The impact of an ageing population on the workforce
With life expectancy on the rise, you might expect people to continue working longer. But actually, a report by CIPD claims the opposite – despite a population that is living longer, people are actually exiting the workforce earlier! What’s more, there are fewer new people entering the workforce due to lower fertility rates and more time spent in education.
I believe it is important for employers to understand how an ageing population might affect them, and some of the ways they can adapt. So I decided to look at this in a little more detail.
We are staying alive for longer
Life expectancy has been on the rise for more than half a century. In fact, since 1950, overall life expectancy in the UK has risen by over 13 years!
Naturally, life expectancy still varies hugely from country to country. For example, while people only live for an average of 54.4 years in the Central African Republic, the average age of death in Hong Kong is a whopping 85.3!
But regardless of regional specifics, global life expectancy is on the rise. And the reason I’m mentioning this, is because it has significant implications for the workforce.
Implications for business
According to the CIPD (Chartered Institute of Personnel and Development), employers are facing a demographic crunch. And in their report, “Ageing gracefully: the opportunities of an older workforce” they explain what this means.
I recommend reading the full report, because they go into a lot of very helpful detail. But one of the points they make in short, is that our population is getting older. Which might not seem too significant, until you compare this with the following two facts:
- Retirement age is not really keeping up with life expectancy – it is still lower today than it was in 1950; and
- Fewer new people are entering the workforce – through a combination of lower fertility, and young people spending more time in education
In other words? Our workforce is shrinking. Maybe not every workforce. Maybe not your workforce. But as time goes on, the wider talent pool we all have access to as employers, seems to be getting smaller.
Navigating the challenges of a candidate-driven marketplace
One symptom of a shrinking workforce is a candidate-driven marketplace. In other words, a job market where the number of people looking for jobs, is smaller than the number of jobs on offer.
In a candidate-driven marketplace, talented candidates can afford to be picky. Because chances are high that more than one organisation needs their skills. And this can be a challenge for organisations who are trying to hire the best.
You can remain competitive in a candidate-driven marketplace, by taking care of a few key areas of business. For example:
- A faster recruitment process. The time-to-hire has a direct impact on whether or not you will snap up top talent. That super star you interviewed last week? It probably wasn’t their only interview. And if one of your competitors gets there first, with an offer they can’t refuse, then you’ve lost the race. Therefore, if you can streamline your recruitment process, you can give yourself a first-mover advantage.
- A competitive offer. If you’re constantly calculating how little you can get away with paying your employees, then you’re already at a disadvantage. Sure, we already know that more money does not necessarily equal better performance. But you’re certainly going to struggle to recruit and retain the best people if you’re paying them a pittance.
- A strong culture. We know from experience that having a strong culture creates a successful business. And this is because your employees are genuinely happy and engaged, and are giving you their all. But remember that ‘good culture’ is not just about ‘sushi at your desk’ – if you want to see what good culture is, then watch our exclusive interview with Professor Sir Cary Cooper here.
Following these steps will help you thrive in a candidate-driven marketplace. Not just by helping you to attract the right talent in the first place, but by helping you to retain the stars you’ve already hired. And I don’t just mean retaining people who will be looking for jobs elsewhere – I mean retaining the people who might be thinking about their retirement, too.
You can encourage older people to continue working by focusing on ‘Good Work’
Often, your most experienced employees are your older employees. Not always, of course. And you certainly shouldn’t make that assumption on face value. But with age, often comes experience. Experience of the job role in question, and experience of how your organisation likes to operate. And experience can bring huge benefits to the workplace.
So in a world where our life is increasing, but our working lives are getting shorter, you can help your organisation get an advantage, by making your business more appealing to those who might otherwise be considering retirement.
The CIPD report says that you can do this by focusing on ‘Good Work.’
My interview with Peter Cheese, CEO of CIPD, talks a bit about what ‘Good Work’ involves – after all, this is part of the CIPD’s core message. But in a nutshell, I am talking here about creating the type of environment that lets people work in a way that is good for them.
And the older end of your workforce is a great example of this working in practice. You see, what the CIPD report observed, was that sometimes, older people leave their regular jobs, but end up falling into self-employment, rather than full retirement. And what this could suggest, is that they simply need more flexibility in their lives – flexibility that they could have got from their employer, if their employer had been more sensitive to their changing needs.
Are you thinking about the changing needs of your workforce, as our population continues to age? And are you making a genuine effort to accommodate these needs? Because if you’re not, then you might find yourself suffering a workforce that increasingly shrinks, as the demographic crunch continues to intensify.
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