Great special section in this week’s Economist on the developed world’s aging population.  Many good articles but one that really got my attention was “Work Till you Drop- Retirement has got out of Hand” http://www.economist.com/specialreports/displaystory.cfm?story_id=13887861 .  The article talks about what retirement means today and how it is being rapidly redefined by a variety of economic and societal forces.  There are significant workforce planning implications to each. 

A few of the more interesting  points from the article:

Long Retirements, Getting Longer:  Based on current OECD estimates, men in member countries (http://www.oecd.org/document/58/0,3343,en_2649_201185_1889402_1_1_1_1,00.html )can expect to live just under 20 years after retirement, women over 20.  U.S. figures, in the absence of France to bring up the average,  are only slightly lower.  More to the point, these numbers are probably understated, as they are based on current, not future, life expectancies.  This is up 50-100% as compared to the 1970’s.

From a workforce planning standpoint, this points to the need to reconsider both when people retire, but also what retirement actually means.   Between the collapse of many pension schemes, looming insolvency of Social Security in the U.S. and the fraying of the safety net in other western countries, it is becoming increasingly improbable that societies will be able to support retirees for this length of time.  The age at which people retire has to increase, and workforce planners need to build this into their projections.  Just because people are working longer they may not be working as much; a larger complement of older part-time employees also need to be included in any FTE projections.

Older Workers can be Retrained,  Companies Just Aren’t Doing it: The article notes that while older workers are sometimes thought less able to pick up new skills, particularly pertaining to IT, employers tend to allocate a far smaller portion of their training resources to older workers than young ones.  With a similar amount of training these workers may be prove to be just as adept as their younger counterparts. While this approach may be founded on the premise that investments in older workers are short-term in nature, this becomes much less true if the age at which employees retire begins to increase significantly.  Well trained and equipped workers are more likely to stick around than those who are less well prepared for their roles.

Workforce planners should focus not just on numbers in making their projections, but also on skills, abilities and training.  I believe we will see the paradigm shift from older workers simply being a font of knowledge from which information is passed, but also where new learnings and information is passed in the other direction, to the older workers as well.

Older Workers Want to Work Longer

Depending on the country, between 45-60% of workers in big European countries have expressed a willingness to work longer, in exchange for more robust pension benefits. The exception was Germany, where only 25% had an appetite to stay on (Lousy working conditions? Too much fun on vacation?).  Workers do want to scale back, however, and take advantage of part-time opportunities noted above.

This begs the question, of course, as to whether or not the pension carrot can be made big enough to justify the extra time on the job.  As workforce planners start to develop strategies to fill projected gaps in the workforce (and cost them out), the cost to make the reward big enough to drive the behavior of the older worker must not be so big as to defeat the purpose.

While the combination of the current economic crisis and a pending demographic one seem to be a dangerous two punch threat to the long-term health of the world economy, there may in fact be some unexpected synergies.  We are already seeing many workers forced to work longer, a disappointing outcome for them to be sure, but a source of potential relief to an otherwise constrained labor force.  Companies that leverage workforce planning to foresee and take advantage of these demographic trends, by providing viable part-time opportunities and sufficient training to older workers will come out ahead. That said, things aren’t just going to “work out”, and companies that fail to plan ahead will just as certainly be caught flat footed and unprepared.