With the population aging faster than the workforce, the World Economic Forum’s March report warns that age discrimination is pushing experienced workers out of jobs.
Population aging in Organization for Economic Co-operation and Development (OECD) economies is emerging as one of the biggest workforce challenges over the next two decades, with age-related discrimination threatening to wipe out nearly $500 billion in productivity by 2040, according to a report by the World Economic Forum (WEF) and Marsh.The OECD is a grouping of 38 countries, most of them high-income countries, that work together on economic policy, trade and development.The report warns that labor markets are entering a period in which the number of older people is growing much faster than the pool of working-age people, making the marginalization of experienced workers increasingly costly for economies. It is estimated that OECD countries will suffer nearly $500 billion in productivity losses by 2040, due to underemployment and underemployment among adults over 55 compared to younger workers.Globally, the population aged 65 and over is expected to jump from 856 million to 1.3 billion by 2040, an increase of more than 50 percent. During the same period, the population aged 25 to 64 years, considered the prime age group for work, is expected to expand by only 13 percent.Against this backdrop, the report estimates that OECD countries could collectively give up nearly $500 billion in productivity by 2040 because workers aged 55 and over are more likely to remain unemployed longer or leave the labor market altogether than their younger counterparts.
The economic burden is expected to be particularly pronounced in major economies. Between 2025 and 2040, long-term unemployment among older workers could reduce GDP by $113 billion in the United States and $106 billion in France. Estimated losses are also estimated at $105.8 billion in Brazil, $26.3 billion in the Netherlands, $25.6 billion in the United Kingdom, $7.5 billion in Canada, and $5.9 billion in Japan.The real impact is likely to be greater because many older people stop looking for work altogether after facing repeated barriers to employment, meaning they disappear from official unemployment statistics, the World Economic Forum said.In addition to the economic losses, the report said that ageism also carries significant health and social costs. In the United States alone, ageism has been linked to nearly 17 million medical conditions and added at least $63 billion to health care spending in 2018. Research has also linked ageism in the workplace to depression, poor physical health, and reduced access to medical care.The report also argued that companies have more to gain by retaining older employees rather than viewing aging as a risk to the workforce.
Organizations with multi-generational teams tend to benefit from stronger innovation and knowledge sharing, as experienced employees mentor younger employees while also acquiring new digital skills.Many countries have already adopted policies to extend working lives. South Korea has achieved a record employment rate of 70% among people aged 55 to 64, Japan has recorded a rise in employment among those over 65 over two decades, while Sweden allows people to withdraw part of their pensions without leaving the labor force.According to the report, addressing age discrimination is no longer just a social goal but an economic necessity. Making workplaces more age-inclusive can help alleviate labor shortages, improve productivity and reduce pressure on public finances as the population continues to age.
