Walking corporate halls for the last two decades you will have become used to the conventional moaning about a shortage of talent, skill gaps, and the weakening loyalties of younger workers to their firms. More recently, you will have begun to hear about aging workforces, perhaps followed by a self-deprecating quip about the indignities of older age.
It’s time to stop the giggles. Populations are aging; work lives are lengthening (see Figure 1). Fewer young people are entering the workforce, due partly to lower fertility rates, partly to longer education (see Figure 2). According to OECD data, a long-term trend toward earlier retirement is slowly going into reverse. The UK increased its retirement age from 60 (for women) and 65 (for men), first by equalizing genders, then pushing both up to 66, and with a plan to move up further over time. Prior to a recent increase in the retirement age from 60 to 61 and higher in future years, the Japanese government struggled to push the official retirement age up, leaving firms to often solve the problem by releasing workers at 60 and rehiring them on new contracts, often at reduced pay rates.