The role of older workers in driving Eurozone recoveryPosted by Gareth Hargreaves
Embracing the skills of older workers and making best use of their experience could play key role in improving UK's economic prospects
Harnessing the power of older workers is a vital component of any long-term strategy to rejuvenate economic growth across the Europe.
A report, Rising from the ashes: the role of older workers in driving Eurozone recovery, published by International Longevity Centre UK, estimates that the Eurozone’s economy could lose one in six workers due to population ageing. It also shows that raising labour force participation rates amongst older age groups could make a significant difference to rates of economic growth over the next 40 years.
It is estimated that close to a third of Britons haven't thought about their retirement finances or the implications of being ill prepared. The tail end of the baby boomer generation (1946 -1964) will wait until 67 before they are elligible to claim their state pension, but there remains no cohesive strategy for utilising the skills and experience of older people since the scrapping of the default retirement age (65)
The ILC report reveals that:
• Workers aged over 50 contributed a staggering €2.5trn to Eurozone GDP in 2013.
• Without a substantial rise in workforce productivity to offset the anticipated fall in employment, GDP per capita growth rates across the Eurozone may only reach 1% per year up to 2050.
• By 2050, higher participation rates among the over 50s could deliver 12.6% more economic output per person (in real terms) than if participation rates by age remain the same.
• Across OECD countries, there is a strong association between poverty rates and working longer – with higher poverty rates linked to higher workforce participation.
• Avoidance of financial ruin and poverty are not the only factors keeping people in work. Health and education are also important – those countries whose older populations are in better health or who are better educated are also more likely to work longer.
Rising from the ashes shows that “Unless a higher proportion of older people remain in the workforce, total employment could fall by up to 17% over the next 35 years”. Futhermore, raising workforce participation at older ages in the Eurozone could deliver a greater economic boost for the region’s periphery countries than for its core. This is partly because these countries have more catching up to do in terms of raising labour force participation amongst older age groups. It is also because population ageing is expected to occur more quickly across this part of the Eurozone.
ILC argues that, in order to respond to the challenges ahead, European Governments must:
• Invest in skills and training at all ages;
• Develop and utilise new technologies and, critically in the context of this report;
• Encourage greater workforce participation amongst the over 50s.
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