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 Companies can no longer afford to underutilize any segment of available talent or rely on outdated work organization approaches to stay sustainable.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 aging 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of skills, particularly in Japan, South Korea, China, and Singapore, where technical capabilities can become outdated in just a few years. Organizations 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 organization?

A skills-powered approach organizes work around skills rather than traditional job roles. Instead of defining jobs first and finding individuals to fit those molds, 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 organizations to deploy talent through a variety of arrangements, including:

Becoming skills-powered

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 specialized 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 organizations
Research shows that “human capability” (skills, leadership, organization, 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 organizations 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 learned something new and stated that they would do it again. 

    Standard Chartered implemented a reskilling and redeployment program across its Asian offices with Mercer’s support. Instead of resorting to layoffs or external hires, the bank retrained employees away from declining ‘sunset jobs’ and into high-demand ‘sunrise roles.’ This program 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 underutilize: 

By creating flexible pathways for these and other underutilized talent segments, skills-powered organizations 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:

How to embark on a skills-powered approach in Asia

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

  1. Hierarchical Organization 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 aging economies

Considering Asia’s demographic reality, becoming skills-powered is not merely an HR innovation, but an economic and business imperative. Organizations 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 underutilized 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 organizations to maximize 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.

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