By: Debbie Howard
Although Japan is the undisputed leader in having the most rapidly aging society in the world, it need not feel lonely. The challenges presented by aging societies in countries worldwide are far-reaching, encompassing everything from housing to healthcare to retirement financing.
Statistics indicate that 1 in 10 people are aged over 60 in today’s world population. But by the year 2050, that number will rise to 1 in 5 people.
Of course, this overall worldwide average includes many developing countries, which tend to have younger-aged populations. So in developed countries such as Japan, the U.S., Australia and much of the European Union, the ratios of those aged over 60 among the population will be much higher. For example, as has been widely reported, the Japanese government forecasts that by the year 2025, about 1 in 3 will be aged over 65 — that’s compared to 1 in 5 right now.
With these dramatic statistics in mind, Ernst & Young focused on the business risks presented by the onset of an aging workforce in its 2007 report titled “Aging U.S. Workforce Survey: Challenges and Responses — An Ongoing Review.”
The report notes that the aging workforce is a critical business risk that impacts all key business risk areas. It points out that companies are beginning to recognize that aging workforce issues will require new strategies to address:
- Talent management and succession planning;
- Healthcare benefits; and
- Retirement costs.
So far, companies have primarily had a reactive stance when it comes to managing the challenges brought on by these changing demographics. However, Ernst & Young’s study shows that there is growing acknowledgement that aging workforce issues merit more attention.
For example, for two years in a row, more than 60% of executives surveyed admit that retirement will cause a “brain drain” or talent gap in critical functions in their organizations. Clearly, companies need to find ways to harness the experience of senior employees and make sure that this know-how is passed smoothly along to next generation workers.
Further good news is that there is growing awareness that retirement is a process rather than a one-time event, and that employers must help employees bridge the gap between their final working years and the start of retirement. Along with this, there is growing acknowledgement that one of the most important aspects of the aging workforce phenomenon is that as employees age, they not only have their own retirement issues to face, but also that of caring for their own aging parents.
In the U.S., over half of all major corporations currently offer resources to support their employees who have parent care issues — primarily via resources and referrals provided through EAP programs. Some studies claim that such programs deliver a 5~10% return on investment (ROI) in terms of reduced absenteeism, enhanced productivity and lower turnover. Of particular note is the improved “presenteeism” (the extent to which employees are focused on work tasks) that results when employees have adequate support.
Considering the statistics, companies that begin acting now to address aging workforce issues will no doubt benefit significantly in the future, both financially and non-financially.
Debbie Howard is Chairman of CarterJMRN and President Emeritus of the American Chamber of Commerce in Japan.
Originally Published in Nikkei Weekly, 20th July 2009
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