OECD countries could add $2.6 trillion to their total GDP if the employment rate for workers aged over 55 was equal to best-performing EU country Sweden, according to PwC economists.
The PwC 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 in 34 OECD countries.
The potential GDP boost varies significantly across countries, from around 1% in Norway to around 19% in Greece. Other countries lagging behind in the index could also experience large gains, such as Belgium (15%) and Slovenia (14%). Given its size, the US has the largest potential absolute gain of around $0.5 trillion (around 3% of GDP).
The Nordic countries once again perform strongly on the index, with Iceland topping the list and Sweden in third and Norway in sixth place. Denmark (12th) and Finland (14th) don’t perform quite as well as their peers, but still make it into the top half.
Israel, Germany and New Zealand have shown the most significant improvement since 2003, primarily driven by an increased employment rate for older workers, especially within the 65-69 age group. Greece and Turkey have fallen the most in the rankings since 2003, partly due to falling employment rates for older workers.
The PwC report also looked at what strong performing countries have in common and suggests three key labour market themes that governments should focus on:
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.
To achieve the gains set out in the report, governments and businesses will need to work together, drawing on best practice examples from other countries and companies.
The PwC Golden Age Index focused mostly on the 55-64 age group and combined national performance on the following labour market indicators (with relative weights shown in brackets): employment rate 55-64 (40%), employment rate 65-69 (20%), gender gap in employment, 55-64: ratio women/men (10%), incidence of part-time work 55-64 (10%), full time earnings 55-64 relative to 25-54 (10%), average effective exit age from the labour force (5%), participation in training: ratio 55-64 to 25-54 (5%).
