The firm calculates the UK could add around 5.8% to its GDP if there was a 15 percentage point increase in the UK’s full-time equivalent employment rate for workers aged 55-64 and a four percentage point increase for people aged over 65.

This would bring the UK in line with Sweden, the best performing EU country in the PwC Golden Age Index which compares employment of older workers across 34 OECD countries. This is a weighted average of indicators – including employment, earnings and training – that reflect the labour market impact of workers aged over 55.

The UK has remained middling in the rankings since 2003, rising by one place to 18th currently from 19th in 2013. While the UK has increased its employment rate among 55-64 year olds broadly in line with Sweden since 2003, the gap between the two economies remains similar.

The UK has a high incidence of part-time work for 55-64 year olds. While this may be preferable for some workers, it could also adversely affect earnings, pensions and job security and so enters into the index negatively. But the UK has made some progress since 2003 in closing the gender gap between male and female employment rates for 55-64 year olds.

John Hawksworth, PwC’s chief economist, said: ‘In comparison to other EU countries the UK performs relatively well, ranking sixth out of 21 EU countries in our index in 2014. This reflects stronger employment growth in the UK than most other EU countries in recent years, including for older workers. But we do less well when compared to the other high income countries outside Europe, including New Zealand, the US, Japan and Australia.

‘Between 2015 and 2030, the population of those aged 55 and above in high-income countries is projected to grow by more than a quarter to around 500 million. Rapid population ageing is putting significant pressure on healthcare and pension systems. The UK and many other countries could offset these higher costs by tapping into their older workforce and so increasing both GDP and tax revenues. We have made some progress on this front, but there is a lot more to do to match the best performers like Iceland, New Zealand and Sweden.’

The Nordic countries perform strongly on the index, with Iceland topping the list and Sweden in third and Norway in sixth place. 

Israel, Germany and New Zealand have shown the most significant improvement since 2003, primarily driven by an increased employment rate for older workers, especially within the 65-69 age group. Greece and Turkey have fallen the most in the rankings since 2003, partly due to falling employment rates for older workers.

The US still has the highest ranking of the G7, but has fallen from second place in 2003 to seventh in 2014.

The PwC report recommendations three key labour market themes that governments should focus on. These include encouraging later retirement through pension reform or by creating other financial incentives; improving employability by promoting lifelong education and training; and reducing employment barriers for older workers.

Hawksworth said: ‘Businesses should look to adopt flexible working policies, such as ‘phased retirement’, and to redesign their offices and factories to better suit older workers. They should also take steps to achieve age diversity, for example through opening up apprenticeship schemes to older workers so that they can capitalise on their experience. “Reverse mentoring” schemes can also enable younger workers to pass their digital skills on to older colleagues.’