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RAPPORT

PwC Golden Age Index

The potential $2 trillion prize from longer working lives

Between 2015 and 2050, the number of people aged 55 and above in OECD countries will grow by almost 50% to around 538 million. It is good news that we are living longer, but rapid population ageing is already putting significant financial pressure on health, social care and pension systems and this will only increase over time.

To offset these higher costs, we think older workers should be encouraged and supported to remain in the workforce for longer. This would increase GDP, consumer spending power and tax revenues. It could also help to improve the health and wellbeing of older people by keeping them mentally and physically active.

We have developed our Golden Age index to quantify how far different economies are harnessing the power of their older workers. The index captures a broad range of indicators relating to the participation of older people in employment and training. We find that Iceland, New Zealand, Israel and Sweden lead the OECD on this index, with large potential economic gains if employment rates for those over 55s could be raised to those of the top performers.

Specifically, across the OECD as a whole, we estimate that the potential long-term GDP gain from raising employment rates for the over 55s to Swedish levels could be around $2 trillion. Potential gains could rise as high as 16% of GDP for Greece and 13% for Belgium. For the US, they could be around 3% of GDP, or around 2% of GDP for Japan.

In this edition we also take a closer look at the Netherlands. If this country would attain Sweden’s performance in the index, it could add €48bn to its longer-term economic growth.

PwC Golden Age Index

The index performance of the Netherlands is held back by e.g. a relatively low labour participation of women, and the comforts of a well structured pension system. Given an increasing life expectancy, and concerns regarding the sustainability of pensions, it is possible and desirable that more people work for longer.

For governments across the OECD, the priorities include reforming pension systems and providing other financial incentives to encourage later retirement. Measures to support lifetime learning and training in the face of rapid technological progress, including automation, are also important. Our analysis suggests that policies to support older workers should not crowd out younger workers as this will boost demand as well as supply.

For employers, flexible working and partial retirement options can pay dividends, as can redesign of factories, offices and roles to meet the changing needs and preferences of older workers.

Reverse mentoring schemes on digital skills and extending apprenticeships to older workers also feature in the strategies of leading companies we have reviewed.

I hope you find our analysis useful as a contribution to this important area of debate. Please do come back to us if you would like a more in-depth discussion of how we can help you to harness the power of older workers in your own organisation.

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