PROJECT M
 
Christian Werner
Richard Fiesta
Yves Barou

Conference Call: A seller’s market?

Aging societies may tip labor markets in favor of workers, argues Christian Werner as he discusses the future of work with Yves Barou and Richard Fiesta

Conference Call: A seller’s market?

Aging societies may tip labor markets in favor of workers, argues Christian Werner as he discusses the future of work with Yves Barou and Richard Fiesta


Christian Werner

Richard, Yves – thank you very much for joining. With more and more people living 20 to 30 years in retirement, how do you expect this to influence the future of work?

Richard Fiesta

The average retirement age in the United States is roughly 61 years. Two decades ago, it was 57. While some people continue to work because they are able and willing to, others are forced to recoup losses of projected retirement income. Overall, I expect to see more telework and more frequent changes of jobs among older workers. We expect younger workers, who may now be in their 20s, to have five to eight jobs by the time they are in their 60s or 70s.

Christian Werner

I agree, Richard. We will see a more diverse workforce, also in emerging markets, and we may require legislation to address diversity quotas and compulsory pension rates in mature markets. Changes in consumption habits and new technologies such as digitalization will foster new jobs. And finally, employers will be forced to introduce flexible working hours and incentive schemes including pension plans to address the next generation of workers’ demand for a better work-life balance. Yves, what do you think?

Yves Barou

France has a tradition of early retirement dating back to the 1970s when workers were offered a bonus if they made way for younger generations. This became something of a drug, and the habit is difficult to stop today.

Richard Fiesta

In the US, one in five people over 65 is still working, slightly over 7 million workers. They generate approximately $120 billion a year in tax revenue, which is one factor that is often overlooked in the debate about older workers’ productivity and effectiveness.

Christian Werner

With regard to work: Where do you see the benefits of an aging society, Yves?

Yves Barou

As individuals, we obviously live longer. But from a societal perspective, that extra bit of time has to be shared between work and retirement. It is simply unsustainable for societies if we spend ever more time in economic inactivity. I believe there should be no official retirement age; it should rather be a personal decision reached in collaboration with the employer.

Christian Werner

I tend to envision work in the later stages of life as a knowledge transferYves Barou How do you expect aging societies to affect training on the job, Yves?

Yves Barou

Training, and retraining in particular, will play an ever more important role. Today’s jobs require a different skill set roughly every 10 years. With an aging work force, we have to extend the access to full-time training. And I am talking about programs of six months and more, not just a week. We definitely have to invest more in the human capital at hands.

Christian Werner

Economically speaking, the growing life expectancy turns the labor market into a seller’s market, especially in mature economies. Human capital strategies need to attract, retain and manage not only the younger ones, but all generations. This is a very new experience for HR. It means, for example, that employers understand how workers of different ages can be reached in their specific framework.

Richard Fiesta

It starts with having a human resources department that is nimble, open and receptive to hiring older workers. They have strong track records in almost every metric: their work ethic, staying on the job and bringing in their knowledge.

Christian Werner

What do you think about second careers? Do you have experiences with that in the US?

Richard Fiesta

Yes. If a person is healthy, we are seeing more and more of that trend over the last 10-15 years. In it, people often take a different approach from their first career. But clearly, good health is the basis for much of what we discuss here. Americans 65 years and older make up 13% of the population, but they account for more than 40% of all US medical spending. So there is a need for more preventive care both in the workplace and in our healthcare system.

Christian Werner

And health is much more than not being sick. Younger generations demand a healthier work-life balance than the boomers did. So an attractive workplace has to be flexible, offer a healthy company canteen and possibly even health-related adjustments to production lines. All of this goes to ensure that workers can lead longer working lives, possibly up to age 70 and beyond.

Yves Barou

I tend to envision work in the later stages of life as a knowledge transfer in which older workers share their experience and coach younger colleagues. Such a concept could be a critical link between working life and life as a retiree. But companies are not yet fully ready to create such jobs.

Christian Werner

… even though a mixture of younger and older workers helps increase the productivity of the entire workforce.

Richard Fiesta

Unfounded concerns about older workers’ health and productivity are a huge barrier. A large body of literature, both by academia and government agencies, shows that absenteeism is lower among older workers. Problem-solving is just as good and job performance is equal regardless of age. Ironically, US workers over 55 have the lowest unemployment rate of all age cohorts. However, if you are unemployed and over 55, then you have to expect far longer unemployment periods than other age groups with comparable education and training.

Christian Werner

Generating an adequate income in retirement remains a major challenge Christian WernerAging societies will also have to find new ways to finance retirements, possibly by working longer. What are your thoughts on this?

Richard Fiesta

It has been proposed to raise the retirement age from 67 to 70, which I find problematic since that represents a benefit cut and hardly considers jobs requiring physical labor.

Christian Werner

Generating an adequate income in retirement remains a major challenge. We need a new understanding of how generations work together. We cannot place ever more financial pressure on younger workers to sustain today’s retirees while we have to acknowledge the entitlements of the older generation as well. My conclusion is: Don’t force people into retirement. There is a strong need for multiple sources of retirement income and one of them is working longer.

Richard Fiesta

I see the difficulties, particularly for the majority of workers whose wages have stayed largely flat for the past 30 years. It is extremely difficult, if not impossible, for them to save for retirement. Personally, I plan to work past the legal retirement age – health permitting – either full-time or part-time. But unfortunately, more and more older workers do that simply to pay for basic necessities such as food, housing and medical services. The recession, on the other hand, has made finding any kind of work difficult.

Yves Barou

Managing employees in their 60s and older is a new challenge for companies; I tend to call this a career’s third stage, and it clearly has a specific agenda of its own with two main questions: How can knowledge and expertise be transferred between generations? French companies currently negotiate to create a solid consensus on this question. The second question is how to establish a new work-life balance. The pressure demographic change places on work affects both questions, and we may see more part-time work in the transition between full-time employment and retirement.

Christian Werner

I fully agree. Companies have to work hard to transfer implicit knowledge to younger employees. Otherwise, firms will face significant outflows of knowledge. So how can we better appreciate the human capital that older workers bring to the labor market?

Yves Barou

In France, you cannot force somebody to retire. So, what happens is that people at retirement age demand a premium, if not a golden parachute, when they leave the company. But with changing demographics this may become too costly, and companies may start to put older workers to good use for the benefit of the company, the worker and his younger colleagues.

Christian Werner

In other words, necessity is the mother of invention, and I am sure demographic change will create enough necessity and opportunities. Thank you very much for your time, gentlemen.

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