Introduction

Our world is changing continuously and at an unprecedented pace. Advances in technology, economic uncertainty, geo-economic fragmentation and political tensions are significantly affecting the future world of work. Alongside such rapid and often uncertain developments, there is the long-term, predictable trend of ageing populations and ageing workforces across the globe. This convergence of increasing longevity with rapid technological innovation has the potential to radically reshape the future of work, bringing complex challenges for government, businesses and individuals alike.

In this article, we consider the drivers behind an ageing workforce, current and expected government policy in this area, and how employers can take steps now to adapt to this ongoing trend.

Drivers of an ageing workforce

Increasing longevity: we are living longer

One of the underlying drivers of an ageing workforce in the UK is that we are living longer. In 1800, older workers were rare: one-third of British children died before their fifth birthday – today the figure is less than 1%. According to recent ONS data, boys born in the UK in 2023 can expect to live on average to age 86.7 years and girls to age 90 years.

If progress in reducing mortality rates continues at the current rate, then many children born since 2000 will live to celebrate their 100th birthday. It is projected that 17.3% of boys and 24.7% of girls born in 2047 in the UK will live to at least 100 years old. In fact, the number of centenarians living in the UK has increased dramatically in the past 20 years, rising to an estimated 16,140 in 2023 – more than double the number in 2003. It is worth noting, however, that from 2011, the steady rise in life expectancy has started to slow, and was further significantly impacted by the Covid pandemic in 2020. Despite this, medical breakthroughs can be rapid, with the potential to radically change current projections.

Baby boomers, Generation Z, and the ageing workforce

Cohort size has a significant effect on the age demographics of the workforce and is affected by different birth rates at different times, alongside changes in migration levels. “Baby boomers”, born in the period after World War II (1946-1964), benefitted from the full effects of antibiotics and vaccinations but before the mass introduction of birth control led to declining birth rates.

The entry of baby boomers into the workforce coincided with women entering the workforce in larger numbers and the opening up of other countries to the global economy. This surge in workforce growth is coming to an end, however, in part because many in the baby-boomer generation are deciding to retire.

At the same time, the rising cost of home ownership and education over recent years means that the current Generation Z cohort of late teens and early 20s are tending to study longer and enter the workforce later. The number of economically active people with a postgraduate degree (or equivalent) is expected to double from 2020 levels to approximately 8.3 million by 2035.

While focussing on generational differences can help employers understand ways to manage a multi-generational workforce, it somewhat oversimplifies the complexities of what is driving changing workplace expectations. It can be more useful to look beyond age to life stage. In fact, while attitudes and values can vary across cohort groups, there are certain drivers that unite younger and older workers. Ranstad’s annual Workmonitor survey shows that certain priorities are increasing in importance across all age groups and highlights how employees increasingly value: value alignment; career development opportunities; work-life balance; flexibility; and personalised skills development and belonging.  However, the priority of these factors tends to shift with age, with research suggesting that factors such as interesting work and autonomy peak in importance around the age of 60.

Extended working lives

As the population ages, so too does the UK’s workforce. By 2050 the proportion of the population in OECD countries aged 65 and over is expected to increase to nearly 28%, and it is predicted that in G7 countries workers aged over 55 will make up a quarter of the workforce by the end of the decade (up nearly 10 percentage points from 2011). In the UK specifically, 11.5% of the population now works past its 65th birthday, double the proportion in 2000. The state pension age in the UK is currently 66 but 9.5% of people that have reached this are still working – a figure that has been increasing over the last decade. This change was driven in part by the abolition of the default retirement age in the UK in 2011, which had allowed employers to force staff to retire on reaching 65 years of age. Its removal has meant that reaching a particular age no longer signals a sign for older workers to stop.

Furthermore, as the health of the population has continued to improve over the last century, ill health is a smaller factor in restricting older workers’ ability to work, particularly in light of the shift from physical to higher-skilled work. The IMF recently found that a person aged 70 in 2022 had the same cognitive function as the average 53 year old in 2000, and the same physical fitness as a 56 year old.

Retiring later is a financial necessity for some older workers, and finances during retirement are becoming more of a challenge; for example, the annual cost of a moderate standard of living in retirement for a single person in 2023/24 is £31,300, an increase of 34% since 2022/23. There is also an increasing appreciation of the cognitive and social benefits of staying in work, with many taking advantage of greater opportunities to agree flexible working arrangements.

