a new way of thinking and a commitment to flexibility are key
For the last 20 years in HR circles we have been talking about the aging workforce as the baby boomer generation approached and began entering into retirement. And while it has been a hot topic of discussion in HR forums and in the media, businesses seemed to be ignoring it, according to Randstad’s World of Work Research, which shows that the majority of workforce planning is focused on the near term. And only 14% of organizations stated they had a clear strategy to keep older workers engaged.
The fact that we can expect to live much longer should seem like, at face value, good news. From a purely selfish perspective, improvements in our diet, health, and medicine mean that we can all expect to live 10 or 20 years longer than our grandparents.
However, it is not simply a matter of living longer as this trend has been slowly accelerating for the past few hundred years. The challenge is that since the 1960s the fertility rates across the Asia Pacific region have declined. They are now some of the lowest in the world and way below the replacement level of 2.1.
Source: World Bank
Source: World Bank
In Japan, Prime Minister Shinzo Abe described the country’s birth rate as a “national crisis” that has led to a population decline, with the Japanese population expected to fall from a peak of 127 million to 95 million by 2050. In Singapore, the population will start to decline by 2020, and this is a familiar development across the region. Even China will face labor shortages in the future as the effects of its one-child policy begins to take hold.
It seems the aging population debate in most countries has focused on the challenges to the social welfare system caused by spiraling pension costs and liabilities, not to mention the increased demand on health care. However, very little of the conversation seems to be focused on the workforce of the future, specifically posing the question: where will talent come from? The simple reality is that if economic growth continues across the region at the same pace, we will not have enough workers to meet the demands of our businesses. In the not-too-distant future we face the the very real prospect of having to make do with a smaller workforce and the need to significantly increase productivity.
While countries such as Singapore have made increasing fertility rates a national priority, these kinds of measures are unlikely to have a significant impact. It is also unlikely we will see many of these countries increase immigration rates in a meaningful way. Even if immigration is seen as the answer, where would the migrants come from with so many countries around the world facing talent scarcity issues too? The businesses of the future will need to get smart about the way they attract and utilize talent if they hope to improve their chance of survival.
But it is not all bad news. With workforce participation rates sitting at around 65% across the region (defined as the number of people who are available to work actually participating in the labor market), there are plenty of opportunities for smart businesses to capture a workforce that is currently disengaged.
Source: World Bank
These potentially available workers have dropped out of the mainstream employment market. They include mothers or fathers looking to return to work after or while raising their children; people with a disability; students and part time education professionals; and younger workers (youth unemployment is still at record levels across the region). There is also a significant opportunity to encourage and engage older workers to stay in the workforce longer to capitalize on their experience. After all, why should retirement be forced on someone at a certain age if they want to stay active in the workforce?
But this approach will require a dramatic shift in thinking for many companies in order to eliminate the unconscious (and sometimes conscious) biases that exist in organizations and are preventing them from hiring these categories of workers right now.
It will also require a genuine commitment to provide flexibility in different forms as different worker cohorts have different needs. It may be flexibility around hours and days scheduled, and for other it will be flexibility of location or devices. For these workers, work is not necessarily a place to be but more a task to achieve. They will not be constrained by your work hours in a 24/7 world.
Companies will also need to develop strategies to engage with the new forms of worker that have become a fast-growing phenomenon of the 21st century: freelancers, temporary workers, and independent contractors, who are available on demand and rely on new technologies to interact and and collaborate. They represent a challenge in engagement and this requires a new and broader set of leadership skills.
So with this in mind, it’s time that you ask: how does my company fare in the competition for tomorrow's workforce?
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