A recent PricewaterhouseCoopers (PwC) global report has found that harnessing the power of an older workforce could deliver productivity gains of up to AU$78 billion for the Australian economy.
The report found that if Australia’s employment rates for older workers aged 55+ was increased to those in Sweden (74% of those aged 55-64 employed), Australia’s GDP could be around 4.7% higher.
Some 83% of this potential economic benefit would be achieved by improved employment of 55-64 year olds, with the remaining 17% attributable to those aged 65 and older.
The results are drawn from PwC’s ‘Golden Age Index’, which was developed to assess the extent to which older people remain active members of the labour force. It captures a broad range of indicators, including employment earnings and training, that reflect the labour-market impact of workers aged over 55 in 34 OECD countries.
Overall, Australia was ranked 16th of the 34 OECD countries, with the Nordic region leading the way with Iceland first, Sweden third and Norway sixth.
Notably, New Zealand was one of the biggest movers, going from ninth to second, and finishing first in the Asia Pacific region.
PwC Economics and Policy Partner Jeremy Thorpe said the population of those aged 60 and above in high income countries will grow by around a third to 400 million by 2030 and, like all countries, Australia needs to consider how to best to respond to both the opportunities and the challenges.
“The Golden Age Index shows that, compared to other OECD economies, older Australians are under-utilised in the labour market and our policy frameworks may inhibit their ability to make important contributions to our economic, social and public life,” Thorpe said. “The countries who performed strongly in this report all have three key labour market themes in common: encouraging later retirement; improving employability and lifelong education and training; and, reducing employment barriers for older workers.
“The report was designed to stimulate debate about ageing policy and that keeping older Australians in the workforce for longer increases both GDP and tax revenues. An employed and stimulated older population could also be a healthier one.
“There is considerable economic gain to Australia in encouraging more older Australians into the workforce. We have a rapidly ageing population and this puts pressure on the health and social care systems and also threatens the financial sustainability or some public and private pensions.
“What we’re seeing in other parts of the world is that later retirement and more flexible working policies is good for the economy, businesses and individuals.”
Jon Williams, PwC Global Partner, People and Organisation added that there are also some important considerations for Australian from a ‘future of work’ perspective and that successful economies are likely to be those that utilise the full range of capabilities in their population.
“As we look forward to 2030, many of the existing jobs in our economy will change due to new and emerging technologies,” Williams explained. “The first wave of this process is likely to require increased STEM (science, technology, engineering, maths) capability in our working population to build and program a new infrastructure. This will be likely driven by younger generations.
“In the second wave, however, we believe there will be a greater focus on human skills of empathy, intuition, creativity and innovation and this shift will open up opportunities to a much wider age range where work and life experience will be highly valued.
“We will also see a shift to less-traditional employment models, where people work for multiple organisations or in less-rigid structures than established ‘9-to-5’ arrangements, meaning more flexible opportunities for older Australians.”