Joseph Quinn is a Professor of Economics at Boston College, where his research focuses on the economics of aging with emphasis on the economic status of the elderly, Social Security reform, the determinants of the individual retirement decision, and trends and patterns of labor force withdrawal among older Americans.
A new volume just published by the Organization for Economic Cooperation and Development, entitled Promoting an Age-Inclusive Workforce: Living, Learning and Earning Longer, offers an excellent perspective on the demographic realities ahead for the world’s most developed economies. As noted in the Forward, “This report debunks several myths and demonstrates the positive impact of age diversity and inclusion on … long-term competitive growth and organisational resilience.” The volume also corrects several inaccurate myths about older workers and discusses promising age-friendly corporate approaches to manage an increasingly multigenerational workplace.
What are the Demographic Facts?
By 2050, 45% of the world’s population will be over the age of 50, compared to only 37% today. The global workforce will age even faster, since older workers are remaining in the labor force longer, and smaller cohorts of young people are entering the labor force at later ages. The old-age dependency ratio (persons age 65+/20-64) will fall from 1:3 today to 1:2, straining public retirement programs. Economic productivity and therefore economic growth will therefore become increasingly dependent on these experienced workers. To succeed and prosper, while hiring and retaining a productive workforce, employers must adjust to these important changes on the horizon (which the report describes as potentially “good for business”) by implementing age-inclusive employment policies consistent with the new world ahead.
Making Jobs More Appealing to the Aging Workforce
A 2020 AARP survey across 36 OECD counties indicates that much remains to be done. Job strain affects 40% of workers around the world. Only a minority of firms allows periodic or full-time telecommuting (of course, many service industries, like restaurants, cannot), or compressed work schedules (the same number of hours distributed over fewer days). Few companies today currently provide phased retirement options (fewer hours on the career job), a change that might retain older workers no longer interested in, or capable of, full-time work.
Firms that understand and respond to the changing preferences and needs of their workers as they age will be more likely to prosper in the future, by generating increased effort from their appreciative employees. The overall goal, therefore, is not just to reduce or eliminate policies that discriminate on the basis of age (age is by far the most common reason stated for work-related discrimination), but to actively encourage policies that benefit and retain experienced workers.
Examples include flexible work options (for some, part-time work or, where possible, work from home) that permit adjustments to changing personal responsibilities (e.g., care for children, an incapacitated spouse, or elderly parents – and sometimes more than one); these can keep good employees on board and reduce the recruitment and training costs of new hires. Moreover, life stage is more important than age in understanding employee preferences and needs, but most workers at all ages will value meaningful, stimulating, and varied work. In-house mentoring programs (much appreciated by mentees), job-shadowing, training options for current employees, paid parental leaves, support for employees; mental and physical health, frequent performance reviews, and good pay can also increase retention. Therefore, a higher human resources bill might actually reduce total costs, if it increases employee retention.
While the prospects are positive, it remains the case that challenges remain. For instance, small companies may not be able to allow job flexibility, if even a few employees out on an extended leave can leave the firm seriously short-handed. Interpersonal tensions could also arise if more senior employees report to younger and less-experienced managers. Having workers adapt to new and frequently changing technologies could be more difficult for older workers, although the solution may be different training approaches by cohort.
It is also important to note that, although many workers are now working to older ages, and many happily so, this will not be the case for everyone. Some are in physically demanding occupations, have health problems, or must provide home health care to relatives, making additional years on the job difficult even impossible.
The report contains many excellent tables and graphs, along with case studies of companies offering successful human resource programs. This reader found very useful the key takeaways and extensive bibliographies at the chapter ends. A minor complaint is that the text sometimes did not note the source of an interesting fact, making it difficult for the reader to know where to go to learn more about a topic. Nevertheless, this is an important and timely topic, and the OECD report is a valuable addition to this literature.
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