More than a million people over 50 have been pushed out of work, costing the UK economy billions, according to a new report to be launched by Prince Charles on Thursday.

The prince’s charity for older workers will warn that this “missing million” are losing out on earnings, pensions payments and the social benefits of work as they “sit in no-man’s land, waiting to reach the relative safety of state pension age”.

As many as 1.5 million people aged 50 and over involuntarily left employment over the last eight years due to a combination of redundancy, ill health or forced early retirement, according to the research by the Prince’s Initiative for Mature Enterprise (Prime). Of these, 1.1m people would still be wanting work, said Prime, which is part of the prince’s Business in the Community charity.

“There are a significant number of over-50s who would be willing to work if the right opportunity arose but we are failing to harness their potential,” said Stephen Howard, chief executive of Business in the Community.

“We need to successfully address the needs of this missing million, who have been forced out of work prematurely. By doing so, we will not only help individuals achieve a financially secure, meaningful and productive future, but also retain valuable knowledge, skills and experience for the benefit of the economy, businesses and communities.”

The research, done with the International Longevity Centre (ILC), highlights official figures that show long-term unemployment accounts for nearly half of all unemployment among the over-50s age group, compared with just over a third for all unemployed UK adults.

The researchers estimate that if the skills and abilities of the 50-to-64 age group were fully used and their employment rate matched that of people in their 30s and 40s, UK GDP would be £88bn higher this year, equivalent to 5.6% of GDP.

They contest that a higher proportion of older workers would not crowd out the labour market for younger workers, “as there are not a fixed number of jobs.”

It argues that without more older people in work, the UK will suffer more acute skills shortages. There are 13.5m job vacancies, which need to be filled over the next decade and only 7 million young people are projected to leave school and college over that time, the researchers say.

They call for action from policymakers and employers to make it easier for people to keep working beyond 50. The recommendations include more flexible working and retraining for older workers as well as health packages to help over-50s stay fit enough to work.

Baroness Greengross, the ILC’s UK chief executive, said: “We have found that older workers aren’t always motivated by money alone. Jobs have to be enjoyable. To maximise the economic benefit of older workers in an ageing society we therefore need to make jobs more relevant, satisfying and fun for older people. But we also have to address the health challenges of ageing.”

Ros Altmann, recently appointed as the government’s new older workers’ business champion, said: “It is so important to help over-50s stay economically engaged and I congratulate Prime on its marvellous work. Older workers could provide a major boost to future growth, whereas continuing to waste their skills and experience is a recipe for economic decline.

“Millions of over-50s are out of the labour force when they need not be. With our ageing population, employers and individuals need to radically rethink retirement and ensure as many as possible stay economically active as long as they want to.”

Pensions minister Steve Webb said: “In the next 10 years there will be 700,000 fewer people aged 16 to 49, but 3.7 million more people aged between 50 and state pension age. Older workers have a huge amount to bring to any workforce and will form an increasingly important section of the labour market.”