Three employer actions to drive growth in the longevity economy 

We’ve known about this issue for many years. Economic growth in developed markets fuelled by immigration, productivity improvements from technology and the large number of baby boomers bolstering the current working population have allowed us to put off taking action.

Now it’s time to pay the piper. You may have heard people talking about Peak 65 — the point at which the number of baby boomers reaching age 65 is the highest. This year, we’ve reached Peak 65 in the US — and most countries across the developed world have already hit this point or soon will.

Put simply, fewer people are entering the workforce than are leaving to retire. We’re feeling the impact of this inflexion point in many areas of our everyday lives: cancelled trains and buses due to driver shortages, longer waits to see a doctor, the challenge of finding someone to fix a leaky roof — the list goes on.

The most extreme example is South Korea, which beat its own world record for the lowest birth rate again in 2023 with just 0.72 babies per woman. Common wisdom is that a birth rate of around 2.10 is required to maintain a stable population. At this rate, the next generation in South Korea will be just one-third the size of the generation before.¹

If there will be fewer people contributing to the overall productivity of our countries in the future, how can we manage the debt and maintain infrastructure across retirement, healthcare and care systems? Will our countries be able to maintain our relevance in the future world if we have fewer and fewer productive workers driving our economies?

To add to this, although we’re living longer (estimates suggest average life expectancy globally has increased to 73.4 years) and is significantly higher in most developed economies,, an increasing proportion of our lives is spent in ill health.² In a study by the World Economic Forum and Mercer, health was the top concern related to living longer for 43% of survey respondents.³ Meanwhile, HR and risk professionals rank mental health at number eight in a list of 25 risks, and pandemics and infectious diseases comes in at number 11.⁴

The increasing burden of retirement pensions, healthcare, and care services for a larger older and unwell population as the size of the productive workforce gets smaller will only add to the problems — unless we’re prepared to make some significant changes. These changes need to focus on increasing the length of time potential workers are employed in productive work as well as keeping us healthy for longer.

This longevity transition is one of the three key shifts that will shape the global economy over the medium term, with the other two being the climate transition and the digital transition.

Based on our longevity research carried out in collaboration with the World Economic Forum, we propose three actions for employers to help them attract and retain talent while driving growth.

One of the biggest brain drains many companies currently face is people leaving the workforce to retire. Collectively, we must activate as many potential employees within the productive workforce as possible. This means trying to retain productive talent for longer at retirement age. Employers will need to openly discuss the transition into retirement to make it more attractive for employees with key skills to contribute for longer. This may well include a gradual transition into retirement with fewer responsibilities and reduced working time in the latter years.

A “cliff edge” retirement in which people stop working altogether is still the most common method of exiting. Often, employees are encouraged to leave to help maintain talent velocity through the organisation rather than trying to find creative middle ground that’s more attractive for older employees and cheaper for employers — and retains key skills, experience and connections.

Another reason for lost talent is employees pausing their careers to look after children or, increasingly, their parents. We need to help people (especially women) return to work after a career break and encourage more men to share the burden of care. This will mean investing in maintaining career paths to make returning to work easier and more attractive. To make this change stick, the company culture needs to change, removing the stigma that so often surrounds taking extended time off (including fathers taking paternity leave). Taking caregiving leave should be supported by the business rather than being perceived as a lack of commitment.

Finally, businesses need to become much more open to recruiting from “unconventional” sources, recognising the underlying skills required and being prepared to provide more on-the-job training to build up the necessary expertise — for both internal and external recruits. Such alternatives are becoming increasingly important as the world of work changes rapidly.

Especially as retirement ages increase (an inevitability, despite the political sensitivity of the issue), we need to do more to encourage individuals to take care of their own health before they become sick. Our healthcare systems are mainly built around trying to care for people who are already ill rather than investing in identifying potential problems early so that preventive action can be taken. Research suggests increasing preventive action will lessen chronic conditions that have historically reduced productivity. Chronic diseases, such as heart disease, diabetes and cancer, along with risk factors like smoking and physical inactivity, not only exacerbate the risk of mortality but also impose a heavy economic burden: The global cost of chronic diseases is projected to reach US$47 trillion by 2030.⁶

A transition to proactive rather than reactive care will rely in part on people making necessary lifestyle changes. While we may not be able to convince everyone to do so, a greater focus on prevention by society as a whole will multiply the benefits through greater numbers of available workers and less pressure on healthcare or care services. Companies can play a big role in this transition, particularly since state healthcare systems are currently built around intervening after a problem occurs rather than preventing the problem in the first place.

Indeed, employees crave greater investment in their own health. Our Global Talent Trends Study 2024 shows employees believe these are the top three employer well-being offerings⁷:

• 43% — Designing work with well-being in mind

• 37% — Programmes to help people talk about difficult topics

• 34% — Screenings for early health risk indicators

Social isolation and loneliness have a significant impact on physical and mental health too. We’ve lost much of the social part of work. Employers should consider investing in events to bring people together, perhaps offering subsidised sports or evenings out to improve networking, with a particular focus on younger workers (who are often the loneliest).

The reasons for lower birth rates are many, but, often, they boil down to a key concern that overall quality of life will be reduced after having children. In part, such worries relate to the cost of raising a family, including being able to afford somewhere big enough to live comfortably. Despite South Korea increasing financial incentives to encourage its population to have children, birthrates remain the lowest in the world.⁸ Why is this?

Alongside the financial burden, one of the biggest reasons women are increasingly reluctant to have children is that they bear a disproportionate share of the caring responsibility, both for their own children and for ageing parents.⁹ There appears to be a correlation between lower birth rates and cultural expectations that women should manage the household and caring duties. Japan is another country where the fertility rate has declined to record lows and is among the lowest worldwide. Women perform approximately five times more unpaid housework and caregiving than men in Japan and Korea — that’s more than double the OECD average for gaps between men and women in unpaid work.¹⁰

Skyrocketing childcare costs also play a part, with average daycare fees worldwide increasing by 6% in 2023 compared to the previous year.¹¹ The result is either that women sacrifice their careers to have children, reduce their hours to take on unpaid childcare or struggle to manage a career alongside parental responsibilities. What follows is unmanageable stress disproportionally placed on women as they try to perform well at home and at work. When local management doesn’t embrace flexible work hours and locations, the problem becomes even worse.

Changing these attitudes requires a cultural shift toward embracing support for families by providing greater flexibility regarding work intensity, working hours and work location. For such a shift to succeed, the scales will also need to tip toward more equal sharing of childcare by men and women. For example, estimates suggest that while women in the UK provide 23.2 billion hours of unpaid childcare annually, men provide just 9.7 billion.¹² Employers also need to carve easier paths for maintaining career trajectory despite periods of caring absence or temporary lower-level engagement.

By taking action on these three fronts, employers can better attract and retain talent in the longevity economy while driving growth in the face of demographic shifts.