Older workers are the key to defusing the demographic timebomb

The long-term decline in the UK’s birth rate and number of young people entering the workforce is well known. But as the UK enters a likely deep recession, the problem of labour shortages may be offset if employers rethink their approach to older workers.

There is a temptation for many employers to ‘let go’ of older employees through early retirement, only to suffer labour problems later. But if employers do not seriously consider how they utilise and retain older workers now, they will be left with a long-term reduction in workforce numbers, and a corresponding drop in economic growth.

The need for action is clear when you consider population demographics.

Over the next 10 years, the number of 15- to 19-year-olds in the UK is projected to drop by 13% – half a million fewer young people ready to enter higher education or jobs. The number of 20- to 24-year-olds will drop by 165,000, and in some regions of the country the situation is much worse.

The average age profile of the workforce is also rising. Over the next 10 years, the number of people aged between 50-54 is set to rise by 21%, and the number aged 55-59 by 15%. In absolute terms, there will be a projected increase of nearly 1.3 million people between the ages of 50 and 59, while the number of those in their 40s will actually drop by 784,000.

A key component of the problem is the fact that the employment rate for different age groups declines rapidly after a person hits 50, as a large percentage of those in the 50+ age group will not actually be working.

What can be done?

Migrant workers would appear to be an immediate way of filling the gap. Yet the recent high levels of immigration, especially by young workers from Eastern Europe, is unlikely to continue as opportunities increase in their homelands. These countries also face their own demographic problems and the falling value of the pound makes the UK a less attractive destination.

Another option is to reduce the size of the workforce by substituting technology and capital for labour, although the impact of this may be limited as much of the demand is for labour intensive services.

Which leaves the door open for keeping more people aged over 50 active and productive in the workforce.

Skills obsolescence

Traditionally, older workers have been considered less productive or entrepreneurial than younger workers. However, this is not the case as older workers have greater life and work experience, require less supervision and have lower levels of turnover and absenteeism.

And while there may be some loss of productivity among older workers, this may be due to skills obsolescence, rather than age, thereby making training for older workers a priority. However, this means convincing both sides – reluctant employees and employers – of the need for greater and more effective skills development through appropriate incentives and opportunities.

The physical workplace and tasks also need to be redesigned to better reflect a lifecycle approach to dealing with staff. For instance, better career pacing (to stop burnout and to reignite enthusiasm) – including looking at the use of sabbaticals.

And work-life balance policies are also likely to be more important for older workers (for example, some may need to look after parents or grandchildren, while others just want a better balance). Employers should also consider tapering retirement, as retaining people part-time will be better than losing them altogether.

This workforce timebomb has been ticking for some time. It has, to some extent, been hidden by rising numbers of people in employment and, more recently, high levels of immigration. But if employers don’t start redesigning the lifecycle of employment now, they will be staring a workforce crisis in the face in less than 10 years.

Ditch the retirement age

Personnel Today is supporting a campaign by the Employers Forum on Age (EFA) to force the government to commit to remove the default retirement age in 2011. Now is the time for HR professionals to lead and make the decision to ditch the retirement age. You can register your support for our campaign by signing our petition on the Number 10 website.

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