Do you think of the UK’s ageing population as a growing burden on the economy? One that increasingly has to be shouldered by younger workers?
Joint research by Hitachi Capital UK and the Centre for Economics and Business Research (Cebr) has found that, far from being a drain on resources, over-50s are in fact contributing more to the UK economy than under-50s across several fronts.
Analysing data from the ONS’s quarterly Labour Force Survey (LFS), our study found that SME owners over the age of 50 employed more people and generated more revenue than their younger counterparts for the first time in 2016.
The over-50s are becoming an increasingly important demographic in the UK. The number of 50 to 64 year-olds in work has risen from 6.8 million in 2005 to 8.7 million at the end of last year – 2.1 million of whom are self-employed.
Of that 2.1 million, roughly 0.36 million employ at least one other person in a standard small business (up to 50 employees). Last year those businesses generated a combined turnover of £365 billion, nudging past the £361 billion generated by the 0.37 million under-50s employers within the same bracket.
As well as shading the under-50s on revenue, those old-timers also surpassed their younger competitors on the total number of people employed – accounting for 3.46 million jobs versus the 3.40 million employed by under-50s small business owners.
A pattern emerges
While new, this is a trend that looks set to continue. If we add medium-sized businesses (between 50 and 250 employees) to these figures, the number of people employed in over-50s-owned SMEs was 5.1 million in 2016 – up from 4.76 million in 2011. That put the over-50s ahead of under-50s business owners in the same bracket for the first time ever; total employees of SMEs owned by under-50s were 5.05 million – down from 5.9 million in 2011.
This research clearly shows that small and medium-sized business owners among the over-50s are outperforming their younger competitors on both job creation and turnover.
These aren’t the only measures in which the older generation is taking the lead. Discretionary spending in 2015 by over-50s was £376 billion, surpassing the under-50s (£373 billion) – again for the first time. Our analysis of the direct and indirect impact in the economy of this ‘silver pound’ concluded that it currently supports up to 1.9 million jobs – expected to rise to 2.8 million by 2027.
It’s clear we need to rethink outdated attitudes about older workers. While most of us know that SMEs form the backbone of the UK economy, what’s been less apparent is how the role of older business owners has caught up with, and now overtaken, that of Britain’s younger entrepreneurs.
With increasing participation in the labour market after pension age, those trends are only going to go one way. So the next time you hear the common cliché of the younger generation looking after the baby boomers, remember that when it comes to small business, it’s actually the other way round!
See here for the full report.
Robert Gordon is CEO of Hitachi Capital UK.