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Thoughts from day two of the IMF spring conference: the challenges and opportunities posed by ageing populations
Much of the world is ageing at an astonishing rate. In Europe, the average age increased from 30 to 40 since 1950. In China, the proportion of people over 65 has doubled (as a share of total population) in 25 years. However, experts from academia, government and policy think-tanks convened by the World Bank, agreed on 16 April that this is not necessarily an impending economic disaster. Managed correctly, it offers opportunity to fundamentally revolutionise how societies and businesses engage with people across their lifecycles, and to think less about age chronologically, but more in terms of skills and abilities.
Lifelong learning is increasingly important
While people are living longer due to huge medical advances (over the past 150 years, average life expectancy in Europe has risen by 30 years), fertility rates are also declining for myriad reasons including women getting married later and choosing to stay in the workforce longer (see Grant Thornton's recent women in business report for a deeper discussion of these issues). The panellists pointed out that in most countries institutions, including those governing health and education, are simply not set up to deal with this phenomenon. The focus is primarily on early-stage learning rather than continuous development through adulthood.
Youth unemployment is so high in some parts of southern Europe that training older people in skills to keep them in the workforce longer may seem counterproductive. But in China, where businesses have historically used vast quantities of unskilled migrant labour to boost production, the one-child policy and declining fertility as families urbanise mean harnessing the skills and experience of older workers is increasingly important. Other countries will have to think about whether they are providing the right working environments and training opportunities to allow older workers to flourish, or risk coming up against a serious skills shortage.
There is a huge opportunity for healthcare
Much has been written about the public healthcare crisis that a rapidly ageing population could trigger. As we age, our bodies suffer wear and tear with increasing frequency and severity, and if there are fewer people of working age supporting relatively more retired people, then this puts huge pressure on public healthcare systems. Of course, rising healthcare costs are not a problem if more health (a social good) is created but many such systems in Europe and beyond are bloated and inefficient.
However, this focus clearly provides a major opportunity for healthcare businesses. In China, the lack of a robust social security net means working-age people are largely responsible for care of their children, and possibly their parents and grandparents too. If the government were to encourage more domestic and foreign capital by lowering barriers to entry in healthcare, this could provide real long-term growth benefits in terms of higher productivity and higher consumption.
Encourage sabbaticals but not early retirement
Hilary Clinton, the current frontrunner for the Democratic US Presidency nomination, would be 76 by the end of her second term if elected. However, the vast majority of people in formal employment around the world retire much earlier than this. In Europe there is even pressure to bring retirement ages down despite people living longer and fertility rates declining. This is exacerbated by pension systems which do not incentivise people to continue working.
Rather than encouraging people to retire, people should have a choice about whether they want to continue in employment. Studies cited by the panellists show the psychological and physiological benefits of people who remain active into their later years. And, if they remain productive, why should businesses be forced to lose their most experienced people? Instead the panel advocated more sabbaticals for career and personal development to keep people engaged and prevent them 'burning out'.
Key considerations for business leaders
- business leaders should engage with education providers to discuss the needs of and demands on older workers, creating better designed lifelong learning experiences which match the needs of employers
- an ageing population offers a unique and important opportunity for those healthcare businesses who can show innovative ways to keep people healthy and happy into their later years
- lifelong learning, career breaks and secondments should all be considered as business leaders design their people development programmes, as should the needs of older workers more generally, whose experience and resilience make them important drivers of growth.