Older workers urged to delay retirement to save economy

Telegraph

09-07-2025

Older Britons will need to work for longer if the UK is to avoid an economic slowdown, the Organisation for Economic Cooperation and Development (OECD) has warned.
As Britain's population ages, its GDP per capita will grow at just 0.41pc a year between now and 2060, almost half the rate of the past two decades, the OECD said.
But this slowdown could be almost completely avoided, or even reversed, if a bigger share of Britons in their 60s stick it out in the workforce, up from an employment rate of 58pc now.
In its Employment Outlook report the OECD said: 'The United Kingdom is marked [from other rich countries] by the striking contribution that improving older worker employment could make.'
Among the 38 countries in the OECD, a Paris-based policymaking club for advanced economies, Britain has one of the highest rates of 'job strain' among older workers, behind only Latvia.
In Britain, 15pc of workers aged 55 to 64 suffer job strain, which means the stress and demands of their role outweigh the aspects that motivate them or help them cope. This makes these workers less willing to remain in the labour market throughout their 60s.
' Improving job quality can be an important aspect to better retention of older workers in the labour market,' the OECD said.
The report cited studies showing that older workers put a higher premium on autonomy and flexible work practices than their younger colleagues.
Older workers are also more likely to quit the workforce if their job involves 'high physical demands such as heavy lifting, awkward postures, or fast work pace', it said.
Britain's other challenge is that people are less likely to work in their 60s if they did not work, or worked only intermittently, in their 50s.
At 55, a quarter of Britons are not in employment, according to analysis by the Centre for Ageing Better. That drops to more than a third by age 60, and more than half by 64. At the state pension age of 66, only 30pc remain in work.
Of those aged 50 to 65 and not working, 41pc cite sickness or disability, while 31pc are retired. Of the rest, 12pc are home-makers and 6pc are unemployed and looking for work.
The OECD said governments could introduce policies that encourage employers to hire workers in their 50s, or ensure a level playing field with younger generations. This would eventually prop up the employment rate among older workers.
Old-age dependency
In Britain, the government is pushing the state pension age to 67 as a down-payment on bolstering the size of the grey workforce.
The OECD said other countries that had raised the pension age had seen a big boost in older workers sticking to their jobs.
When the Netherlands gradually ratcheted up the state pension age from 65 to 66 during the 2010s, this delivered a 21 percentage point increase in the employment rate of people in their late 60s. Austria and Germany also experienced double-digit gains.
The OECD also canvassed other options such as flexible pensionable ages or semi-retirement options, but said the evidence of success varied.
Britain is among the OECD countries with most to gain from keeping older people in the workforce.
Almost 70pc of the improvement the UK could potentially make to its overall employment rate would come from retaining older workers, with the rest coming from greater workforce participation by women, disabled people and migrants.
But Britain starts from a strong position: its old-age dependency ratio, which is the proportion of over-65s versus the working-age population, is in the mid-30s and is forecast to be 49pc by 2060 – one of the lowest in the developed world.
The OECD said Britain's dependency ratio had benefited from the influx of working-age Europeans in the early 2000s after Poland and the Baltic countries joined the EU.