![]()
1
The Aging Workforce: Individual, Organizational and Societal Opportunities and Challenges
Ronald J. Burke, Cary L. Cooper and John Field
Someone once said that the only sure things in life were death and taxes. We can now add a third sure thing to this list: an aging global workforce. This introductory chapter sets the context for this Handbook by reviewing issues contributing to, and the effects of, an aging workforce on individuals, families, organizations and societies as a whole. These issues are then addressed in significantly more detail in the chapters that follow.
The aging workforce has emerged as a major issue for individuals, organizations, and countries (Anderson, 2009; Bloom, Canning & Sevilla, 2003; Hankin, 2004; Hedge, Borman & Lammlein, 2006; Magnus, 2008; Shultz & Adams, 2007). Although interest in an aging workforce might be traced as far back as the 1950s, it has had little impact on policy and practice until recently (see Griffiths, 1997, for a review). Why havenât governments and organizations responded sooner to these demographic patterns? On the one hand, thinking about these patterns requires thinking in terms of decades rather than years. And politicians are typically concerned with the next political cycle, and business leaders with the short term. In addition, facts and information were hard to come by being spread across a range of different disciplines (e.g., sociology, psychology, gerontology, economics, public policy, business management). Thus countries and organizations are generally not well prepared for these changes (Lam, 2011). There has been some âtalkâ by governments and organizations but little âactionâ.
It is estimated that the world population will either peak or stabilize around 2050 after growing for hundreds of years at an increasing rate. Much of this is due to a declining birth rate in most economically developed countries. And the population will be aging because of these lower birth rates and better health care resulting in people living longer. In the US, the senior population will represent over 20 million of the total population within the next 50 years, a dramatic increase in the number of seniors from 2000 (US Census Bureau, 2005). Between 1950 and 2000, the percentage of the worldâs population older than 60 grew about 8â10%; from 2000 to 2050, this figure is expected to more than double to reach 21%. In Japan and Western Europe, there they predict a 40% increase during the latter time period.
An aging workforce, a declining birth rate, and a trend to earlier retirement have come together to create skills shortage, termed a âwar for talentâ by some (Michaels, Handfield-Jones & Axelrod, 2001). This is reflected in both labor shortages (loss of older employees through retirement, more difficulty recruiting younger workers, retention of current employees will be more difficult) and skills shortages (loss of experienced older employees, difficulty recruiting younger employees due to increased competition). And although Canada and the US are similar to Japan and Western Europe in terms of lower birth rates and aging populations, both Canada and the US have relatively high rates of immigration to partly offset effects of an aging population. But concerns have emerged in countries encouraging immigration in terms of assimilating immigrants, providing job opportunities for them in more difficult economic times, and addressing concerns about backlash against immigrants â particularly strong in Western Europe.
In order to address these challenges, organizations need to begin a dialogue on what strategy would work best for them, there is no âone size fits allâ approach that makes sense (Cappelli & Novelli, 2011) It should, however, start with retention planning to make sure that valuable employees remain throughout the organization, targeted selection that focuses on important knowledge and skills that fill positions in the organization, managing the culture change as older employees leave and new employees join the organization to enshrine the values deemed necessary, and starting an aging workforce dialogue involving central organizational decision makers.
There is increasing discussion of a generation gap. Older workers are enjoying the current level of retirement benefits while younger workers are paying for these benefits. There will be a growing number of retirees and a shrinking number of workers paying for their retirement in the future â perhaps creating a growing generational divide.
In addition societies define aging differently. Are the aged seen as reliant or dependent, as poor or as filling an important place in society? Aging can be seen in some societies as a blessing rather than a problem or difficulty. But there are some obvious burdens that aging places on a society such as increasing health care needs and costs, more elder care, and greater pension demands. In addition older workers get paid more and represent higher costs than do younger workers. But the aged also can represent opportunities as there will be a need for new products and services for the aged. As the aged become a critical mass, in Europe currently a third of the population is over 65, they become a force to be reckoned with. About 90% of the elderly are healthy and they vote at a higher rate than do younger men and women.
On the organizational front, Ernst and Young has conducted surveys (their Aging Workforce Survey) among Fortune 1000 companies and concluded (1) that no single company has developed or implemented a comprehensive solution that addresses the total problem, (2) retaining key employees and maintaining intellectual capital were the human capital issues of greatest concern, increasing in importance over the two most recent surveys, and (3) the impact of the aging workforce extended beyond the executive level to middle management. Their 2007 survey showed that the aging workforce had become a more important concern among these firms: 70% now considered issues of an aging workforce to be important compared to only 38% two years earlier.
