Executive Summary
The EU’s domestic working-age population is set to decline. Delaying retirement could have a huge impact on making companies demography proof. Including the age group 65 to 69 into the potential labor force could close around 75% of the gap and dampen the total decline of the working-age population in the EU 27 by around 10pps from a total -13.4% to -3.3%. On average, the EU 27 will have to cope with an annual decline of -0.8% until 2040. Furthermore, a positive net migration balance could lead to an increase in the working-age population in many EU member countries – with the exception of most Eastern European member countries, which are sender countries.
Companies will need to double down on initiatives and policies to foster intergenerational inclusion. Indeed, even after the Baby Boomer generation retires, the workforce population is set to be older than today on average: In 2040, 14% of the population in the EU 27 available on the labor market will be aged between 60 and 69, compared to 9% today. The share of migrant workers is also set to increase further, not only because of efforts to attract skilled workers from abroad but also because of the retirement of today’s higher age groups, which have smaller shares of foreign workers. To successfully manage multigenerational and multicultural teams, trust as well as mutual respect and understanding are crucial. This requires understanding the differing needs of generations and cultures. This holds especially true for leadership and communication styles. Companies will have to cope with different expectations and find the balance between traditional, hierarchical styles of leadership and more collaborative ones, and between in-person meetings and phone calls and texting and social media.
Intergenerational knowledge transfer needs to be a priority. Management styles also need to become more age-inclusive. Since knowledge is a strategic resource, knowledge sharing and intergenerational knowledge transfer are crucial for the success of a company. It goes without saying that this transfer can only be successful if there is a willingness on the side of the employees to learn and change – continuously. Given the rapidly evolving technological landscape, learning requirements will increase dramatically in the next couple of years. Keeping up with the latest twists in GenAI, for example, and its possible use cases demands great agility, not least from older employees. Millennials and Generation Z are said to place a high value on development opportunities, knowledge gathering and being open to change. In addition, wisdom skills are in high demand in the workplace and should be put forward. Last, to retain young talent, companies should also reconsider their management styles and offer qualification as well as career development opportunities to all age groups. Keeping older employees for longer is an important signal to attract younger ones.
Adapting to the needs of an aging workforce population is a win-win for all employees. Given the global competition for young talent and demographic change, companies must adapt to the needs of an aging workforce. This includes investing in age-friendly equipment in the workplace and the re-arrangement of workflows, working hours and shifts. Part-time work, working from home, lifelong learning and combating (unconscious) age biases are equally important. Health-management offers are an essential supplementary means that can help to shift the onset of age-related diseases in higher ages and keep the workforce healthier for longer. And although these measures are aimed at older employees, all employees benefit, not least women. Generational relations are not antagonistic but cooperative. Age-friendly companies with mixed teams have a positive effect on the productivity of older and younger employees.