Is retirement a thing of the past?

There are a number of pressures currently facing the global labour market, amongst them are a growing talent mismatch, rising gender pay gaps, poor productivity and increasing inflation. However, on top of this there is another issue that is impacting the business landscape and one I don’t think we’re talking about nearly enough: the world’s ageing workforce.

The statistics underpinning this issue are plain to see. Data indicates that birth rates are falling round the world, while life expectancy for men and women is near an all-time high. This all means that our workforces are ageing. In fact, people aged 55 and older made up 22 per cent of the US workforce in 2016 – this share is expected to jump to 25 per cent by 2024. Meanwhile, in the European Union, workers aged 55+ currently account for 16 per cent of the total workforce.

This group is quickly approaching retirement, which will only exacerbate an already acute skills shortage across many industries that power economies worldwide. Pension schemes are increasingly being rendered unsustainable as additional funds need to be put away each year to manage future liabilities and as retirements become longer.

How should businesses react?

As the pool of available workers ages and potentially begins to shrink, businesses will need to ensure they retain the key talent and skills already within their organisation. One of the easiest solutions is to help keep older employees working for longer.

Some of this will happen naturally of course. Statistically, life expectancy increases by two to three years every decade, so going forward younger sections of the workforce will be expected to work considerably longer in the future when compared to that of their older counterparts today. The prospect of people living much longer also calls into the question the usefulness of an official retirement or pension age and whether it is a thing of the past - policy makers may have to examine this in much closer detail in the coming years.

I believe businesses need to do far more to upskill employees and futureproof them against not only longer careers, but also the coming technological and organisational changes. AI, machine learning and robotics are rapidly changing almost every job that currently exists, from the factory floor all the way through to the boardroom. This means the modern worker is set to go through more changes in their working life than at any other time in the past, making adaptability a quality of paramount importance. So it is up to businesses and policymakers in our time to pre-empt these changes and ensure the workplace of tomorrow is suitably prepared in order to minimise any adverse impact on businesses and the economy.  

The rise of the multi-generational workforce

Interestingly, today’s workforce is made up of five different generations. This provides a unique opportunity for businesses to facilitate the efficient transfer of knowledge from older, more experienced workers to their junior colleagues. Effective succession planning is key to this, as well as the promotion of two-way mentoring programmes, whereby younger staff are provided with tutelage from senior colleagues in return for support in understanding and using new technologies for example. This ensures no one is left behind as the workplace becomes increasingly digitalised and complex.  

Without urgent change, the demographical analysis indicates that today’s skills shortage will only become worse as time progresses. Having finished university at the start of the summer, a fresh graduate entering the world of work now is expected to live on average until 100. While this represents a long time, the economic impact of this trend is set to be felt much sooner.

I am pleased by some of the change that is afoot across several industries in terms of employment practices and training and development initiatives. However, I strongly believe this needs to be supplemented with a robust strategy to help our ageing workforce, one that is coordinated between business and governments, and not adopted in economic isolation. To help foster skills amongst the workforce, businesses – supported by government policy – need to devote greater time and investment into training and reskilling their current employees, while also modernising working practices to account for flexible working, career breaks and parenting.

In short, the businesses of today need a clear strategy in place for supporting and managing the ageing workforce of tomorrow.

A version of this blog first appeared in The Telegraph.