Forced retirement costs UK economy £3.5bn a year
Published on 28 April 2010 05:00 PM
Forcing older workers to retire cost the UK last year an estimated £3.5 billion in lost economic output‚ new figures by Age UK reveal ahead of tomorrow night's TV showdown among party leaders on the economy.
With an estimated 120‚000 older workers forced to retire in 2009‚ new research by the leading older people's charity now shows the policy is draining billions of pounds from the economy every year. Forcing over a hundred thousand employees out of the job market has opened up an estimated £3.5 billion gap in lost economic output‚ says the Charity. This includes £2 billion in lost earnings for the workers themselves.
The three main political parties have all committed to change the Default Retirement Age in their manifestos‚ but neither the Conservatives nor Labour have guaranteed a complete end to forced retirement. Age UK is now calling on all parties to pledge to scrap the law outright.
Michelle Mitchell‚ Age UK Charity Director‚ said: "While party leaders are gearing up to lock horns over the state of the economy‚ they should remember that scrapping the Default Retirement Age is a simple step to boost public finances.
"The Default Retirement is not only an unfair‚ outdated piece of legislation‚ it also causes real harm to our economy and public finances by depriving the labour market of experienced‚ skilled workers who would otherwise be paying taxes.
"Nine in ten older workers oppose forced retirement. It's now time for the parties to go beyond warm words and give mature workers a simple‚ radical pledge to scrap forced retirement."
Age UK is the new force combining Age Concern and Help the Aged. The Age UK family includes Age Scotland‚ Age Cymru and Age NI. Notes to Editor
1. 4% of people aged 65-70‚ an estimated 118‚000 people‚ said they were forced to retire in the last year. Source: TNS/BMRB survey for Age UK.
2. Approximately 15% of workers aged 65-69 stop working each year (Turner Commission‚ 2004) suggesting 100‚000 of those forced to retire would have otherwise remained in work.
3. Average Economic output of UK workers: Total UK Gross Value Added is £1259.6 billion‚ Office for National Statistics 9 December 2009: http://www.statistics.gov.uk/pdfdir/gva1209.pdf. There are 28‚824‚000 people employed in the UK. Figure for December 2009 to Feb 10 in Labour Market Statistics‚ April 2010 ONS. http://www.statistics.gov.uk/pdfdir/lmsuk0410.pdf ‚ Table 1. Gross value added per employee is therefore £43‚700 per annum (rounded)
4. Employees aged 60+ earn a (mean) average of 81% of the average employee Source: Annual Survey of Earnings and Hours (ASHE)‚ ONS December 2009‚ Table 6.1a
5. Average GVA per employee aged 60+ has been assumed to be 81% of the average GVA for all employees at about £35‚397 per annum
6. The total amount of lost contribution for the 100‚000 employees aged 60+ is approximately £3.5 billion per annum
7. The total amount of lost earnings for 100‚000 people with average (mean) 60+ earnings of £20‚150 is £2 billion per annum