Workforce Planning: Aging and Employment

Module 8: International: Pressures and Lessons

Barbara McIntosh, Ph.D., SPHR 2010

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International Pressures and Lessons

• Aging is a global phenomenon.• Projected labor force changes in EU and G7

countries.• Retirement expectations.• Economic implications.• Work intentions post retirement.• International (universal) age-related HR

practices.

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Aging Is a Global Phenomenon

All countries face demographic transitions:> Older population.> Slowdown in growth of 20- to 64-year-olds,

the primary participants in the labor market (OECD, 2006).

Effect on labor market:> Retirees not being replaced in Japan, Italy

and France.> Small growth in Germany.

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The G7 Labor Force Changes: Five-and 10-Year Projections

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Employment Realities and Retirement Expectations

• In 2001, the EU set a goal to increase employment of older workers to 50 percent by 2010 (European Council, 2001).

• The goal in the EU is to raise the effective retirement age by approximately five years by 2010 (European Council, 2002).

• In G7 countries, retirement from a primary job is at about age 60--slightly later for full retirement (AARP, 2007).

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2005 Employment Rates for Ages 55-64 in EU-15

Country Women Men Total

Austria 22.9 41.3 31.8

Belgium 22.1 41.7 31.8

Denmark 53.5 65.6 59.9

Finland 52.7 52.8 52.7

France 35.2 40.7 37.9

Germany 37.5 53.5 45.4

Greece 25.8 58.8 41.6

Ireland 37.3 65.7 51.6

Italy 20.8 42.7 31.4

Luxembourg 24.9 38.3 31.7

Netherlands 35.2 56.9 46.1

Portugal 43.7 58.1 50.5

United Kingdom 48.1 66.0 56.9

Spain 27.4 59.7 43.1

Sweden 66.7 72.0 69.4

EU-15 35.4 53.1 44.1

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Retirement Expectations in the G7

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Economic Implications

• Retirement age has not, in general, shifted upward worldwide.

• Significant talent gaps will exist if retirement age remains the same.

• Increasing dependency ratios are not sustainable.

• Pension affordability is a universal problem.

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Headlines Reveal Common Issues

• JAPAN: “Fiasco over pensions worsens in Diet,” Yomiuri Shimbun, December 14, 2007.

• GREECE: “Greeks strike over pensions,” Bloomberg News, December 13, 2007.

• SINGAPORE: “Few Singaporeans dream of retiring young: survey,” Channel NewsAsia, December 13, 2007.

• CZECH REPUBLIC: “Czech PM sees rocky 2008 over pension reform,” Reuters, Dec. 12, 2007.

• INDIA: “Pension bill may outstrip wages this fiscal year,” Economic Times, Dec. 12, 2007.

• KENYA: “State to stop free pension plans for all civil servants,” Business Daily Nairobi, Dec. 13, 2007.

• NIGERIA: “Pension Arrears Now 2 Trillion Naira (17.188 billion US dollars) - NLC,” allAfrica.com, Dec. 12, 2007.

• UK: “Ministers blamed for stalled pensions lifeboat,” by Phillip Inman,Guardian, Dec. 10, 2007.

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Work After Retirement? Global Economic Uncertainty

• Country-specific/dependent on: Custom. Mandatory retirement. Availability of jobs. Attitudes toward age.

• Universal: Shifting dependency ratios (fewer people working and

therefore supporting retirees). Financing pension programs is in question, so more

older workers face economic uncertainty.

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G7: Reported Work Intentions

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How Country Differences Affect HRM

• Cultural factors.• Economic systems:

> Effects of recession.> Labor costs.> Number of hours worked.> Paid time off.

• Legal and industrial relations factors.

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Perceptions of Employer Support

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Global Differences and Similarities in HR Practices

• Employee selection procedures.• The purpose of performance appraisal.• Training and development practices.• The use of pay incentives.

* Based on assessment of best practices in 13 countries starting in 2002.

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Age-Related Employment Practices Implemented and Under Consideration in the G7

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Best Age-Related HR Practices in the EU

 Universal topics• Job recruitment.• Learning, training and lifelong learning.• Career development.• Flexible working practices.• Health protection and promotion and workplace

design.• Redeployment.• Employment exit and the transition to retirement.

 

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Perceptions of Workplace Policies Supporting Older Workers in the G7

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Staffing the Global Organization

Offshoring, outsourcing:• Significant increases in the number of

jobs moved in the future.• Value.• Movement to include managerial jobs.

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Age in a Global Environment

• Form global HR networks.• Promote age in global outsourcing.• Acknowledge differences in intergenerational

perceptions.

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Intergenerational Perceptions of Work-Related Competencies in the G7

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Aging Workforce Learning Modules Conclusions: Individual Level

• U.S. workers want to work longer for monetary and non-monetary reasons.

• Older workers are healthier and living longer than previous generations. They are able to work!

• Economic uncertainty (changing pension schemes, low retirement savings, Social Security vulnerability and increasing health care costs) may necessitate working longer.

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Learning Module Conclusions: Organizational Level

• Labor shortages are projected given changing demographics.

• Aging workers constitute an available, experienced labor pool.

• Strategic reviews and actions should include:> Existing workforce audits.> Organizational culture analysis.> Human resource programming, including increasing

workplace flexibility, managing career transitions and developing multigenerational relations.

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Learning Modules Conclusions: Societal Level

• Keeping society productive with an aging workforce is a shared responsibility.

• Traditional social and economic retirement support programs are not as secure as the were in the past.

• Creative economic and employment and training legislation needs to be supported.

• The transition difficulties are shared by virtually all industrialized nations.

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Recommendations for HR

• Establish an organizational culture where age is respected.

• Manage the aging workforce strategically.• Become an age-friendly employer of choice.• Create a flexible workplace, especially with

respect to hours of work.• Develop multigenerational relations.• Examine existing policies and practices through

an “age” lens.