Scotland could add 55,000 jobs if 'participation gap' is closed, says PwC

Closing a “participation gap” among Scots aged over 55 could create in excess of 55,000 jobs, new research suggests.

PwC’s Golden Age Index measures how well countries are harnessing the power of their older workers. The analysis by the professional services giant highlights significant regional variation in the employment rate of workers aged 55-64 in the UK, with Scotland the third lowest of the UK’s nations and regions at 60.7 per cent - compared with 68 per cent in the south east of England. It suggests that bringing labour market participation among Scotland’s older workers up to similar levels to south-east England could create more than 55,000 additional jobs.

The index also shows that if all 12 UK regions absorbed older workers into the labour force to a similar extent as the south east, it would translate to an additional 320,000 jobs - equivalent to around one third of UK vacancies.

Jason Morris, regional market leader at PwC Scotland, said: “Whilst there is no doubting the regional disparities at play when it comes to participation of older workers, there is a clear opportunity here in Scotland to work towards absorbing more people over the age of 55 into the labour force. This will not only benefit the growth of the economy and alleviate inflationary pressures, but could also allow businesses and younger members of the workforce to benefit from their invaluable skills and experience.”

The analysis by professional services giant PwC highlights significant regional variation in the employment rate of workers aged 55-64 in the UK.

PwC said the regional disparities are likely to be driven by a variety of factors, including educational incomes and the likelihood of older workers in Scotland, the north east of England and Northern Ireland – which have the lowest employment rates of 55-64 year-olds – to be employed in industries such as education, health and manufacturing which offer less flexibility for employees.

Morris added: “To some extent, the findings of the Golden Age Index tie in with key points highlighted in our recent Good Growth for Cities Index – which showed Glasgow, Edinburgh and Aberdeen tracking below the UK average for health. There’s a possibility that the impact of these health inequalities could be contributing to older workers choosing to exit the Scottish labour market.”

The latest index shows that people in the UK aged over 55 are more likely to have left work and not returned than those in other G7 countries. The study, based on most recently available data from 2021, finds that the UK’s ranking of 21 out of 38 OECD countries remains unchanged to its position in 2016, as it struggles to close the gap on how well it includes older workers in its labour force relative to other economies.

PwC chief economist Barret Kupelian said: “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.”

In-depth: the valuable skillset of the growing 'midlife entrepreneur' category