European Workforce Ageing

The European population is expected to grow significantly older over the next 20 years. The number of retirees will grow compared to the working age population. The average age of people within the labor force will rise. The percentage of workers between 55 and 64 will increase by a third within the next 20 years. The rate of ageing in the workforce is higher in continental Europe than the UK or the U.S.. According to projections by the OECD and the European Commission, the ageing workforce in the U.K. and the U.S. will peak at 16 percent and 18 percent respectively by the year 2026 while the percentage of older workers in the E.U. will remain relatively constant at 22 percent.

The ageing of the workforce in Europe is expected to affect productivity. Statistically, workforce ageing is found to significantly reduce productivity per worker. A five percentage point increase in the share of workers between 55 and 64 is associated with a decrease in labor productivity of about three percent.

In some E.U. nations, the problem will be larger than in others. In Spain, aging is expected to take as much as one-half percent from expected worker productivity. In Greece aging could take as much as a full percentage point of worker productivity. The worry is the productivity decrement is likely to affect the E.U. countries that can afford it least. In the United States and in the U.K., the effect of aging on productivity is expected to be negligible.

The effects of ageing on worker productivity in Europe can be mitigated by social policy that focuses on vocational education, retraining, a proper gender perspective–differentiating the issues affecting men and women in the workplace, and health policies. Education that improves the quality of the workforce can reduce the impact of aging.

United States Workforce Ageing

Workforce ageing is partly because of the increasing number of workers who don’t retire and partly because the sheer number of workers in the pool to replace older workers is smaller.

• The U.S. Government Accountability Office finds that 29 percent of older households (55 years old or older) have neither the sufficient retirement savings or traditional pension plans to retire. The economic downturn of a few years ago lowered the retirement capability of many families.
• As older workers leave for retirement, they are followed by a much smaller generation. This represents a skills gap. Older workers are frequently asked to remain on the job to make up for a resource shortage.
• Labor laws have changed to prevent discrimination by age which makes such things as forced retirement policies difficult to defend.

Today’s ageing workforce is relatively healthy, according to the National Center of Health Statistics. Less than one-quarter of U.S. adults over 65 identify themselves as having only “fair” or “poor” health. In many ways, older workers are among the most skilled and productive employees. A survey of 2,500 human resources managers identified the top advantages of older workers as having greater work experience, knowledge and skills, as well as greater maturity, greater professionalism, a stronger work ethic, more reliable and loyal, and showing lower turnover than younger workers.

There were 78 million babies born between 1946 and 1964. These people comprise a large group of workers in their 50s and 60s. There are more of these older workers in the workforce than ever before. In three years (2020), one out of every four workers in the U.S. is going to be over 55. The aging workforce is expected to bring a higher rate of disability in the workforce. The rate of disability doubles between age 40 and 55.

Research on the effects of age on work-related functioning and ability show that ageing mostly affects speed of motor activity. However, differences in performance are small across age groups until at least the age of 65. In some areas of work, like sales, productivity actually improves with age. Small errors in performance may be more frequent among older workers, but major errors are more likely among younger workers.

The Network Editorial Team