The 2010s have been complicated and tense with regards to economic growth, particularly in the UK, which has suffered notably following the referendum vote in favour of leaving the EU. However, it’s not just the UK that’s been affected. According to the European Commission, Europe’s major economies are expected to grow at a slower rate within the next two years, while globally, almost all advanced countries are experiencing slower economic growth. All of which begs the question, why has the economy experienced such a slowdown, and what are the reasons for this overall slowdown?
While Brexit is one possible factor to explain the slow growth in the UK with a lack of confidence in the economy following the EU referendum, as well as the possibility of an imminent credit crunch, there are certainly other elements at play here.
According to a recent study, an ageing population could be one of the main reasons why economic growth has been slower than average during the 2010s, not just in the UK but globally too. In the UK, the average life expectancy for men is 79 years and for women is 82 years. Further, by October 2020 the state pension age will increase for both men and women to 66. This increased longevity – combined with the demographic bulge of the baby boom and an increased retirement age – has resulted in an ageing workforce, which isn’t necessarily good news for the economy.
One reason for this negative impact on the economy is that the older workforces are less productive than younger workers, which accounts for the overall reduction in economic output attributable to an ageing population. While an ageing population is satisfied to work at all, this demographic is regarded as less productive, less upwardly mobile, less geographically mobile, less demanding on wages and more interested in health benefits and flexible working. And while older workers value stability and security over adventure and ambition, younger workers bring new energy and perspective, workforce development, adaptability and agility as well as an ability to apply and understand different technologies and software quickly. As such, their presence in the workplace is fundamental if businesses are to remain competitive.
While young workers remain an asset, research suggests that younger people are now starting work much later, whether because they want to further their studies, travel or do something entirely different before entering the workforce. As a result of this, the older generations are now being given the chance to find jobs and remain in the workforce for longer than ever, with 40.2% of 55+-year-olds currently working, compared with just 32% in 2000.
However, in order for economic growth to improve, more prime-age workers – those between 25 and 54 – need to fill some of the many millions of jobs available. More young workers are needed, bringing with them their new skills, their willingness to work longer hours and their adaptability to an ever-changing and fast-paced economic, social and political environment.
In the meantime, more balance is needed between the older and younger generations, with societies implementing appropriate measures to tackle ageing populations in order to improve economic growth. This, in turn, will help businesses – and the economy – to not only endure but to thrive during these testing times.