Non-workers to outnumber workers this year as baby boomers retire
The number of non-workers is set to grow by 350,000 in 2017 compared to an increase of 100,000 workers as waves of baby boomers retire, the think tank said.
Baby boomers are the generation born in the years immediately following the Second World War. The report says the UK economy has benefitted hugely from rising life expectancy and increased employment among its large baby boomer population which currently stands at over 15 million.
It refers to the ‘baby boomer dividend’, which it says has increased the tax base and helped fund education, health and welfare provision.
However, the report warns “2017 marks a tipping point… which turns dividend into a debt.”
David Finch, senior economic analyst at the Resolution Foundation, said: “Rising life expectancy has helped more people to work for longer and made a major contribution to higher living standards over the course of their lives. But the sheer size of the baby boomer generation – and rising longevity for everyone – also brings economic challenges that must be addressed.
“2017 marks a tipping point in Britain as retiring baby boomers swell the ranks of the non-working population faster than our workforce. As this continues, our ageing society brings challenges for future generations of workers. If we had to cope today with the pensioner population we expect by 2060 it would mean a cost pressure equivalent to a 4p rise in the basic rate of income tax.”
Without the government’s existing approach of accelerating increases in the State Pension age (SPA) that cost could be higher, the think tank said.
The Foundation said that a renewed drive to reach full employment, including helping older and disabled workers to remain in employment, would boost employment by over a million – and help maintain the ratio of workers to non-workers “for decades to come”.