“… Falling numbers of immigrants – who tend to be younger – since the EU referendum means the UK population is ageing faster than expected, which poses profound challenges for the country. The Office for Budget Responsibility estimates that NHS spending will need to almost double from 8% of GDP in the early 2020s to 13.8% by the mid-2060s because of the demographic shift. Without policy changes, public debt relative to the size of the economy could rise to 283% by 2067 from around 80% today.
Debate about age and the economy has recently focused on the plight of millennials. However, older workers face rampant workplace discrimination, according to MPs on the women and equalities select committee, even though treating older people differently at work is illegal under the Equality Act 2010.
Ben Broadbent, deputy governor of the Bank of England, recently drew angry comments when he said the UK economy was in a “menopausal” phase – past its productive peak. Although he soon apologised, observers pointed out that women over 50 are the fastest-growing group of workers in the UK and are far from past their economic peak.
Changes to the state pension age for women, which is gradually rising to meet the male threshold of 65, are part of the reason for the increase. Meanwhile, there are now more than 10 million over-50s in work – double the 1990s number and accounting for almost a third of the overall UK workforce.
French says younger people might worry about large numbers of older workers making it harder for them to find a job, or about seeing their career progression blocked. But she argues that companies could always create more jobs: “They can put someone in my job with me – that’s never going to be a problem.”
Economists call this idea the lump of labour fallacy, arguing that there is not a fixed amount of work in the world, and that the more jobs are added to an economy, the bigger it can become. The same argument is applied to immigration, where economists agree migrant labour stands to boost host economies rather than steal domestic workers’ jobs.
There are, however, fears that growing numbers of older workers could hold back the growth of productivity and wages, as the older we get the slower we become and the more outdated our skills might be. According to the Oxford Economics thinktank, ageing societies with a bigger share of over-60s workers see lower wage growth. It found eurozone wage growth depressed by as much as 0.3% annually.
More funding for training in later life can help. Ben Franklin, economist at the International Longevity Centre, says: “It may well be that in 10 years’ time the peak age for productivity is 60 rather than 50. Age may be a drag on per capita growth at the moment, but it doesn’t have to be if you can translate health gains into productivity gains.”
The International Monetary Fund fears that if baby boomers continue retiring at 60-65, Britain and other advanced economies could be overwhelmed by pensioners. It reckons ageing societies have the potential to slow economic growth by as much as 3% by the middle of the century, while also increasing the strain on the welfare state.
Franklin says keeping people in the workforce is the most efficient thing to do. “We need older workers, even if they’re less productive. You may be less productive as a 70-year-old, but if you’re not in the workforce, your output is lost altogether.”