Historically low birth rates and increasing life expectancy mean that Europe’s working population is ageing fast. In 2012, the continent reached an inevitable demographic tipping point. The percentage of the population at working age fell for the first time in 40 years. It is now forecast to fall every year until 2060.
This inescapable trend will have profound implications for governments, citizens and companies across Europe. The fact that Europe has seen its demographic dividend expire in a time of economic frailty will only compound the challenge.
Retirement as we think of it today could soon become a thing of the past. State pension and health provision will come under intense stress. Companies will have to achieve a step change in their attitudes to older employees, and, more broadly, working practices.
To explore some of the issues that senior executives will have to address as they seek to adapt their organisations to this new world, The Economist Intelligence Unit, on behalf of Towers Watson, surveyed 480 senior executives at companies across Europe. Almost three quarters (71%) of them expect the number of their employees aged 60+ to increase by 2020, including 22% who expect it to increase significantly.
The report explores some of the key issues that senior executives will have to address as they seek to adapt their organisations to this new world.
- Most companies know they have to change, but not all. By 2020 senior executives believe that managing an ageing workforce will have moved up the human resources agenda, from just the number seven issue today, to a top three concern. Demonstrating that, almost half (46%) say that they will implement changes to ensure that the skills of older employees remain up to date. Significant minorities will also adapt their structures to ensure that older workers who reduce work hours or responsibilities retain their status within the company and continue to feel valued (32%) and look at how to address intergenerational differences in their workforces (28%).
- Adapting work so it suits older workers is good for all employees. As a result of the ageing workforce, almost half (43%) expect greater employee demand for benefits and over one-third (35%) expect increased flexible working. Although ageing may be the prompt, the changes employers are implementing will benefit all employees. Over half (56%) will offer more flexible working hours or working from home, half will change the employee benefits they offer and 48% will give employees more choice over their benefits.
- Employee priorities are shifting from money to lifestyle. Although managers think the top concern for employees now is job security (64%), by 2020—when the economic climate and job market are expected to have improved—work-life balance and employment flexibility are expected to be more important priorities. Nearly half (43%) of employers also expect employee demand for healthcare and retirement provision to grow, with the majority (55%) believing that the cost of providing healthcare benefits to an ageing population will increasingly fall on the employer.
- Managing talent will be a significant driver of change in 2020. As Europe recovers from years of economic crisis, companies will begin to shift their focus away from cost control, with new priorities such as people management (cited by 42%) emerging in the years to 2020. Almost half (46%) of survey respondents say that the ability to manage talent will be one of the top drivers of change in their business in 2020— second only to new technologies and globalisation.
Chosen excerpts by Job Market Monitor. Read the whole story at Is 75 the new 65? Rising to the challenge of an #ageingworkforce – Towers Watson.
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