Ben Franklin - Older Workers in the Eurozone

The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.

Rising from the ashes: the role of older workers in driving Eurozone recovery

Ben Franklin, Senior Research Fellow, International Longevity Centre

@ilcuk @bjafranklin


What key issues does the report cover?

The current economic state of the Eurozone

What we know (and don’t know) about the relationship between population ageing and economic output?

How could raising labour force participation at older ages boost Eurozone GDP over the long term?

What factors are associated with working longer: evidence from European and OECD countries


The Eurozone: where are we now?


Govt debt burdens continuing to rise…


…as do private debt burdens


Regaining competitiveness through painful internal devaluation


Where next for the Eurozone? The longer term


The worst case: flagging productivity growth and no increase in older workers


What would happen if the proportion of older people in employment rises?

No conclusive evidence to suggest that older workers are

less productive than younger workers.

Some academic studies suggest older workers drive up

productivity due to their experience and inventiveness.

Problems with productivity amongst older workers may

indicate problems with management.

Productivity of older workers may be sector and industry

specific.

In our models we assume all workers are equally productive


Isolating the impact of older workers on future Eurozone economic output

Our three scenarios:

1.No change: Employment rates of the over 50s remains at 2013 levels up to 2050.

2.65+ catch up: There is a gradual increase in the employment rates of the over 65s until catch-up with Sweden’s high rate is achieved

3.50+ catch-up: There is a gradual increase in the employment rates of the over 50s until catch-up with Sweden is achieved.


Results for the Eurozone, Core and Periphery countries

Average annual growth rate in GDP per person (2014-2050)

*All scenarios assume workforce productivity growth of 1.5% per annum over the projected period*Core countries are: Germany, Austria, Belgium, Netherlands, France and Luxembourg*Periphery countries are all other Eurozone members.


What can we conclude from scenarios?

Even a gradual increase in participation has

significant impact on output over long term.

Raising participation rates will not be enough to

avoid stagnation.

Must be accompanied by measures to rejuvenate

workforce productivity growth across the region.


What factors are associated with working longer: evidence from OECD countries


But “carrots” and not just “sticks” are needed to support working longer


And let’s not forget the critical role of good health in supporting longer working lives


Quick recap….

The immediate future of the Eurozone is dicey.

But policymakers must also think about the medium to longer term and the big challenge of ageing.

Ageing could result in stagnating or shrinking economies if workforce productivity fails to rise and older age groups are not supported to work longer.

Raising workforce participation could make a significant material difference to rates of per capita growth but this is not going to be a silver bullet.

“Carrots” and not just “sticks” are needed to support longer working lives and to harness the productive potential of older workers.


Many thanks

Ben Franklin

Senior Research Fellow

International Longevity Centre - UK

[email protected]

02073400440

Twitter: @ilcuk @bjafranklin

Ben Franklin - Older Workers in the Eurozone

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