People in the UK aged over-55 are more likely to have left work and not returned than those in other G7 countries, according to the latest edition of PwC’s Golden Age Index, which measures how well countries are harnessing the power of their older workers.
The Index, based on most recently available data from 2021, finds that the UK’s ranking of 21 out of 38 OECD countries remains unchanged to its position in 2016, as it struggles to close the gap on how well it includes older workers in its labour force relative to other economies. The UK is an outlier among the G7 as economic activity level among older workers has not recovered to pre-pandemic levels, with over 55s driving three-quarters of the rise in total economic inactivity since the pandemic.
High house values, investment income and poor health are the primary reasons for the UK’s deteriorating employment rate for older workers, as New Zealand, Iceland and Japan top the rankings for the highest proportion of economically active over 55s in the labour force.
Commenting on this, PwC chief economist, Barret Kupelian, said: “Post-pandemic, the UK economy has struggled to grow the supply side of its economy. In terms of the labour market, there are one million vacancies and the unemployment rate is relatively low.
“Some of the shortage in the labour force can be explained by the economic inactivity rate, which is higher than during the pandemic, and driven predominantly by almost 244,000 older workers, equivalent to the size of Portsmouth, who withdrew from the labour force during the pandemic and have not returned. While this has undoubtedly been a choice for many – driven by relative prosperity of this age group taking early retirement – it is also clear that ill health is part of the story which explains this trend.
“Understanding the cause of these labour force trends is crucial for the UK, as convincing older workers to return to work could help businesses deal with labour shortages fast with experienced staff, ultimately helping to alleviate domestic inflationary pressures. It’s vital, therefore, that businesses and policymakers focus on designing policies to support those who want to continue to work, as well as help to incentivise older workers to return to work if they want to.”
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