The many unexpected benefits of retaining older workers

Retaining older workers has significant positive effects on productivity, earnings, economic growth.

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In 1960, those older than 65 made up just 4.9% of the global population, but by 2050, they’ll account for a staggering 17%.

According to a recent study by the United States Bureau of Labor Statistics, by 2026, more than one in 10 workers will be older than 75, double the rate in 1996. Roughly 3 in 10 workers will be between 65 and 74

Studies show that the majority of elderly people have faced age discrimination, either on the job or in job applications. A 2018 report by AARP, a US-based not-for-profit for retirees, found that 61% of the older workers it surveyed had seen or experienced age discrimination.

In 2016, Nicole Maestas, an expert in healthcare policy at Harvard Medical School, conducted a major research with colleagues from the RAND Corporation

It’s tempting to attribute economic and productivity slow-downs to the fact that older people are past their best, but “it doesn’t necessarily follow that older workers are less productive than younger workers”, says Maestas. In fact, she thinks the reasons underlying this trend are the opposite of what the stereotypes would suggest; the problem might not be that baby boomer workers are older and therefore less competent now, but that the ones who are leaving the workforce are still impressively productive.

And, contrary to popular belief, there is no conclusive evidence to suggest that older workers are inherently less productive. One 2018 study didn’t find any significant links between the overall performance of private sector organizations in the UK and the proportion of older workers that they employed.

Maestas suggests some alternative explanations:

• The first is that, as skilled older workers leave the economy, younger ones inevitably replace them – and the youngest workers in society aren’t necessarily the most productive. As a report for the Centre for European Economic Research suggests, this is likely to have more of an impact on the sectors that require more acquired knowledge, such as manufacturing.
• The second is even more intriguing: the most productive members of society tend to be wealthier, and better at planning for their retirement. As more of these older workers are able to leave, the least productive workers are left behind.
• Finally, older and younger workers are thought to have skillsets that complement each other. It’s well-established that mixed-age teams can be more productive than those which are less age-diverse. It’s possible that as the most experienced workers retire, the loss of this collaborative dynamic is reducing productivity.

According to a 2015 report for the UK government by the pensions expert and political campaigner Ros Altmann, holding on to workers for just three years beyond when they would usually retire could add £55 billion to the British economy.

As if that weren’t reason enough, the evidence suggests that retaining older workers would also have the benefit of boosting the wages and employment prospects of younger generations, too. The idea is that if more older people stay in work, they’ll have more money to spend, and this benefits the economy, which is good for everyone.

Written by By Zaria Gorvett for BBC, published on 14th November 2019, click on the picture for the full article