But while increasing burdens on health and welfare systems are real possibilities, an ageing population also presents opportunities. Harnessing this potential of older workers will become an increasingly important competitive advantage to boost growth and support organisations in sourcing talent.
"Harnessing this potential of older workers will become an increasingly important competitive advantage."
Bruce Hassall, Chief Executive Officer PwC New Zealand
PwC has developed a new Golden Age index comparing how well workers aged 55 and over are being utilised. It includes relative employment, earnings and training rates for older workers in 34 OECD countries since 2003.
The findings show both New Zealand and Australian employment rates for older workers have risen over time, as is the case for most other OECD countries.
While New Zealand has maintained its second place behind Iceland in the overall index, Australia has remained in the middle of the pack, moving from 20th to 15th place among the 34 nations. Greece and Turkey have both fallen furthest in the rankings.
New Zealand's high ranking suggests that current conditions are a win for government, employers and older workers. However dynamics will change within New Zealand in the next five to 10 years as older workers consider their financial choices.
Australia moving up five places to 15th is credited to the Federal Government's efforts to increase participation and support its ageing demographic. Closing the gap between Australia and New Zealand could become another driver of growth across the ditch.
A PwC analysis of the Federal Treasury's Intergenerational Report (which projects the economy out to 2050) shows increasing participation among mature age workers to New Zealand levels will have significant benefits to the Australian economy.
If Australia can increase GDP by 4.7 per cent or $198 billion at today's value it will improve the Commonwealth and state/territory budget by 1.7 per cent of GDP and reduce net debt by 11 per cent GDP in 2050.
The modelling shows the potential is there to generate an annual average increase of $24 billion in nominal GDP.
There is no quick fix for increasing employment rates for older workers but if we look at a country such as Sweden, which ranks in third place, its government has tax incentives for both companies and individuals to keep working past 65 and its state pension system also creates incentives to work longer.
Other measures governments can undertake include stricter enforcement of age discrimination legislation, increased support for retraining of older workers, especially in digital skills and job centre help focussed on online job search and self-marketing skills.
Business clearly has a key role to play in New Zealand and Australia. Employers should be thinking about how they can utilise the experience and skills of this golden age generation.
Increased flexibility, job redesign, career breaks and role shifts could help engage older workers and an ageing workforce may demand different approaches to reward in terms of the balance between salary, pensions and healthcare benefits.
Companies will need to allow for the health issues and caring commitments older workers may face. Business should also consider a comprehensive audit of their age profiles that covers recruitment, retention, training, reward and performance.
Making employment more attractive for those who are eager to work for longer in their careers will benefit us all.
Bruce Hassall is PwC New Zealand's Chief Executive Officer.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
07 Jul 2015
15 Jun 2015