Extending people’s working lives could provide a windfall of more than $4.6 trillion across Organisation for Economic Co-operation member countries, according to new report by PricewaterhouseCoopers.
The population of those over the age of 55 in the 35 OECD countries is on track to rise by almost 50 per cent to more than 500 million people by 2050, the report noted. Meanwhile, current employment rates for workers aged between 55 and 64 vary significantly across the OECD, from 84 per cent in Iceland to 34 per cent in Turkey.
Governments can realize the benefits of longer working lives by reforming their pension systems and offering financial incentives to encourage people to retire later, according to the report.
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“Of course, it’s good news that we’re living longer,” said John Hawksworth, chief economist at PricewaterhouseCoopers in Britain, in a news release.
“But an aging population is already putting significant financial pressure on health, social care and pension systems, and this will only increase over time. To help offset these higher costs, we think older workers should be encouraged and supported to remain in the workforce for longer. This would increase GDP, consumer spending power and tax revenues, while also helping to improve the health and well-being of older people by keeping them mentally and physically active.”
In measuring how well OECD member countries encourage people to work longer, the top performers share several characteristics, including labour markets that support flexible work and the implementation of reforms benefiting older workers, such as redesigning jobs based on physical requirements. As well, those countries have increased the retirement age, improved the flexibility of pensions and provided training to help workers adapt to the digital world.
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Retraining and lifelong learning for older workers will be critical, according to the report, which noted that up to 20 per cent of the existing jobs held by older workers could be automated over the next decade. As such, training and learning will enable those employees to handle the new roles created by artificial intelligence.
“AI technology can boost economic growth, generate more labour demand and support longer working lives, for example, through the use of digital platforms that allow older workers to market their skills more widely,” said Hawksworth.