Golden oldies could provide $78 billion boost to the economy, report finds
If Australia increased the number of older workers it could return $78 billion a year to the economy.
Australia is lagging while New Zealand soars ahead in attracting and retaining older employees in the workforce, costing an estimated $72 billion a year.
According to the PwC Golden Age Index, if Australia’s employment rates for workers aged more than 55 years old were increased to Swedish levels the nation’s gross domestic product could be about 4.7 per cent higher, equivalent to about $78 billion annually.
The biggest potential impact on GDP comes from those in the 55‑64 years old age group.
The report, which relies on the most recent data from 2014, found Iceland was ranked as the best OECD nation when it comes to keeping older workers employed, for the fourth consecutive time since 2003.
However, New Zealand has seen a rapid transformation, moving from ninth place in 2003 to second in 2014.
Israel, Germany and New Zealand saw the biggest improvement in the rankings between 2003 and 2014.
Australia, which was ranked 20th in 2003 has moved to 16th place in 2014, dropping back on the 2013 ranking of 15th.
Australia was ranked sixth when it came to the proportion of older workers in part-time employment.
But when it came to full-time earnings of 55-64 year-olds relative to 25-54 year-olds Australia performs relatively poorly, falling into the lowest third of countries.
PwC national economics and policy consulting partner Jeremy Thorpe said Australia had been slower than it needed to be to act on encouraging older workers to remain in the labour force.
He said it would take at least 10 years for the $78 billion of extra GDP to come to fruition.
“It’s not a figure we’d be able to achieve tomorrow because we’d have to raise our participation,” he said.
“Once we transition and improve that’s the outcome we could achieve. I don’t think we can turn the tap tomorrow. It’s at least a 10-year exercise. Unless you’re continually on a path of improvement, I don’t think any of this comes quickly. ”
Mr Thorpe said that, although politically-sensitive, Australia had been “slower than it needed to” in pushing the eligibility age out for the aged pension.
“Where we haven’t been proactive is around improving access to employment,” he said.
“From a government perspective there have been ‘toes in the water’ around these schemes. And industry need to make the change as well and understand they will suffer skills shortages as the population changes and it will be the one suffering if nothing changes.”
Last year’s intergenerational report predicts will be 2.7 people aged between 15 and 64 for every person aged 65 and over in 2055, compared with 4.5 at present and 7.3 in 1975.
Because of this, the number of workers over the age of 65 years will rise to 17.3 per cent, up from 12.9 per cent today.
With age and service pension, costs are expected to stabilise from 2.9 per cent of gross domestic product in 2014-2015 to 2.7 per cent in 2054-55
Mr Thorpe said when you looked at New Zealand it was because the country had looked at encouraging delaying retirement, improving employability of older workers and reducing barriers to employment.
The PwC report found the OECD could add about $2.6 trillion to its total GDP if economies with a lower full–time equivalent employment rate among people aged over 55 than Sweden increased their older worker employment rates to levels in Sweden, which is the best-performing EU country in the index.
When it came to Pacific countries, Australia performs poorly, ranking last out of New Zealand, the US, Korea, Japan and Canada.
Last week a report analysing Centrelink data by the University of Melbourne found since the pension age was raised to 65 women have worked for longer rather than trying to find other sources of welfare like the dole or disability pension.
There is a positive correlation with the PwC Young Workers Index, which suggests that the employment of older workers does not crowd out youth employment at the economy-wide level.
The report called on the federal government to introduce policy measures to encourage or facilitate later retirement, improve employability and reduce employment barriers.
“Policies could include pension reform and financial incentives to encourage working beyond national retirement ages, providing training throughout people’s working lives, and tightening regulation around labour market discrimination against older workers,” the report said.
Source: Australian Financial Review
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