In the past, short lifespans and high mortality rates formed a population
structure where children were the largest age group; however, today the global
population is undergoing a profound shift. This trend started over 50 years ago
and will continue for the next 50 years. By 2020, there will be more people
aged 60 and older than children under five. By 2050, the world’s older adult
population will have doubled to 2 billion.

This change in the age structure of the world population will have a great
impact on the global workforce. The rapid growth of the 45-65 age group has
been the main factor that has increased the average age of workers. From 1990
to 2010 this group of workers increased at a rate of 67%.

In addition to the aging of the
workforce, the definition of what is considered “working age” is also
shifting slowly. In developed countries, there has been an increased number of
retirement-aged individuals that choose to keep working. The U.S. Bureau of
Labor Statistics predicts that the percentage of men aged 65-74 will increase
from 25% to 35% by the year 2020.

The traditional view of retiring at a certain age is rapidly changing.
Mature workers often realize they can’t afford to retire and they either keep
working or they “semi-retire” by working part time or shifting toward
consulting or freelancing. This option is especially viable in high-skilled
jobs where the demand for qualified talent outweighs the supply.

Aging population causes a decline in productivity growth

The population shift has also created a challenge in the area of
productivity. As the global workforce has gotten older, greater numbers of
older workers are leaving the workforce. With a smaller workforce, productivity
needs to accelerate in order to maintain a country’s GDP growth. Without a
change in productivity levels, GDP growth is expected to decline by 40% over
the next 50 years.

In order to compensate for this decline, productivity growth would need to
increase by 80%. One way to improve productivity in the coming years is for
companies and governments to catch up with best practices that are already in
use. Also, given that the service sector employs 75% of non-agricultural
workers, opening more of these jobs to aging workers could help maintain
productivity growth in those industries.

Some researchers see technological innovation as a way to push the frontier
of productivity growth. The growth of e-commerce, where productivity is more
than 80% greater than brick-and-mortar stores, is one of the greatest
opportunities for productivity growth. Recent innovations in health care have
also had a big boost to productivity in the medical industry.

Are industries prepared for aging employees?

Given the aging trends in the global workforce, the question becomes: How
should employers adapt to a pool of job candidates that are of a higher average
age? Should this be viewed as a negative or a positive?

On the positive side, the aging workforce is beneficial to companies that
suffer from a lack of qualified, highly-skilled and experienced talent. On the
negative side, the rising age of retirement-aged employees increases payroll
costs and health benefit costs, and can potentially disrupt the flow of younger
job-seekers entering the market. Overall, companies are beginning to capitalize
on opportunities to “retire retirement” as millions of baby boomers are passing
age 65.

It is vital to retain aging employees in organizations in order to avoid
labor shortages and retain expertise and experienced employees. New strategies
should be implemented to help retain senior employees. Workforce training,
development and changes in policies can keep more mature employees as effective
team members in the workplace.

Cultural and legal efforts can help avoid discrimination issues that arise
between younger and older employees. Changing the retirement incentives,
retirement age and pension agreements will also help retain older employees in
companies.

Companies need to prepare to make the most of an aging workforce. By challenging
their assumptions, they can benefit from more loyal, experienced workers that
are not yet ready to retire.