January 24th, 2013
07:47 AM GMT
Editor’s Note: Members of the Young Global Leaders forum at the World Economic Forum in Davos share some of their ideas for innovative ways to boost the economy and unleash intellectual capital.
(CNN) – Declining birth rates and longer life expectancy mean that many countries, particularly in the developed world, are faced with aging populations. In Japan, for example, the median age has risen from 22 in 1950 to 45 today and is expected to reach 53 by 2050.
This long-term demographic trend poses huge challenges for affected economies, putting pressure on social welfare systems while dragging on productivity and economic growth. It is worth noting that 17 of the world’s oldest countries in terms of median age are European, creating further challenges to economic recovery in the region.
The problem is exacerbated by social conventions on working age. In 1960, a 65-year-old man had a life expectancy of about 12.8 years but today that figure is about 17.4 years. This rise of almost five years is challenging pension systems and the assumptions that they are based on, particularly the notion in some countries that we should retire at 65 or younger.
People can clearly lead longer productive working lives than they currently do. The percentage of people aged 60-64 in work across the OECD nations rose from 36% to 43% from 2001 to 2011, but that increase does not seem sufficient considering the increase in life expectancy.
The challenge is to re-engage the skills of older workers and extend their working lives while ensuring that their skills and knowledge accumulated over the years is transferred back into the economy rather than lost forever.
One way of doing this would be to redeploy older workers to provide training and advisory services to small and medium enterprises (SMEs). The emerging corporations tend to be the key drivers of growth and innovation in most countries but often lack critical resources and skills, so could truly benefit from skill transfers from other industries.
At present, however, there is a “matching problem” in that there are far too few agencies, services and incentives dedicated to promoting the employment of older workers. Governments, corporations and entrepreneurs need to re-examine their underlying assumptions about age and address this issue if we are to mitigate the long term effects of population aging.
– Jayne Plunkett, Division Head of Casualty Underwriting, Swiss Reinsurance
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