Managing an Ageing Workforce

Introduction

More than one-quarter of the workers in G7 countries will be 55 or older by 2031 [1]. In the US, that figure will be reached by 2028 [2], with the number of workers over fifty having increased by 80% in the last 20 years and the number of over-65s having tripled [3]. In the UK, there are now 185% more over-65s in the workforce than there were in 1992 [4]. Meanwhile, the UN projects the number of working-age people in South Korea and Italy will decrease by 13 million and 10 million by 2050 [5]. The number of working-age residents in China could shrink by 200 million in the same timeframe [6].

These changes are profound. Demographic shifts will drastically alter countries’ global standing and socio-economic performance, while forcing a rethink on domestic policies regarding pensions and immigration. Life in old age will soon look very different to how it does today. People will be working deep into their sixties, seventies, maybe even eighties. This will have a colossal impact on businesses.

An ageing workforce

Global talent shortages are projected to lead to more than 85 million unfilled jobs by 2030. This will result in annual revenue losses of roughly $8.5 trillion [7]. One way to fill these vacancies is to break from the traditional mould of generally hiring graduates or younger workers by instead hiring older employees. Bain & Company estimates that approximately 150 million jobs globally will need to shift to workers 55 and older by the end of the decade [8].

Despite the necessity of these changes, take-up is slow. In Forbes, Sheila Callaham, executive director and Board Chair for the Age Equity Alliance,notes that “talent management processes such as recruiting, hiring, promoting and retaining tend to exclude individuals under 24 or over 40. The result is a 16-year criterion for talent” [9].

Part of the problem is age discrimination. A recent AARP poll reported that 78% of older workers said they had seen or experienced age discrimination in the workplace, the highest level since AARP began tracking the question in 2003 [10]. A recent SHRM survey backs these findings up [11]. It found that 26% of workers aged 50 and older said they’d been the target of age-related remarks in the previous six months, with 72% of that grouping saying the experience made them feel like quitting their job. Meanwhile, US census data from 2022 showed that the only group in the country to experience an increase in poverty was Americans aged 65 and older [12].

A lot of the discrimination against older people in the workplace is bred from baseless preconceptions regarding performance. A pre-pandemic report for the British Medical Association revealed that while parts of the brain that deal with things like working memory may degrade in middle age, overall age-related cognitive decline is not typically pronounced until you reach at least 70, and only 5% of people over 65 show signs of cognitive impairment [13].

Regarding productivity, the report concluded that: “The main finding is that healthy older people perform equally as well as their younger counterparts” [14]. In other words, not only is discrimination against older workers morally wrong, it is based on a false premise.

In fact, in some regards, older workers are preferable to their younger counterparts. A 2023 Wall Street Journal-NORC survey of Americans’ values found that three-quarters of over-65s said hard work was very important to them personally, compared to just 61% of those in the 18-29 age bracket [15].

“It makes great business sense to hire experienced workers,” said Heather Tinsley-Fix, senior adviser for employer engagement at the AARP, speaking to the Wall Street Journal. “More companies are also recognizing the need to include age in their diversity, equity and inclusion efforts” [16].

Robert Sheen, founder and CEO of Trusaic, a technology company focused on pay equity, DEI and healthcare, writes in Forbes that employers “report that older workers tend to have superior problem-solving and interpersonal communication skills, possess a strong work ethic, offer a deep understanding of customer service and bring a larger perspective to bear on their work and that of their teammates –– all of which complement the skills that younger workers bring to the table” [17].

This final point is crucial. A multigenerational office dynamic leaves companies best placed to succeed, with older employees working in tandem with younger ones, each bringing their specific skills to the table while learning off one another. And for all the talk of differences between the generations, their values have actually been found to co-align.

The Institute for Employment Studies and the Centre for Ageing Better found that older workers desire “meaningful and intellectually stimulating work, job security and opportunities for learning, mentoring and career progression” [18]. Flexibility and being part of an organisation whose values they identify with were also found to be pivotal. These align entirely with the oft-reported on values of Gen Z workers, whom many commentators like to treat as though they were an entirely separate species.

It’s no wonder, then, that the Organisation for Economic Cooperation and Development (OECD) found that age-diverse firms have lower staff turnover and higher productivity rates than their benchmark peers [19].

The cost of discrimination

The US Equal Employment Opportunity Commission (EEOC) reportedly resolved more than 12,000 age-related discrimination cases in the 2022 fiscal year, more than the 13,000 cases in 2021 and over 15,000 in 2020 [20]. Some of the payouts in these settlements ran into the millions. One would hope workplaces would be disincentivised from indulging in age-based discrimination for the right reasons, such as they want equality or recognise that older workers have a great deal to offer. But if not, maybe the fact that such discriminations would be financially damaging, not to mention reputationally ruinous, will prove sufficient.

An absence of preparation

An AARP global survey of employers found that around 4% had implemented programs to integrate older workers into their talent systems, with slightly more than 25% saying they were “very likely” to explore doing so in the future [21]. Only 6% were found to have policies in place related to unbiased recruiting processes.

According to the Centre for Ageing Better, only one in five employers are discussing the ageing workforce strategically and nearly a quarter admit they are unprepared for the growing number of older workers [22].

Clearly then, in spite of the stark need for older workers, businesses are not sufficiently prepared for the transition that is soon to take place in the workforce.

Sheila Callaham writes that, “It’s crucial for company leaders to understand age demographics, just as it is to understand other vital demographic figures. That means dissecting age demographics according to the talent pool, hires, development, promotion and retention” [23].

And yet further AARP research revealed just 42% of companies provide their managers with the training and support necessary to effectively manage a multigenerational workforce, while only 39% focus on how to avoid age discrimination in recruitment or hiring, and 38% focus on how to avoid age discrimination in providing access to training opportunities [24].

Managers must do more. An older workforce is a certainty. There’s no excuse for not making the necessary preparations now in order to achieve success in the future. One technique that has been found to work is implementing programmes of lifelong learning. As noted earlier, older workers are not dissimilar from their Gen Z counterparts in their desire to keep learning and improving, and to work for companies that have a structure in place that allows them to grow rather than stagnate. If people are going to be working longer, the last thing they want is to feel stuck.

A 2023 Transamerica Institute report backed up the notion that lifelong learning opportunities are valued by older workers and are a proven method for attracting and retaining them [25]. That said, the same report revealed that only 28% of the nearly 1,900 employers surveyed offer specific training to address generational differences and help prevent age discrimination. There is much more work to do.

Managing an ageing workforce

Ageing populations are affecting the entire world and could lead to a total restructuring of the global order. With widespread job shortages and people working later and later into their lives, it only makes sense for firms to start hiring older workers to plug the gaps. Not only do they offer experience and a strong work ethic but they can help younger workers to thrive. For too long, older workers have been at the mercy of baseless discrimination. Companies that are serious about facing the new demographics of the future will need to show they are serious about providing a discrimination-free work environment that offers lifelong learning opportunities in order to entice and retain older workers. Those that don’t will feel the demographic shifts first and hardest, and may never recover.