Dividends after youth: Help the silver generation help the economy

The silver generation makes up the largest share of new business owners in the US, and its share of the workforce in many large economies has expanded significantly. Governments and businesses must work in tandem to integrate them into the modern workforce.

Except for most of sub-Saharan Africa and India, the world is aging. China’s population peaked in 2021, the proportion of US over-65s is expected to rise to over a fifth by 2030, the EU’s population is expected to peak in 2026, and India’s fertility rate is declining. Thus, the world’s major economies will all have the silver generation representing a significant portion of their population.

While migration is presented as a way to bridge age gaps, the phenomenon is becoming increasingly politicized and unpopular. In response, governments should focus on absorbing more of their silver generation into the workforce, which is already happening in developed countries.

In the US, for example, the labor force participation rate of people aged 55 to 64 increased from 55% in 1990 to about 65% in 2020. In the EU, it increased from 36% to 60 %. But it could be given explicit political support.

A number of studies show that older adults stay in the workplace past retirement age or return to work when given adequate opportunities. Employers and governments need to work together to make better use of their expertise.

In Germany, certain industries are pursuing silver-friendly labor policies that enable better worker retention, upskilling and intergenerational knowledge transfers. In North Rhine-Westphalia, flexible continuing education programs have enabled better retention of workers in the logistics and transport sector.

This, along with the German government’s decision to raise the retirement age to 67, has extended workers’ careers. It is not just a question of raising the retirement age, but also of ensuring that the silver generation is empowered and trained to contribute effectively.

It’s important to give people over 50 the work flexibility to work at a pace they’re comfortable with. There is enough evidence to show that the silver generation is willing and able to continue working.

At WisdomCircle, a technology age platform designed to unite the worlds of retirement and recruiting, we believe that the nature of work for this generation differs from that of younger workers.

Many studies of aging and work show that the silver generation is looking to provide strategic and personalized advice rather than taking on full-time career-setting roles.

Our experience and other research studies show that most workers want to be helpful, but mostly in an advisory or strategic capacity. They seek relevance and respect, which is sometimes a challenge given attitudes towards older workers and recruitment plans geared towards absorbing new talent rather than retaining and reskilling existing workers.

The silver generation has the potential to work with organizations to find ways to improve productivity. Can mentor younger workers.

However, a flexible working approach can sometimes conflict with business goals, as employment is usually seen as a full-time occupation. There are, of course, ways to strike a balance that suits both silver employers and employees.

But in the absence of the right political economy factors to incentivize firms to see the silver generation as offering a demographic dividend of its own, such attempts will have limited impact. Better coordination between industry, government and employment agencies can be a key starting point.

Fostering entrepreneurship is another way to engage with the silver generation. Their financial stability, social capital and experience make them well positioned to be entrepreneurs.

There are already trends indicating that this is happening. The Kauffman Early Stage Entrepreneurship Indicators (2021) show that in the US, people in the 45-54 age group are going into entrepreneurship at the highest rate.

Business gains aside, the involvement of the silver generation also has benefits for society, such as reduced healthcare costs for the elderly. Minds that are kept active and used to solving problems and interacting with others are less likely to decline.

A better sense of well-being also has a positive effect on physical health. This reduces the number of people who would need assisted living facilities and other support as they age. Repetitive tasks or lack of work have been linked to a higher risk of dementia.

With rapidly rising treatment costs, projected to rise to $1 trillion by 2030 from $360 billion in 2023, the potential savings can be immense.

There is a clear case for every economy to keep its gray-haired workers working longer. Their knowledge and experience allow them to start new businesses, learn new things and embark on a second career.

As birth rates decline, the world needs a workforce that can cope with the inevitable changes in the age profile of its population. Companies and governments alike could count on the demographic dividend of the silver generation if they provide the right incentives to do so.