The benefit of an older workforce through the recession
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Across the world, businesses are battening down the hatches, preparing to weather the storm brought by the credit crunch and subsequent downturn. As a consequence, many see employees’ upcoming retirements as a cost-reducing measure; however, this can be a short-sighted and even dangerous attitude.
Many older workers are keen to put off their retirement in light of current economic conditions – and employers should be taking advantage of this. In an economic downturn, business critical areas need to be strengthened, through retaining experienced staff, although cuts may take place elsewhere to reduce expenditure. The knowledge, experience and skills of older employees who may have worked through such conditions before in their career, become even more invaluable during troubled times. Furthermore, the brain drain caused by retirees leaving can do serious damage, not least because employers may be forced to spend precious resources recruiting, up-skilling and training new staff to fill the gaps, either now or when the current economic cloud finally lifts and there is a rush to hire experienced hands.
Crisis
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In addition to the problems facing many employers brought by the credit crunch, most are unaware that they also face a “hidden” crisis. Baby Boomers are leaving the labor force as they retire and there are fewer younger workers to take their place - leading to a potentially disastrous talent shortage for employers.
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According to the Organization for Economic Co-operation and Development (OECD), between 2025 and 2030, 12 million people a year will be leaving the global workforce.
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By 2050, it has been estimated that, in Europe, for every one person in employment there will be one person in retirement.
“Older adults are the largest available untapped workforce segment, most of whom are still healthy and able to contribute long after they officially retire,” commented Terence Liu, General Country Manager, Manpower Taiwan. “Both employers and employees need to rethink their views of older workers and their impending retirements, in order to adequately plan for business needs of the future. Many employees may be happy to continue to work, but not on the same terms. Employers need to think about offering them an attractive package with built-in flexibility, such as part time work through job-sharing”
Retirement
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Employers often make the mistake of assuming that all employees want to retire as soon as possible, yet, according to the US-based American Association for Retired Persons (AARP), nearly 70% of workers’ who have not yet retired say that they plan to work into their retirement years or never fully retire.
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Training and development tend to fall away as retirement age approaches and, if an employee is to be tempted into remaining in the work force it is likely to be with the offer of a higher level of compensation for the same full-time position, rather than an opportunity to adjust their work/life balance appropriately.
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Those most likely to retire are those who have the financial flexibility to do so, BUT who paradoxically tend to be those with the talent employers are most in need of.
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Financial instability due to the economic downturn has meant that many prospective retirees have been forced to put their plans on hold. Falling house prices and dwindling pension portfolios have forced many to remain in the workforce for longer than planned to be assured of a financially comfortable retirement.
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Employers should look on this as an opportunity to renegotiate plans for the future and help employees feel positive about continuing to work, for example, facilitating a paid sabbatical or authorizing a slimmed-down work week to allow employees to start to fulfill some of their retirement dreams.
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