusting policies to help cultivate a favourable environment for older workers taking steps to allow economies to benefit from older workers and boost their index scores as a result.
Incentives such as tax rebates for companies taking on older workers, increasing spending on retaining this Golden Age workforce and enforcing age discrimination laws more rigorously could all help to bring about positive change.
There’s also the matter of the UK’s ageing population as a whole. Are enough companies and brands tapping into the older consumer market Effectively utilising the skills and experience of older workers could see progressive businesses gaining a competitive advantage here with their customer bases also ageing. There have been numerous studies indicating the spending power of the over-50s, as well as ONS statistics stating that over 30 per cent of the UK population is above the age of 50, while controlling 80 per cent of the wealth.
Yet, we’ve seen an unerring focus on appealing to millennials, which has in itself become something of a fluid term blurred in meaning. Age UK has reported 60 per cent of older consumers being open to trying new brands flying in the face of the lasting perception they are most likely to stick with the tried-and-tested.
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In terms of a more specific example, the beauty industry has been fuelled by the over-50s, who have become the biggest buyers of products in the UK according to Escentual.com. Total average expenditure on cosmetics products for women from the age of 50 up to 70 is now up to 43,446 marking the first time this demographic is the biggest spending one.
For businesses to use older workers for their insight here, there will need to be greater flexibility in terms of job design, invest in training for older workers and tailoring employment reward packages to make staying in work an attractive proposition.
Suzanne Noble is the 54-year-old founder of bargain discovery platform Frugl, and she believes most over-50s would like to remain in work. “It’s the employers who often find them too expensive to keep or simply want fresh blood,” she added. Noble feels setting up in-house mentoring programmes could be a useful route to help maintaining the over-50s within work and making sure they feel valued.
Those with experience are often overlooked when it comes to other roles they can play within a business and mentoring is one of them. I’ve done a lot of mentoring over the past year and really enjoyed it,” she told Real Business.
Paying more attention to older workers and taking the time to assess how best to maintain their career trajectories is something all businesses can do and if done effectively, could see the whole of the UK reap the rewards.
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