How becoming skills-powered unlocks new talent pools in an ageing workforce 

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Traditional job-based models with fixed roles and static job descriptions are proving increasingly inadequate in Asia amid technological advancements, significant demographic pressures, skills gaps, and market disruptions. Companies can no longer afford to underutilise any segment of available talent or rely on outdated work organisation approaches to stay sustainable.

Asia is undergoing a rapid demographic transformation, with Japan having the world's oldest population—over 29% aged 65 or older. South Korea and Singapore are ageing even faster, while China faces a "demographic cliff" due to decades of low birth rates. This shift presents critical workforce challenges:

  • By 2030, Japan will face a shortage of 6.44 million workers.[1] 
  • South Korea's working-age population is projected to shrink by 35% by 2050.[2]
  • Singapore expects 32% of its citizens to be aged over 65 by 2060.[3]
  • China's working-age population is declining by approximately over 3 million people annually.[4]

These demographic changes coincide with the rapid obsolescence of skills, particularly in Japan, South Korea, China, and Singapore, where technical capabilities can become outdated in just a few years. Organisations must rethink their approach to work, as there aren’t enough younger workers to replace those retiring.

Companies will need to adopt a more flexible, skills-focused approach to fully leverage the available talent pool.

What is a skills-powered approach to work organisation?

A skills-powered approach organises work around skills rather than traditional job roles. Instead of defining jobs first and finding individuals to fit those moulds, this model starts by assessing individual capabilities and dynamically matching them to the work that needs to be done.

The skills approach allows for much greater flexibility in how work gets executed rather than being limited by rigid job descriptions, allowing organisations to deploy talent through a variety of arrangements, including:

The image represents a visual representation of various modern workforce strategies leveraging skills. It highlights five key concepts:

  1. Skills-powered staffing - focused on short-term initiatives or seasonal demands
  2. Fractional roles - allowing part-time contributions in specialised roles
  3. Project-based Assignments - Defined by clear deliverables and timelines
  4. Internal Gigs - Enabling employees to engage in projects outside their formal roles
  5. Skills Exchange - Facilitating the sharing of talents across departments or between organisations
Research shows that “human capability” (skills, leadership, organisation, and HR) accounts for 44.5 percent of revenue per employee and 26 percent of earnings (EBITDA).[5] Skills-powered approaches have been shown to unlock a variety of benefits, both in terms of productivity and the work experience organisations can provide.[6]
  • Case Study: How a skilled workforce can unleash productivity and retain talent

    At Unilever, their skills-powered talent deployment has led to over 700 projects being resourced in just 90 days, with 60% of projects resourced cross-functionally and cross-geographically. A whopping 530,000 hours have been unlocked by this flexible approach – equivalent to 241 full-time employees.  Additionally, 90% of employees learnt something new and stated that they would do it again. 

    Standard Chartered implemented a reskilling and redeployment programme across its Asian offices with Mercer’s support. Instead of resorting to redundancies or external hires, the bank retrained employees away from declining ‘sunset jobs’ and into high-demand ‘sunrise roles.’ This programme not only preserved jobs but also saved an estimated $49,000 per employee in reduced recruitment costs and increased retention.[7]

The skills-powered approach opens access to untapped talent pools

As Asia’s demographic pressures intensify, a skills-powered approach supported by technological advancement can help unlock critical talent pools that traditional job-based models often overlook or underutilise: 

Over 80% of workers over 50 in Japan wish to continue working[8] but prefer reduced hours or project-based engagement, with similar sentiments in other economies such as Singapore.[9]

As longevity increases, skilled older workers are no longer a “nice to have”, but an economic necessity. There is an estimated US$5 trillion potential economic output from employing older workers globally[10], yet this demographic faces challenges in securing jobs when companies prioritise age and tenure over skills and capabilities, missing out on valuable contributions that older adults can offer. Focusing on skills rather than age or traditional career stages enables companies to tap into older workers’ valuable capabilities through flexible arrangements that would otherwise be lost to retirement. 

