by Andrew Schwedel, Partner, Bain & Company for World Economic Forum
It’s no secret that the global workforce is ageing along with populations. Fewer young people are entering the workforce due partly to lower fertility rates and partly to more extended education.
According to OECD data, a long-term trend toward earlier retirement is slowly going into reverse. The United Kingdom, for example, increased its retirement age from 60 (for women) and 65 (for men), first by equalizing genders, then pushing both up to 66 with a plan to move up further over time. In Japan, before a recent increase in the retirement age from 60 to 61 and higher in future years, the government struggled to push the official retirement age up, leaving firms to often solve the problem by releasing workers at 60 and rehiring them on new contracts, often at reduced pay rates.
In the G7 countries, workers age 55 and older will exceed 25% of the workforce by 2031, nearly 10 percentage points higher than in 2011. Japan is the extreme case: by 2031, Japanese workers 55 and older will approach 40% of the workforce. According to Gallup, 41% of American workers expect to work beyond age 65. Thirty years ago, it was 12%. Even the spike in retirements during the peak-Covid Great Resignation now looks more like a Great Sabbatical, a blip in the long-term trend, with a higher percentage of retirees reentering the workforce than in February 2019.
This issue extends beyond developed markets. China’s elderly population (65 and older) will double by 2050. Brazil’s proportion of workers over age 55 is creeping up to the mid-teens. Globally, approximately 150 million jobs will shift to workers 55 and older by the end of the decade. That’s not far short of the entire working population of the US.
Despite the shift, it’s rare to see organizations implement programmes to integrate older workers into their talent system. In a global employer survey from 2020, AARP found fewer than 4% of firms were already committed to such programmes, with only a further 27% saying they were “very likely” to explore this path in the future.
By understanding older workers’ motivations, both individually and more generally, firms can design their way to success.
The approach focuses on three clear steps:
1) Retain and recruit older workers by understanding what motivates them at work;
2) Reskill them for your next 10 years of capability needs; and
3) Respect their strengths and allow them to do what they do best.