Keep­ing older work­ers longer could boost OECD GDP by $2.6 trln

Financial Mirror (Cyprus) - - FRONT PAGE -

OECD coun­tries could add $2.6 tril­lion to their to­tal GDP if the em­ploy­ment rate for work­ers aged over 55 was equal to best­per­form­ing 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.

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