Category: Industry News, development, economic, advantage, region, golden age index, demographic
Two studies by PwC demonstrate the economic value that each of these groups could add through their greater participation in the workforce.
An overall global rise in population – set to expand by more than a billion people by 2030 – will manifest itself very differently across the world’s regions. The population of Africa, for example, will double by 2050, while Europe’s will shrink over the same period of time. The average age profile across different parts of the world will also show significant variation. In Japan, for example, the average age by 2050 will be 53. In Nigeria it will be 23. But while a youthful population is a potential source of advantage for Africa, it requires economic development to create jobs if the region is going to capitalise on this demographic dividend.
Conversely, the ageing populations of developed economies mean fewer younger people to support the old. Not only will there be a growing imbalance between young and old, but other economic strains will develop including a substantial rise in healthcare spending and a major challenge to traditional forms of retirement planning and saving.
To counter this imbalance, it’s going to be essential to encourage two key groups to participate more in the workforce: women and older people (of both genders). Two studies by PwC demonstrate the economic value that each of these groups could add through their greater participation in the workforce. Our Golden Age Index compares how well countries are doing in harnessing the power of workers aged 55 and over. For example, if Greece, a relatively low performer on the index, could achieve the same levels of participation in the workforce by the over-55s as the best performer, Sweden, it could see a long-term increase in GDP of 19%.
Our Women in Work index highlights that a more diverse workforce with greater gender balance is a source of strength for both economies and companies. For example, a study by Credit Suisse1 showed that large companies with women on their boards outperformed those who had none by 26% over a six-year period.
In addition, and political tensions notwithstanding, a rise in migration is likely to be an important source of population growth in G7 economies, although boosting the skills and employment prospects of young people will also be critical.
Adapting to these sweeping demographic changes will require governments and businesses to design and implement new policies. Greater flexibility and new forms of incentives that encourage workers to stay in employment are likely to be required. A more open approach from employers to an older workforce and, with support from government, a willingness to retrain them and support their life-long career development along more flexible lines will also be important. Some businesses are already showing a new way forward. In Germany, for example, BMW has redesigned a factory to take the needs of older workers into account.
The interaction of government policies and employer actions will also be critical to encouraging more women to enter and/or remain in the workforce. Greater flexibility of working patterns, for both men and women, will be one measure. Access to affordable childcare – a key barrier in many countries but a particular strength of the Nordic countries – will also have to be addressed, possibly through fiscal measures so that returning to work makes economic sense for parents who wish to do so.
Overall, the changes that we will see over the next few decades will mean that the working population will look very different from today. Businesses that are prepared for the changes ahead could seize considerable advantage by making sure they are adaptable and ready for the future. To find out more, visit our new megatrends website.
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