Multinational corporations are already aware of the importance of attracting and retaining a gender- and ethnically-diverse workforce, in order to improve innovation and financial performance, and have implemented policies to encourage this. What is perhaps less well-established as a competitive advantage is the idea of an age-diverse workforce. This low level of awareness  is likely to change in the next few years, due to several major demographic, financial and social factors, which are likely to bring major shifts in our working lives. What we’d like to do here, very briefly, is explore those factors, examine some of the longer-term predictions and look at what some companies are doing as these changes emerge. These changes are likely to have a multi-generational effect, making a difference to many of those currently advanced in their working lives, millennials, as you would expect, as well as those very new to the workforce or indeed have yet to join the workforce, and will therefore have a major affect on, for example HR and recruitment practices, in the long term.

Labour-force participation rates

The participation rate of older workers in the workforce in developed countries is increasing. For example, in the US, while millennials now make up the largest percentage of the labour force (35%), compared to Generation Xers (33%) and Baby Boomers (25%) , the labour force participation rates of older people is increasing. This increase started in the 1980s and 1990s. The labour force participation rate for men aged between 65 and 69 was 25% in 1985 and rose to 37% in 2016. It is predicted that by 2020, over one-quarter of the US workforce will be over 55 years of age.

In the UK, the employment rate for 50 to 64 year-olds has increased from 57% in 1995 to 71.8% in 2018,  and it is predicted that by 2020, 30.7% of the workforce will be over 60.

 

Increased lifespans and dropping birth rates

People are living longer and therefore from an individual perspective need to work longer to finance these longer lives and retirement. From a public finance perspective, there are also incentives for governments to encourage people to remain  in the workforce for longer. Due to falling birth-rates as well as rising life expectancy, the old-age dependency ratio (ie the number of people of retirement age as a percentage of those in employment) is increasing significantly. For example in Japan, one of the worst affected countries, in 1960 there were  ten workers for every pensioner. By 2020, its is predicted that for every ten workers there will be seven pensioners. It will be increasingly difficult for governments to fund pensions, due to lower tax revenues, with lower numbers of workers to pay for them.

 

It is likely that governments will need to encourage as many workers as possible to remain in the workforce for as long as possible, as a fiscal imperative. The increases in the state pension age in many countries including the UK, Denmark and Italy are signs of governments already attempting to address this.

 

Social changes

These changes are expected to be so significant,  that they will herald major social shifts. In their 2016 book, “The 100-year life: living and working in an age of longevity,” Lynda Gratton and Andrew Scott, Professors of Management Practice, and Economics respectively, at London Business School, predict an end to the three stage life, of education, career and retirement, and a move to a multi-stage life where “age is no longer a stage”. There will be scope for “much greater individualised sequencing” and workplaces will therefore be more multi-generational with people of very different ages going through similar professional experiences.  Gratton and Scott predict that firms will have to radically change, for example, recruitment practices, in particular graduate recruitment practices, learning and development policies, pay and performance assessment, to adapt to this shift. They argue that while these changes are likely to be slow and piecemeal, nonetheless, “a corporation built for a three-stage working life is profoundly ill-equipped to cope with what is coming” and that it will be up to corporate leaders to realise that.

From an individual point of view, the authors suggest that there will also be major retraining implications, with people experiencing many work transitions throughout their lives, in terms of both sector and skills. People will need to make continuous investments in their skills, finances, relationships and health, in order to take advantage of the age of longevity and make it work for them.

 

How are corporations reacting

Of course many companies have already started to address these challenges, in addition to complying with anti-age-discrimination legislation and removing default retirement ages. A few examples include:

Last year, Microsoft published a White Paper, called “How 5 generations add up to 1 productive workplace”, which looked at some research-based insights into the technology preferences of the five generations in the workforce currently, Traditionalists (born before 1945), Baby Boomers (born 1946 to 1964), Generation X (born 1965 to 1980), Millennials (born 1980 to 1997) and Generation Z (born after 1997). The paper makes suggestions as to how companies can give “individuals the right tools to maximize productivity, and get teams collaborating more effectively.” 

Delivery company UPS has set-up multi-generational action learning groups to generate ideas on how it can drive efficiency and reverse-mentoring is said to be well-established there.  This is in addition to millennials-focused working groups.

A few years ago (2015), Barclays extended its apprenticeship scheme for the long-term employed to people over 50.

On a broader note, in August this year, professional services firm PwC announced that it was opening up a new recruitment route in the UK, called the PwC Flexible Talent Network, to meet demand from people to work flexibly, and make a move away from traditional working patterns. Over 2,000 people registered for the Talent Network with two weeks of its launch. PwC is hoping to attract more diverse talent, who might previously have dismissed the firm as an option. People in the network will be eligible for holiday pay, sick pay, a bonus and pension and will agree a contract in advance, including a number of days that suits their lifestyle.


Sample recommendations for the age-agnostic workforce

 

  • Suggested recommendations for businesses to attract and retrain older workers and encourage an age-agnostic workforce include:
  • Re-evaluate existing hiring practice and promotion plans to identify any unintentionally discriminatory practices.
  • Introduce of broad, effective diversity training to encourage inclusive thinking when considering potential promotions or new hires
  • Consider opening up internship programmes to existing employees, which could allow staff to develop new staff or explore career changes.
  • Ensure that leadership training is open to all qualified staff, rather than just graduates of specific training programmes. 
  • Re-evaluate existing hiring practice and promotion plans to identify any unintentionally discriminatory practices.
  • Introduce of broad, effective diversity training to encourage inclusive thinking when considering potential promotions or new hires
  • Consider opening up internship programmes to existing employees, which could allow staff to develop new staff or explore career changes.
  • Ensure that leadership training is open to all qualified staff, rather than just graduates of specific training programmes. 


What about AI?

Another underlying factor in the potential importance of retaining older workers is the fact that companies increasingly see investing in retraining and upskilling existing workers as an urgent business priority, due to the disruptive nature of digitization, automation and advances in artificial intelligence. A recent McKinsey Global Institute article notes, that earlier workforce transformations took place over many decades, which allowed older workers to retire and allowed new entrants to transition to changing industries. The pace of change of this transformation is potentially much faster and the task which economies and firms will face is likely to be how to train and deploy major numbers of middle-aged workers who are mid-career.

Conclusion

Major demographic changes, especially an increase in life expectancy, are likely to lead to significant shifts in our working lives. These changes are already starting to take effect for employees currently in the workforce and will likely have an even greater effect on those yet to join. These changes will mean that governments, corporations and individuals will all have to adapt to new ways of working and living. It is essential that companies engage as soon as possible with the challenges of attracting and retaining a multi-generational workforce, in order to prepare for the major social shift ahead.


This article was first published in the January issue of the Armstrong Craven Review.

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