Keeping Older Workers on the Job
By Cindy Wagner
Governments in many developed countries are seeking ways to keep aging
populations from becoming a drain on future national resources. With fewer workers
providing benefits for greater numbers of retirees, the push is on to keep older workers
working. This brief analysis examines what is behind this trend and what some of its
implications may be.
Background: A recent U.S. General Accounting Office report
summarizes the retirement policy reforms initiated in Japan, Sweden, and the United
Kingdom. Japan, facing the most severe aging trend, has enacted substantial benefit cuts
to its national pension system, which will require some workers to work to later ages.
Sweden changed the entire structure of its social security system from
"pay-as-you-go" to a defined benefit plan (where the pensions that retirees
receive depend on what they put into the system). The United Kingdom is phasing in a
higher pension eligibility age for women, making it equal to that of men (65). The new
system will also reward people who stay on the job longer with higher pensions when they
do retire.
Demography: Life expectancy at birth in the more-developed
countries is projected to increase from 75.8 years currently to 81.6 by 2050, according to
UN data. This will raise the median age of the population in these nations to well over 50
in Japan and Sweden by 2050, and to about 47 in the United Kingdom. In the United States,
median age will grow from about 35 in 2000 to over 40 in 2050. The trend is now expanding
to Latin America, where the number of people age 65 or older is projected to more than
double between 2000 and 2025--and then double again by 2050, according to the Population
Reference Bureau.
Economics: Many forecasters see a coming jobs crisis--not enough
workers to fill needed jobs (see "The Impending Jobs Crisis" in the March-April
2003 issue of THE FUTURIST). This shortage will be exacerbated if workers 65 and older
continue to drop out of the workforce in high-income nations. Businesses may need to come
up with more incentives to keep older workers on the payrolls longer.
Government: Reforms already initiated by Japan, Sweden, and the
United Kingdom are designed to reduce public costs for growing numbers of retirees. In the
United States, the percentage of the budget going to Social Security has grown steadily,
surpassing the military's shrinking portion in the early 1990s. As less money is available
for meeting other national priorities, policies might become increasingly drastic, such as
completely privatizing Social Security.
Society: Keeping older workers in the workforce longer will
likely require new education and training programs to keep their skills up to date.
Attitudes will also have to change to reduce discriminatory practices that undervalue the
intangible assets that older workers bring to their jobs, including experience, corporate
memory, and relationships.
Source: "Older Workers: Policies of Other Nations to Increase Labor
Force Participation" (GAO-03-307, February 13, 2003), U.S. General Accounting Office,
441 G Street, N.W., Room LM, Washington, D.C. 20548 Web site www.gao.gov.
Additional data from United Nations Population Division, Population
Reference Bureau, and the U.S. Office of Management and Budget.
