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How will declining birth rates and an ageing population impact business?

Nick Gold, MD - Speakers Corner

The Great Resignation has forced businesses and governments to start thinking about the future of our workforce. Alongside other seismic events like Brexit and the COVID-19 pandemic, the UK’s skills shortage and ageing workforce have been pulled sharply into focus.

In 2021, an SMF report showed that the ratio of working people to retirees has halved over the last 60 years: from 6:1 in the 60s to 3:1 today. Predictions suggest it will reach 2:1 by 2035.

Businesses aren’t yet prepared for this huge change in their workforce — but they can be. By adopting a new mindset across society, we can ensure we’re equipped to provide work, healthcare and pension support to everyone that needs it.

So how will the ageing workforce in the UK impact businesses — and how can we make sure we’re ready for it?

Ageing workforce: threat or opportunity for businesses?

The digital revolution is forcing us to challenge the assumptions we’ve been making about work and life for the last 20 years.

As the use of technology increases, the perceived value of experience declines. Businesses sometimes see older, more experienced staff members as less dynamic and tech-savvy than workers from the digital native generations. I’m as guilty as anyone of making judgements based on people’s age — it’s a natural instinct.

But the pandemic has forced all workers to get a better handle on technology, regardless of age. And in these unprecedented times, as businesses deal with downturns and the prospect of recession, employees who have experienced difficult economic periods will be able to offer support and insight that younger, less experienced workers simply don’t have.

Re-educating ourselves about the value of experience is crucial to thriving as our workforce gets older and smaller. Redesigning the entire workplace can’t happen overnight — it requires a societal mindset shift. As a society, we often view people who are content in their jobs as unambitious or unmotivated. But there’s no doubt that as you get older you become more content with who you are — and this security and experience can reap rewards for employers.

The changing concept of retirement

The increasing retirement age is often seen as disastrous for future generations. But studies have shown that working longer actually means living longer in many cases. Retiring at 66 rather than 65 can cause mortality rates to drop by as much as 11%.

We’re currently seeing a disconnect between governmental policy and public attitudes to retirement. While the government continues to drive us towards the concept of comfortable retirement, as a society, we’re moving away from this idea.

Instead of retiring at a government-mandated age, people want to feel focused and fulfilled for longer, both from a financial and an intellectual perspective. As people stay healthier and live longer, they seek fulfilment — whether from work or some other purpose — for far longer than previous generations. As businesses, we should be aiming to fulfil those personal needs for as long as people want to work — that’s the key to success with an ageing workforce.

The importance of the individual within a shrinking workforce

As our workforce shrinks, global catch-all policies are no longer appropriate. Businesses need to adjust their focus away from teams or workforces to individual employees.

It starts with recruitment. The advent of video CVs gives employers the opportunity to get to know staff on a personal level right from the start. And job applicants can get their personality across better in a 30 second video than in the most beautiful cover letter. Younger candidates are more likely to embrace the video CV format than older applicants, but no matter how old you are, this format can seriously help your chances of being hired. It comes down to one of my core beliefs, which is that we can all speak — we’re just afraid to.

Beyond recruitment, progression should be a key focus for employers. Not everyone wants to move into management — and many people who are fantastic at their job don’t make good managers.

Leadership and management skills don’t come into play just because you’re paid more to do it. Management roles are undervalued at many businesses because managing people is a completely different skillset to being a great salesperson or a fantastic designer. But because this is often the only career progression available, people are funnelled down paths they don’t want to follow.

Both employers and employees are responsible for changing these ingrained facets of business. And to adapt to our shrinking workforce, we’re going to have to.

How businesses can prepare for a shrinking, ageing workforce

Focusing on the individual is the number one thing business leaders can do to prepare for the future. We need to look at the support and opportunities we’re providing to each employee. We mustn’t judge people on how high they want to climb the ladder, or how much more money they want to make. Instead, we have to focus on what each individual wants to achieve for themselves.

Businesses also need to embrace technology as something that enables people to work more efficiently. There’s a pervasive fear that eventually AI is going to drive us all out of work — but this isn’t the reality. AI can help us automate process-driven tasks, but it can’t replicate the intellectual capacity around them. In that respect, it’s all about experience. Those who have built up experience and expertise over decades are as valuable as ever.

As business leaders, we need to prepare for our workforces to become older, and for the talent pool to become smaller. To do this, we as a society need to adjust our mindsets on everything from retirement to technology to the value of experience. Only then can we become truly equipped for the future of work.

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