The impact of longer working lives
Can an ageing population keep pace with shifting trends in the world of work, asks Cavendish Interim Management’s Mala Manku
The UK’s population is getting older – a fact that is affecting everything from employment policies and pension schemes to the ability of workers around the world to keep pace with innovation and structural changes.
Coupled with lower birth rates and a delay in having families, this demographic trend has far-reaching implications for the economy, presenting both opportunities and challenges to business and the world of work.
Employed for longer
A study earlier this year found that a third of the British workforce expects to retire after their 70th birthday, up from just 17 percent in 2010. This is partly a result of the rising retirement age, which will increase for both men and women to reach 66 by late 2020. Further changes are expected to increase retirement age to 67 between 2026 and 2028.
Among the opportunities are the contributions older people make to the economy, whether they’re wealthy and spending their final salary pensions, or still working and making tax and national insurance contributions.
For some of those still working, it’s a choice that can entail retiring from a decades-long career to pursue gainful employment in a field that they have a passion for. This brings about personal, social and economic benefits.
For others, it’s down to financial need. The Independent reports that between 2016 and 2018, the levels of both secured and unsecured debt held by the over-65s has increased from £70bn to around £85bn. Pension shortfalls, the launch of pensions freedoms and unforeseen expenses are all contributing factors. Crucially, a lack of choice when it comes to staying in employment often equals less job satisfaction, less engagement and more stress.
The 2008 economic crash has played a central role in this gap between the wealthy baby boomers and the would-be retirees who are living off credit. At the time, many older savers lost vast swathes of wealth. Indebtedness among the over-65s grew, and this trend has continued, with credit card and loan debt threatening the retirement years of one in five.
Meanwhile, younger people graduating around 2008 found the jobs market to be stagnant – which has contributed to the rise of today’s gig economy. Many millennials and Gen Z work in a way that is unrecognisable to their parents’ generation. Retirement seems a distant, perhaps unattainable, dream. Many work irregular hours and think nothing of dipping in and out of employment in between travelling or simply taking time out. And it is not impossible that this style of working will be carried into their senior years, with periods of work interspersed with regular time off.
Global power shifts
Despite the bad press the gig economy receives, it is arguably preparing the next generation for changes in global economics and the employment climate at home.
As power shifts from West to East, young startups and entrepreneurial individuals are taking advantage of fewer barriers to entry in global markets. But while we can prepare children for business operations and transactions with an Eastern focus, it’s significantly harder to retrain an ageing workforce.
It’s made harder still when the East is a much larger, more complex, geographic area than the ‘West’, encompassing countries as disparate as China and India. A successful global business environment requires understanding in terms of language, culture and corporate responsibility for all of these.
A 2014 study found that populations in advanced economies are pessimistic about the financial prospects for the next generation. People in the emerging economies of Asia tend to be far more optimistic than Europeans that their children will have better financial prospects than they have had. This is a reflection of the times.
Europe is still healing the wounds of the 2008 crash as it gets hit by new challenges – Brexit uncertainty being one of them.
To protect ourselves, the mentality of work has changed. But as our younger workers adapt, and perhaps thrive, in this new normal, will our older workforce be relegated to the menial jobs that are already losing out to technology? Unless we support broad, comprehensive retraining for this age cohort, we’re likely to dig even deeper divides.
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