South East achieves highest employment rate among 55 - 64 year olds

The South East of England has the highest employment rate among older workers, according to PwC's Golden Age Index, which showcases the labour market impact of workers aged over 55 in OECD countries. The Index takes into account various factors, including employment, earnings, and training, providing valuable insights into how economies harness the potential of their older workforce.

In this year's overall Index, New Zealand has emerged as the leader, closely followed by Iceland, both demonstrating the highest employment rates for older workers amongst OECD nations. Japan jumped up from sixth place in 2018 to third place in this year’s Index.

The high rate of older workers continuing in work in the South East of England is primarily attributed to the availability of less physically demanding job opportunities in the area. 

The South East boasts the highest employment rate of workers aged 55-64 in the UK, with the North East showing the lowest rate. In 2022, the employment rate among 55-64 year olds varied from approximately 57% in the North East to 68% in the South East. This regional disparity in employment rates has a significant impact on the overall number of workers - if the North East were to match the South East's employment rate for the 55-64 age group, it could potentially create an additional 40,000 jobs. The analysis reveals that if all regions of the UK were to embrace older workers in the labour force in a similar way to the South East, it could result in an impressive 320,000 additional jobs, equating to approximately one-third of the current UK vacancies.

The Index highlights that more than half of older workers in the South East possess higher education degrees, a higher proportion than the approximately 43% recorded in the North East. Additionally, older workers in the South East are more likely to be employed in sectors such as financial services, real estate, and professional services. In contrast, the education, health, and manufacturing sectors employ larger shares of older workers in the North East.

Julian Gray, PwC’s South East Regional Market Leader & Southampton Senior Partner, says:

"These findings underscore the pressing need for the UK to adeptly harness the untapped potential of its mature workforce; I’m pleased to see that within the South East older workers are more likely to stay in work, but there’s always more we can do.”

“Promoting greater participation of older workers in the labour force can help us mitigate inflationary pressures and foster a multitude of job opportunities. Policymakers and business leaders must work together to implement measures to bridge regional disparities and extend support to older workers through tailored training and development initiatives, thereby bolstering the region's competitive advantage."

The UK-wide picture:

The UK's latest ranking on the Golden Age Index stands at 21st place, signifying a comparatively lower performance in relation to the OECD average. The Index shows people in the UK aged over-55 are more likely to have left work and not returned than those in other G7 countries. 

A significant proportion of the UK’s older workers remained inactive after the pandemic. Inactivity levels among 55-64-year-olds in the UK have persistently remained above pre-pandemic levels since 2020.

Looking ahead, the UK's future standing on the Golden Age Index is expected to deteriorate relative to the OECD average, primarily driven by the fact that while the employment rate of 55-64-year-olds improved across most OECD economies between 2021 and 2022, the UK witnessed a slight decline in its employment rate during the same period.

Barret Kupelian, chief economist at PwC, says:

“Post-pandemic, the UK economy has struggled to grow the supply side of its economy. In terms of the labour market, there are one million vacancies and the unemployment rate is relatively low. Some of the shortage in the labour force can be explained by the economic inactivity rate, which is higher than during the pandemic, and driven predominantly by almost 244,000 older workers, equivalent to the size of Portsmouth, who withdrew from the labour force during the pandemic and have not returned. While this has undoubtedly been a choice for many - driven by relative prosperity of this age group taking early retirement - it is also clear that ill health is part of the story which explains this trend."

“Understanding the cause of these labour force trends is crucial for the UK, as convincing older workers to return to work could help businesses deal with labour shortages fast with experienced staff, ultimately helping to alleviate domestic inflationary pressures. It’s vital, therefore, that businesses and policymakers focus on designing policies to support those who want to continue to work, as well as help to incentivise older workers to return to work if they want to.”