Companies need to prepare for an ageing workforce by adapting work processes and the benefits offering while investing in automation.
Statistics show that the world’s population is becoming older, with a decreasing portion of the population at working age in developed countries, and the burden of financing public services (rising healthcare and pension costs) therefore falling on fewer individuals. Globally, the proportion of the population aged 60 or over is growing faster than all younger age groups — it is expected to more than double by 2050 to 2.1 billion from 962 million globally in 2017, and to more than triple by 2100 to 3.1 billion. The ageing trend is particularly advanced in Europe, where already 25% of the population is older than 60.
Companies need to prepare to accommodate an older workforce, adapting the workplace and the benefits offering.
“A company is a microcosm of the economy,” says Pablo Macián Clemente, business development executive at Zurich Insurance, who will demonstrate an interactive risk tool for over 170 countries at Lockton’s 2019 Global Benefits Forum in London on June 11 and 12, 2019.
A company is a microcosm of the economy.”
Facing the productivity challenge
“The demographic risks will outpace productivity growth for most countries if action is not taken by governments, businesses, and other nongovernmental institutions. It is important to understand that increases in labour force alone explain ½ of global economic growth over the past 50 years” Macián explains.
“Developed countries will face productivity losses due to declining employment growth already in 2030 if they don’t introduce successful measures to counteract this trend such as investing in automation / innovation or stimulating immigration” Macián says.
“Increasing fiscal demands in the areas of healthcare and pensions will result in unfortunate trade-offs with investments in education and research & development (R&D) despite the need to increase productivity,” he explains.
These challenges in developed countries are adding pressure on private companies to increase the funding for employee benefits as governments deleverage. “Companies need to understand a country’s risk structure to plan for the future and design an attractive benefits programme,” Macián says.
In order to enable employees to perform their jobs at a higher age, companies will need to adapt workplaces to the special needs of older employees while also expanding the training offering. Increasing flexibility and a stronger focus on well-being, continued care and income continuity will be key for firms to succeed in tackling longevity.
As employees stay longer in the job companies will need to work out a labour mobility schemes enabling for an efficient allocation of capabilities while heavily investing in automation and innovation.
Tackling the generational conflict
“As a result of ageing, people will need to work longer, and firms may face an intergenerational conflict regarding benefits expectations as a result of the widening age range of staff,” Macián warns. Companies will need to consider how they create an achievable, balanced response to these conflicting demands.
As a result of ageing, people will need to work longer, and firms may face an intergenerational conflict regarding benefits expectations as a result of the widening age range of staff."
While older employees may want their employer to focus on expanding the healthcare (i.e. more sick leave/pay to allow time to manage chronic conditions, etc.) and pension offering, younger employees might not feel compelled by those: Only 4% of 16-24 year olds are attracted to an employer because of their pension, according to Lockton research.
Younger generations tend not to value the traditional benefits companies offer and consider most employment as temporary, according to Lockton research, suggesting that employers need to be far more creative to attract and retain the young generation. The benefits offering for the young employees will therefore have to differ significantly from the older generation. Younger employees might complain that they don’t feel fulfilled in their jobs. They may miss doing something "meaningful" and make a positive contribution to the world. Or they may want to take a sabbatical or swap jobs internally to gain new experiences.
When accommodating +65 employees, the company may be at risk of deploying outdated working methods, according to Lockton research. In addition, as retirement ages increase, employers need to be careful that this doesn’t impact the career paths or progression of younger generations, who may look elsewhere. Another potential consequence may be more illness/long term sickness impacting productivity, according to Lockton research.
It is essential that companies invest in automation, robotics and artificial intelligence to prepare for a future with an older workforce and a limited availability of younger workers. A challenge may be to address the needs of the older workforce and those of the younger workers at the same time.
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