What an ageing workforce population means for business

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What an ageing workforce population means for business
Bryony Kelly

What an ageing workforce population means for business

From first glance, the social and economic strain of an aging population seems inevitable. Fewer resources and greater need will impede productivity. But is it that simple? We take a deeper look.

In Japan, the population is in record decline. An ageing workforce and a low birth rate means that it will lose the equivalent of a mid-sized city every year, even with immigration moderating dwindling numbers.

Japan isn’t alone in this phenomenon. In 2017, the United Nations predicted that the number of over-60s would more than double by 2050 and more than triple by 2100. By the mid-2030s, over-50s could make up half the population in the UK.

From first glance, the social and economic strain of an ageing population seems inevitable. Fewer resources and greater need will impede productivity. Those that are unable to work will require greater support, and the burden to provide this will fall on younger generations who are fewer in number – and growing smaller every year. This, at a time where the break-neck velocity of technology is demanding ever greater numbers of highly skilled workers.

The scales appear overwhelmingly imbalanced and the risk to business growth in the tech market very real.

But is it that simple?

The New Workforce

An ageing workforce isn’t just a by-product of low fertility rates. It’s also a sign of generations that are living longer thanks to better healthcare. People’s quality, as well as their quantity, of life is improving.

In the UK, retirement ages are increasing to reflect this positive trend. Since mandatory retirement was abolished, more and more people are choosing to work later into life, either through choice or financial necessity to meet the standard of living previous generations enjoyed. As much as we like to talk about the impact of millennials and Gen Z in the workplace, the reality is that the future workforce demographic is likely to be much older.

This isn’t necessarily a bad thing. In the UK, we are on the brink of a severe tech talent shortage. While many see immigration as the key to unlocking new talent pools, the potential impact of Brexit and global competition for talent means that we cannot simply rely on ‘fresh blood’ to feed the tech pipeline.

It is predicted that by 2022 there will be 800,000 more workers aged 50-64 in the UK, and 300,000 fewer 16-24 year-olds entering the workplace. Meanwhile, a separate study estimates that between 2012 and 2022, 12.5 million jobs will be vacated by people leaving the workforce and an additional two million will be created – while only seven million new workers will enter the workforce.

There is an obvious disjoin here between supply of ‘young’ workers and demand for skills. Optimising the knowledge and experience of older workers could help to plug this gap, as well as future-proofing the workforce by passing down vital insight.

According to PwC, the UK’s GDP would have been roughly £100bn higher between 2003 and 2013 if we’d had the same level of older work employment as Sweden. Far from draining the economy, the mature workforce is an underutilised asset.

However, there are still some barriers to adopting this new workforce model.

Addressing discrimination 

For one, ageism in the workplace is widespread. According to recent research, more than a third (37%) of employees aged 45 and above believe that age discrimination is an issue where they work, while 19% believe that their age is a barrier to career progression and development. Meanwhile, only 19% of employers are concerned by age discrimination.

This highlights a significant gap between how employees experience ageism and how employers perceive it. While employment rights and anti-discrimination legislation have helped to remove some malpractice, in some businesses the stigma lives on. More than a million over-50s who want to work are currently unemployed, in what MPs have called an “unacceptable” waste of talent.

Educating hiring managers – particularly around unconscious bias, the importance of knowledge transference (73% of those in their 50s and 60s believe they share invaluable skills, experience, and knowledge with their colleagues), and how older workers can address skill shortages – can help to lift perceptions.

Reasonable Adjustments

Thanks to healthcare quality, physically and mentally 65+ year-olds are far better equipped to continue working than former generations. Advances in technology have also offset earlier healthcare barriers, such as automation reducing the need for manual labour.

Instead, according to one government report, health is only ever a barrier “because of poor workplace design or management practices”. There is evidence that older people are more likely to remain in the workforce when they experience low physical and mental stress.

Increased awareness around employee welfare and mental health has led to more healthcare initiatives in the workplace. Greater flexibility around working hours, remote working and more inclusive work spaces are creating a more welcoming working environment for everyone, and could be especially beneficial for older workers. This, alongside easy access to support, a more co-operative management style, and open conversations around diversity and inclusion could ease the transition into work for many older workers.

Multi-generational Workforce

Many businesses are already grappling with the unique quirks of Gen Z – the most digitally connected generation to date – entering the workplace. With workers now staying on for longer too, the make-up of the workforce is set to become more disparate than ever. This multi-generation workforce could present some challenges as conflicting interests, objectives, and communication styles come into contact.

For example, on average, Baby Boomers are used to hierarchical work structures, Gen X value their autonomy and independence, Gen Y thrive in team environments, and Gen Z require regular feedback from managers. In another example, there is a significant gap in technological fluency – with digital natives working alongside those that have been working since before the conception of the internet.

It’s important for hiring managers and HR to understand generational differences in order to diffuse tensions and get the best out of each demographic. Removing stereotypes and encouraging transparency will vastly improve workforce collaboration. There is no reason that these different working styles cannot co-exist, but respect and understanding will go a long way.

In the next decade, the workforce landscape will change considerably. Talent shortages will threaten to paralyse businesses around the world, as fewer people enter the workforce for the first time. For some, immigration and outsourcing roles to the gig economy will be a viable option. For others, it will come down to using pre-existing skills – those of the aging workforce – more wisely.

As competition for talent as a whole heats up, building a supportive environment for all people, in all walks of life, will become fundamental for attracting and retaining talent. HR, hiring managers, and business stakeholders need to prepare for this future now by educating against age discrimination, investing in inclusive practices, and understanding the next phase of working life. The aging workforce isn’t an impediment to our future – it’s a vital lifeline.

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