Finally, at the individual level, there is increasing evidence about the relationship of aging and cognitive and coordination skills, changes in needs and priorities, health and physical well-being, financial security and retirement. A recent longitudinal study carried out in the US using a very large sample of retirees reported that men and women who worked in some capacity following retirement fared better both psychologically and physically.
Some countries, including Singapore many states in India, have extended their retirement age. Most European countries have raised, or are in the process of raising, the age at which state pensions kick in, and while European Union (EU) legislation on age discrimination has not removed the principle of age-based retirement, it has enabled many employees to extend their working lives. Other countries, including Canada, have done away with mandatory retirement allowing individuals who want to work beyond the previously-legislated age of 65 to do so.
AGING, WORK AND SOCIETY
Aging has emerged as a major and urgent issue for individuals, organizations and governments. It is also a rapidly growing area for academic research. Current concerns focus on the implications of aging for economic competitiveness, innovation, public services, health and well-being and education, as well as the implications for relationships and financial transfers between the generations. And this is a truly global phenomenon, affecting not only North America and Europe, but also many Asian societies such as Japan, Taiwan and Hong Kong, Australasia and some Latin American societies.
The OECD, WHO and World Bank have all warned of predictable impending problems. Yet European Union policies on workforce and social aging, for example, are clearly at odds with policies designed for other domains. Public policy fears over pensions sustainability, health provision and workforce supply are nowhere matched by planned interventions and measures to deal with the problems. Where governments have tried to tackle the most significant and immediate challenges, as over public sector pensions, they have met with heated opposition.
INCREASING RESEARCH ATTENTION BEING PAID TO AGING
It should come as no surprise that increased research attention is being devoted to understanding the effects of aging, factors associated with successful aging and ways to improve the quality of life of the elderly. Here are two recent examples of this interest. First, the Canadian government is funding a large longitudinal study of factors associated with successful aging (Teotonio, 2012). It will involve 50,000 people between 45 and 65 and run over 20 years. Information collected will examine biological, behavioral, psychological, spatial, lifestyle and economic factors. Second, an International Conference on Aging, Mobility and Quality of Life was held at the University of Michigan in June 2012. The following appeared on their conference program. Since understanding aging is a multi-disciplinary effort, experts from a variety of fields presented their work: gerontologists/geriatricians; transport researchers, operators and regulators; psychologists, behavioral researchers; urban planning researchers and policy makers; safety researchers; mechanical/electrical engineers form industry and academia (vehicle design, assistive technologies); tourism/leisure researchers/industry; occupational therapists; and medical professionals. Content streams fell into two broad categories. One considered mobility-related characteristics and activities of elderly people and included spatial cognition and way finding, social participation, travel behavior, exercise and health, tourism and leisure, personal security, transport safety and aging in developing and newly industrializing countries. A second considered technological and policy responses such as building designs, urban planning and environmental design, roadway design, vehicle design, ICT, assistive technologies, gerontechnology, transport policy, and community transport.
ISSUES RAISED BY AN AGING WORKFORCE: CHALLENGES AND OPPORTUNITIES
A staggering challenge
The aging population has been described in dramatic ways by terms such as âa demographic time bombâ and an âold age tsunamiâ. This somewhat apocalyptic language has even become something of a clichĂ©, but it should not disguise the unprecedented nature of this change. According to the United Nations, the elderly population of the world is growing at its fastest rate ever. By 2050, there will be more than two billion people aged 60 or over.
Every day, a few hundred thousand people move into their 60s. These people have talent, experiences, skills and knowledge. There has never been such a large group of people in this category. Societies cannot afford to âwasteâ or âthrow awayâ these resources (Morrow-Howell, Hinterlong & Sherraden, 2006). But there is a lag between how best to capitalize on these resources and current attitudes and policies.
A shrinking workforce
In France, more than a million people took to the streets in 2010 in protest over plans to raise the retirement age from 60 to 62 in 2018. Germanyâs efforts to integrate 3.5 million Turkish immigrants without giving them access to citizenship has failed to incorporate them into German society. Both of these are examples of responses to an aging population. As population growth rates slowed and stopped, fewer working age people were present. The solutions to this problem are to raise the retirement age, encourage more immigration, or both. By 2050, most Western countries will spend 27â30% of their GDP on retirees (Saunders, 2010).
A total fertility rate of 2.1 maintains a countryâs population. This figure is now lower in most industrialized countries, and higher in some non-industrialized countries. And 18% of US women reach the end of their childbearing years without giving birth, up from 10% in the 1970s. But this rate had held steady over the past decade. More women with advanced degrees are now having children.
The globalization of business, along with an aging workforce, will increase demands for talent world wide. Some countries (e.g., UK, US, Canada, Germany) relied on immigration to fill the need. The globalization of business has resulted in developing countries such as India and China now coming to these formerly host countries for talent.
REGIONAL DIFFERENCES IN POPU...