Female labour force participation remains significantly lower than male participation across the region - 56% versus 72% in Japan,[11] 58% versus 75% in South Korea, and only 33% versus 82% in India.[12] Mercer’s research has identified caregiving responsibilities as the primary reason women step back from the workforce, resulting in a substantial loss of talent in markets already grappling with severe skills shortages due to ageing populations.

In Japan alone, aligning female labour participation with that of males could add up to 7-9 million workers to the economy, more than compensating for projected workforce losses from ageing. By prioritising skills and outputs over traditional work arrangements or uninterrupted career histories, organisations can create pathways for this critical talent pool.

As workforces in ageing Asian economies encompass up to five generations, organisations must develop mechanisms to deploy talent across traditional age boundaries. Skills-powered approaches facilitate precise matching of capabilities to organisational needs, regardless of age, fostering opportunities for productive cross-generational collaboration. This is especially valuable for knowledge transfer in countries like Japan and South Korea, where critical institutional knowledge resides within older workforce segments that are nearing retirement. By leveraging the strengths of both younger and older employees, organisations can ensure continuity and innovation while maximising the potential of their diverse talent pool.

As industries transform and traditional roles become obsolete, many mid-career professionals in ageing Asian economies require pathways to new types of work. Skills-powered approaches that emphasise transferable capabilities, rather than solely focusing on industry-specific experience, can create vital bridges to new career opportunities for these individuals. This is particularly crucial in economies like Singapore and Hong Kong, where sectors such as financial services are rapidly transforming due to digitalisation. By recognising and harnessing the diverse skills of mid-career workers, organisations can facilitate smoother transitions and ensure a more adaptable workforce.

In Japan, South Korea, and increasingly China and Singapore, many retired professionals are seeking opportunities to partially re-engage with work, driven by the desire for financial security and a sense of purpose. Skills-powered approaches create pathways for these individuals to contribute valuable expertise through fractional, project-based, or advisory roles, allowing them to remain active without the need to fully return to traditional employment.

By creating flexible pathways for these and other underutilised talent segments, skills-powered organisations not only expand their talent pipelines but also directly address the demographic challenges reshaping Asian economies.

Implementing a skills-powered approach in Asia: Challenges and solutions

While the benefits of becoming skills-powered are compelling, navigating region-specific challenges in Asian markets is essential for success:

The image outlines a framework for implementing a skills-powered approach in Asian organisations. It is divided into six sections:

  1. Hierarchical Organisation Structures
  2. Seniority-based Cultures
  3. Personal Relationships
  4. Varying Digital Maturity
  5. Regulatory Compliance
  6. Traditional Leadership Identification

The importance of developing a skills-powered workforce cannot be understated, as Asia’s major economies, such as Japan, South Korea, Singapore, Hong Kong, and increasingly China, are facing unprecedented challenges with large cohorts of experienced workers approaching retirement age. By 2040, many of these markets will have dependency ratios (non-working to working population) that render traditional talent models unsustainable.

Conclusion: Three critical advantages offered by a skills-powered strategy in ageing economies

Considering Asia’s demographic reality, becoming skills-powered is not merely an HR innovation, but an economic and business imperative. Organisations that can identify, deploy, and develop capabilities across all available talent pools regardless of age, work history, or life stage will enjoy three critical advantages over their competitors:

  1. Extended productive careers: By focusing on capabilities over age or tenure, companies can create flexible pathways for experienced workers to contribute their valuable skills beyond the traditional retirement age.
  2. Knowledge preservation: Skills-powered approaches enable more effective knowledge transfer between generations, ensuring critical institutional expertise is not lost with retirement.
  3. Expanded talent access: By establishing more flexible work arrangements based on skills rather than job requirements, companies can tap into previously underutilised segments.

In a future defined by both demographic constraints and accelerating business change, skills-powered approaches represent one of the most promising paths forward-enabling organisations to maximise the contributions of every available talent pool while creating more engaging work experiences across increasingly diverse and multi-generational workforces.

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Speak to Mercer’s career specialist to embark on your skills-powered journey today.