What can productivity figures tell us about working in later life?
With productivity in the UK falling, much more needs to be done to make sure employers are supporting and upskilling their older workers.
Our Evidence Assistant, Amy McSweeney, argues that there's no conclusive evidence that older workers are less productive. But employers need to act now to ensure they're reaping the benefits of the older workforce.
At the beginning of summer, labour productivity in the UK fell by 0.5% – the worst figures for five years. At the same time, the UK’s workforce is getting older: nearly one in three workers is currently over 50, and this proportion is set to grow. This means any solutions to the ‘productivity puzzle’ have to take into account that the workforce putting those solutions into practice will be older.
This will sound alarm bells for some, who fear that older workers slow down, and produce less value, than their younger colleagues. Are these worries founded?
There is no conclusive evidence that older workers are less productive than their younger counterparts. But there are worrying signs that having a large proportion of older people in the workforce has been correlated with poor productivity growth in certain regions.
The key point is that this is not inevitable. A failure to make the most of older workers shoulders much of the blame. Employers need to act now to ensure they are reaping the benefits an older workforce offers.
How does ageing affect productivity? A look at the evidence
Studies that measure productivity at the level of a single firm, or a team, find that either older workers don’t affect productivity at all, or they improve it. According to evidence reviews, most studies show older workers have no effect on productivity. Two studies have found a positive association between a high proportion of older workers and increased productivity, while another suggested that older teams make fewer mistakes and produce higher quality goods.
But other economy-wide studies have suggested that an ageing workforce can reduce productivity. One projected that the changing age distribution of the US workforce will slow GDP growth by 0.6 percentage points over the next decade. Another found that this changing age distribution had already affected productivity in Japan. This, and other research, has attributed these effects not to growing number of older workers, but to the smaller number of workers in their 40s who are thought to be in their ‘productivity prime’.
According to one piece of research, heavily physical jobs in factories or construction are more likely to be negatively impacted by ageing workers than more ‘age-neutral’ jobs like bank clerks or electronic engineers. People in highly skilled occupations like lawyers or doctors, meanwhile, could expect to become more productive with age. This could help to explain why we see different results when we look at a team or firm level than we do when we look at the economy as a whole.
While we don’t have a concrete answer on this question, we do know about the factors that can help people stay productive in work for longer.
While there are lots of unknowns when it comes to an ageing workforce, one thing is certain: the older workforce is the workforce of the future.
Skills and training
Throughout our working lives, we tend to rely heavily on the core skills we entered the workforce with. But as time goes on, with workplaces and technology changing, these skills can become dated.
Some studies have suggested that workers reach their peak productivity in their 40s, with a decline thereafter. Starting a new job is typically the time when people get training opportunities – but after the age of 40, people are less likely to be starting new jobs.
Investing steadily in training throughout people’s working lives, rather than just when they are young, can help workers stay as efficient in their 50s and 60s as they were in their 30s and 40s.
For most older workers, experience in the industry is a key ingredient in their productivity. Some studies have suggested that this experience stifles innovation, but this doesn’t seem to apply in all industries, or in the wider economy.
If experience is the greatest strength of older workers, we need to build training opportunities around this. It’s also important to tailor opportunities – job-related training that concentrates on building skills for new graduates is not going to be suitable for someone with decades of experience.
Health is a defining factor not only in whether someone stays in work, but in how productive they are when they’re there. Last year, the Northern Health Science Alliance released a report that estimated up to a third of the North’s productivity gap with the South was due to poor health.
Acting now to tackle the causes of poor health, and the socioeconomic inequalities that drive them, will go a long way towards future-proofing our workforce.
The future of productivity
While there are lots of unknowns when it comes to an ageing workforce, one thing is certain: the older workforce is the workforce of the future. What’s crucial now is that we make our workplaces ready to support employees as they age, as those over 50 will be at the heart of the economy in the years to come.