Category: Industry News, training, workforce, organisation, development, economic, co-operation
PwC’s Golden Age Index is a weighted average of seven indicators that reflect the labour market impact of workers aged over 55 in 34 countries that are members of the Organisation of Economic Co-operation and Development (OECD countries) such as the UK. These seven indicators include employment, earnings and training. The index looks closely at how well OECD economies are utilising the power and potential of an older workforce.
Between 2015 and 2030, the number of people aged 55 and over in high-income countries will grow by a quarter to around 500 million. Although it is good news that we are living longer, fast population ageing is putting substantial financial pressure on healthcare and pension systems. To counterbalance these higher costs, PwC believe older workers should be encouraged and enabled to remain in the workforce for longer. This would increase GDP, consumer spending power and tax revenues. Across the OECD as a whole, it is estimated that the potential long-term GDP gain from raising employment rates for the over 55s to Swedish levels could be around $2.6 trillion. In the UK, the potential gains could be over 5% of GDP, or around £105 billion a year.
In the 2016 version of the Index, Iceland continues to occupy 1st place, with Nordic countries performing strongly as Sweden and Norway also rank in the top 10. The US still has the highest ranking of the G7, but has fallen from 2nd to 7th place since 2003 as others have improved faster. The UK has remained middling in the rankings since 2003 usually ranking around 18th in the Index, despite some rise in its absolute index score over time. However, when compared to other EU countries in the sample the UK performs relatively well. The UK ranks 6th out of 21 EU countries in 2014, which is up from 7th in 2013. This reflects stronger employment growth in the UK than most other EU countries in recent years, including older workers.
The Golden Age Index also considers how governments and businesses can take action to achieve these gains. The priorities for governments include reforming pension systems and providing other financial incentives to encourage later retirement. Measures to combat age discrimination and support lifetime learning are also important. Analysis suggests that policies to support older workers should not crowd out younger workers. For employers, flexible working and partial retirement options such as ‘phased retirement’ (as companies like Nationwide have done) can pay dividends, as can redesign of factories and offices to meet the needs 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. Training programmes to encourage and support older workers should be expanded on by businesses (e.g. reverse mentoring for digital skills as in Cisco.)
Three key labour market themes have been identified that commonly feature in countries that perform strongly on the Golden Age Index:
- Encouraging later retirement - This could be achieved through pension reform or by creating other financial incentives that encourage workers to continue working past the official retirement age.
- Improving employability - Policymakers could focus on promoting lifelong education and training, which could upskill older workers and thus potentially reduce unemployment of older workers.
- Reducing employment barriers for older workers - Public policy could place an emphasis on tightening regulation around labour market discrimination against older workers.
Diversityjobs member Nationwide have a history of supporting their older workforce. As far back as 2005, they adopted an approach to phased retirement, where older workers were able to gradually decrease their working hours prior to retirement. This helped older workers to continue working until the age of 75. Another flexible working policy included the decision to increase the retirement age. In addition, the workplace pension scheme also enables workers to draw their pension alongside their wages whilst in employment.
Another Diversityjobs member featured on the Golden Age Index is Cisco Systems. Cisco have introduced a variety of reverse mentoring programmes, such as the ‘Social Media Reverse Mentoring’ initiative (as also used in PwC for digital skills). These combine the expertise of older and younger staff via a contractual agreement in order to show their commitment to the mentoring relationship. This has benefited the company through the enhancement of older executives’ digital skills. In addition, this provides managerial staff with insight into the career aspirations of younger workers, which enables them to adapt their working culture to continue attracting ‘Millennials’ into their workforce.
Although the UK scored below the OECD average on the Golden Age Index between 2003 and 2014, its absolute performance on the index has improved over time. The UK has witnessed an increase in the employment rate of 65-69 year olds. Relatively good progress has also been made in closing the gender gap and in increasing the training of 55-64 year olds relative to younger workers.
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