Golden Age index: power of older workers

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10.08.2018

This article highlights key aspects presented in the PwC 2018 edition of the Golden Age index report, which benchmarks, ranks and analyses the performance of OECD countries in fostering older people’s participation in the workforce.

By 2050, the number of people aged 55 plus in OECD countries will grow by almost 50% to around 538 million. The aging population is putting significant financial pressure on health, social care, and pension systems. To offset rising costs, older workers should be encouraged and supported to carry on working as long as possible. Such longer-lasting work life would not only help improve the health and well-being of older people by keeping them mentally and physically active, but it would also increase GDP, consumer spending power, and tax revenues.
 
Overview
 
The Golden Age index report prepared by PwC is a weighted average of seven indicators affecting the labour market of workers aged over 55 in OECD countries. The employment rate of workers aged 55–64 has been chosen as the main indicator. PwC finds that the OECD has continued its gradual progress towards greater engagement of older people in the workforce compared to 2003.
 
Iceland (98.7%), New Zealand (85.3%) and Israel (82.3%) take top positions on the index. Estonia (81.8%) continues to rise up in the rankings, currently 4th. Many of the Nordic countries also perform well on the index. This year is the first year Latvia has been included in the report as a country having joined the OECD in 2016 and currently 12th on the index:

Country

Ranking

Index score (percentage of employed
people out of all people aged 55–64)

Iceland

1

98.7

New Zealand

2

85.3

Israel

3

82.3

Estonia

4

81.8

Sweden

5

81.2

Japan

6

78.6

Korea

7

77.7

Norway

8

77.3

United States

9

75.9

Chile

10

74.5

Denmark

11

70.5

Latvia

12

70.4

Switzerland

13

70.4

Germany

14

68.0

Finland

15

66.8

Portugal

16

66.4

Australia

17

66.3

Canada

18

66.1

Mexico

19

63.2

Czech Republic

20

62.5

United Kingdom

21

62.1

Ireland

22

61.1

Netherlands

23

58.3

Austria

24

56.3

Spain

25

54.3

France

26

53.9

Hungary

27

53.4

Slovak Republic

28

51.9

Italy

29

51.5

Poland

30

50.1

Belgium

31

49.6

Greece

32

48.9

Slovenia

33

48.2

Luxembourg

34

38.8

Turkey

35

38.4

OECD average

 

65.4

New Zealand’s data has been chosen as a benchmark for the analysis, and so it has been used for comparison purposes also to assess the potential GDP increase if all OECD countries hit New Zealand levels. The potential GDP gain across the OECD countries from raising employment rates for those aged over 55 to New Zealand levels is estimated at USD 3.5 trillion.
 
Data for Latvia

The Golden Age index ranking has been determined by comparing the percentage of employed people out of all people aged 55–64 in Latvia. In the column chart, Latvian rates are compared to the average score across the OECD countries.

Key drivers
 
According to statistics available from the Latvian Central Statistical Office an aging population characterises Latvia as well as many other EU countries. In recent years the percentage of workers close to retirement age out of the total population has been rapidly increasing (by 9.1% in the last eight years). So Latvian employers should consider providing workers aged over 55 with some benefits that will motivate them to carry on working since the available percentage of younger competent employees will soon be not enough to fill the gaps in the labour market.
 
However, not all of the benefits a youngster might jump at would motivate an older worker to stay employed. For instance, the prospect of going on a foreign assignment could be a key driver for younger employees, not Golden Age workers.
 
The PwC report has identified the following drivers of employment rates for older workers:
  • Financial incentives such as pension policy and family benefits affect the decision to carry on working;
  • Longer life expectancy is associated with longer working lives, and so the longer people are expected to live, the more likely they are to spend more of their life working;
  • Caring responsibilities affect the employment rate, since especially older workers tend to have them (e.g. an elderly spouse, grandchildren, or other family members), and so flexible working hours and remote working offered by employers increase the employment rate for older workers.
Artificial intelligence (AI) vs Golden Age workforce
 
PwC’s analysis suggests that global GDP will be up to 14% higher in 2030 as a result of the accelerating development and take-up of AI. The percentage of jobs at risk of automation for older workers in some of the largest economies over the next decade ranges from 5% to 30% (an average of around 20%). The AI development will undoubtedly require some older workers to retrain for a new career later in life and to acquire digital skills in their current career. Older workers do face a higher risk of job automation compared to other age groups. And female older workers face a higher risk (26% of jobs) than male older workers do (19% of jobs) over the next decade mainly because of their higher employment in clerical jobs.
 
Although the global automation of various work processes is recognised as a negative factor for Golden Age employees, AI might open up opportunities for older workers in new industries and business models. Process automation also means that workers can focus on more productive tasks at work and spend more time on skills training and learning about new technologies.
 
AI is also likely to create new markets in personalised products, which might create new jobs in the design and production of those goods and services. Thus, older workers can benefit from the increased labour demand in the new sectors.
 
Measures to support lifetime learning and retraining for older workers will be critical to maximising gains from new technology. Employers may benefit from offering flexible working hours and a potential redesign of roles to meet the changing needs and preferences of older workers.
 
Contacts
Irena Arbidane
Manager, Tax Services
irena.arbidane@pwc.com
Tel: +371 67094400
Viktorija Lavrova
Consultant, Tax Services
viktorija.lavrova@pwc.com
Tel: +371 67094400
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