Global aging affects labor market

Global aging affects labor market

The global population is aging, and forecasts show that this trend will further continue. In Monaco, the country that leads the list of the countries with the highest share of older people in 2022, 35.92% of the population is over 65. By 2100, the list is expected to be led by Albania, with 49.08% of the population being elderly. An aging population puts pressure on the labor market. The World Economic Forum suggests that recruiting, reskilling, and respecting the strengths of older employees could be a solution to this demographic challenge.

Demographic shifts have always come under scrutiny as they have the potential to significantly impact economies by moving market forces and changing social landscapes. However, over the last few decades the scientific focus on demographic changes has been particularly strong as data has revealed that in many countries around the world, the population is aging. In 2022, globally, there were around 771 million people aged 65 and above, equivalent to approximately 10% of the global population. At the same time, predictions suggest that by 2050, the percentage will increase to 16%, reaching 24% by 2100.

Among the countries with the highest number of older citizens in 2022, Monaco leads the list with 35.92% of its people being 65 and above. Japan comes next with 29.92%. The list of the top 10 countries with the highest number of individuals aged 65 and above includes Saint Helena, Italy, Finland, Puerto Rico, Portugal, Greece, and Martinique. In contrast, the lowest percentage of an older population was recorded in Qatar at 1.52%. Other countries with a low number of people aged 65 and over are Uganda, Zambia, United Arab Emirates, Chad, Mali, Afghanistan, Cote d’Ivoire, Niger, and Gambia.

Predictions show that in many countries the population will continue to age even further by 2100 reaching 49.08% in Albania, 48.9% in Puerto Rico, 45.41% in American Samoa, 44.44% in South Korea, and 44.05% in Jamaica.

Fig.1. Aging population around the world

Source: Visual Capitalist

Among other concerns related to health care, housing, and pension programs, an aging population brings questions related to the employment market too. The global workforce is aging, and already in the coming decade, 150 million jobs are expected to shift to employees aged over 55. This new reality presents new rules, and companies and governments around the world must adapt their strategies to integrate older workers. According to the World Economic Forum, there are three steps that companies can take to empower older workers.

First, companies should try to understand the needs and motivation of older workers in order to retain and recruit them. For instance, before the age of 60, a worker prioritizes good compensation as the primary factor for motivation whereas after 60, factors such as interesting work, flexibility, and autonomy become more important. Therefore, to motivate older workers, companies should allow part-time work or freelancing.

Second, companies should implement reskilling programs designed for older workers. While it is true that workers over the age of 55 give less importance to learning and growth, with only 3% classifying this as a top factor for motivation compared to 8% for workers aged from 18 to 24, older workers become interested in training if it promises to make their work more interesting. Therefore, specially focused reskilling programs can motivate older workers and allow them to improve their competences.

Third, giving space to older employees in the workplace has the potential to bring a great deal to companies. Older workers are, in general, more loyal to their employers and are willing to pass on their skills when the environment allows for it.

Demographic shifts are already unavoidable, and soon employers will need to deal with the new reality. Those companies that invest in recruiting, reskilling, and valuing the strengths of older employees will not only benefit by closing the labor gap but also by having a productive, balanced, and diverse workforce.