Older people in work typically spend more of their income on goods and services and, in particular, in ways that feed through into the creation of jobs for younger people.
These older workers are in reality a key driver for growing youth employment.
The report by the Centre for Economic and Business Research (Cebr) commissioned by Saga, found that because the over 50s spend more of their income on services, they are very effective job creators.
For example, a billion pounds of spending by the over 50s creates 10% more jobs than the equivalent spending by under 50s, and 12% more jobs for those aged 16-24. They predict that by 2018 the over 50s will create 6.3 million jobs in the economy and 916,000 jobs for young people.
Lance Batchelor, Saga’s chief executive, commented: “The over 50s are an increasingly important consumer group for the UK economy. They account for some 48% of household expenditure in 2013, and their economic activity supports more than 5.7 million jobs, including 900,000 for young people.
“Those that say that by working longer, older people squeeze the young out of work, are peddling a dangerous myth and one that sets up a wholly unfair inter-generational antagonism.
“The fact that retirement is more a process than an event is something to be celebrated. Older people provide a great deal of life and work experience and the fact that they choose to work for longer, either full or part time, is something that society ought to celebrate not vilify.”
There has been concern that older people choosing to remain in work could exclude others from the labour market. However, this is based on an assumption that the number of jobs in the economy is fixed – fortunately this is incorrect.
Women entering the labour force on a large scale did not reduce the number of jobs available for men. In fact, due to the increased spending of this important group, the total number of jobs in the economy expanded so that there were more jobs to accommodate an increased labour-force; the same is true for those choosing to work for longer.
Clearly youth unemployment remains a concern, but, what this report shows is that measures such as forced retirement at an arbitrary age would be counterproductive in reducing youth unemployment. This is because forcing earlier-than-desired retirement reduces spending power in the economy, which in turn curbs demand for jobs.
Far from criticising those who choose to work longer, policymakers looking to reduce youth unemployment should encourage ideas that continue to support economic activity and jobs for all age groups.
Cebr’s report for Saga also showed that in addition to accounting for 47.8% of household expenditure, they also accounted for more than £113 billion in tax revenue through income taxes paid, and taxes on products and production as a result of their employment and direct expenditure.