What is government policy on the ageing workforce?

The importance of older workers for the health of the economy is apparent in the shift of government focus in recent years away from policies promoting early retirement, towards an emphasis on extended working lives. The previous government introduced various initiatives including an online “midlife MOT” to help older workers assess what their skills mean for their future careers as well as with financial planning and health guidance, and a “returnerships” initiative designed to encourage over 50s to get back into the workforce after a break.

The current Labour government is planning to legislate to make significant changes to the employment landscape. While the focus of these reforms is not directly on older workers, many of them are expected to benefit individuals with long-term health conditions, caring responsibilities and zero hours contracts and many over 50s fall into these categories; for example, more than half of people economically inactive due to ill health are aged 50-64. Proposals such as strengthened flexible working rights, and the introduction of menopause action plans should also positively impact older workers.

Reskilling of older workers

Many employers currently reporting difficulties in replacing lost skills will find that the “skills gap” will become even more challenging. The World Economic Forum’s latest Future of Jobs Report found that an estimated 39% of workers’ existing skill sets will be transformed or become outdated by 2030 and that skills gaps are currently the biggest barrier to business transformation. The Future of Work Hub’s most recent report found that 41% of respondents had experienced difficulties in attracting and retaining the best people with the right skills. Employers who recruit from the increasing pool of older workers as part of their workforce planning are likely to be better able to manage the skills gap.

The recent CBI/Pertemps Employment Trends Survey found that growth in skills investment is slowing and is now back to pre-pandemic levels with just 32% of employers planning to make higher investments in training and development over the next year. However, as working lives get longer, individuals will have to adapt to the increasing pace of change. For example, 50-year careers will become the norm rather than the exception, and employees may choose to make radical career choices or change direction and seek fresh challenges in their later lives. Automation and AI will have a growing impact on jobs and job roles - while some jobs may be displaced, new jobs and skills will also emerge for which people need to be reskilled and retrained.

All of the UK’s main political parties recognise the challenge of ensuring individuals obtain the skills they need to progress in work, redirect their careers and secure the jobs of the future. The current government has created Skills England, a new arms-length body which aims to meet the skills needs of the next decade.

Transparency and enforcement: publication of ageing workforce data

A 2018 Women and Equality Commission report, “Older people and employment”, recommended the introduction of mandatory obligations requiring all public-sector employers, and private and voluntary sector employers with 250 staff, to publish the age profile of workforces. This resulted from frustration with the limited voluntary take-up from employers in response to a call for action by Business in the Community to commit to meeting a target of 1 million more people aged 50-69 in work by 2022.

Transparency has been used with some success to challenge discrimination and inequality in other areas to achieve cultural change. The gender pay gap reporting obligations are a good example. It is possible that we may see this approach being applied to age in the future, particularly given that  the government is consulting on introducing mandatory ethnicity and disability pay gap reporting.

Management of an ageing workforce

Despite the existence of legislation prohibiting discrimination on grounds of age since 2006, ageism remains a significant problem in the workforce. Different generations have grown up with different influences in their lives, and a combination of up to five generations working together can generate the potential for conflict in the workplace.

Common stereotypes of older workers may create employee relations issues, leading to discriminatory decisions. Making generalised, age-related assumptions needs to be addressed during the whole of the employment life-cycle, not just at the point of recruitment when age bias can be most apparent for older workers.

An unintended consequence of age discrimination laws and the removal of the default retirement age is that some employers are reluctant to hold conversations with older workers about retirement planning and flexible working. Employers should be prepared to tackle difficult conversations about an older worker’s future plans, and should not assume that they aren’t interested in reskilling or progressing when they reach a certain age. It is crucial to make this type of conversation a regular feature of line-management discussions with all employees. 
Performance generally deteriorates at some point, and it is no longer possible for employers to rely on compulsory retirement as a more “dignified” exit from the workplace in these situations. With the removal of the default retirement age, underperformance of older workers must be dealt with in the same way as anyone else.

The number of Employment Tribunal decisions concerning age discrimination appear to have steadily dropped between 2019, where the number was 875, and 2024, where the number was 441. Despite this, research by the Centre for Ageing Better found that 36% of 50-69 year-olds feel at a disadvantage applying for jobs due to their age. Therefore, this remains an important issue for employers to tackle, particularly as the compensation in these cases has seen a sharp rise, increasing to an average of £103,000 in 2023/2024 (a notable jump from £14,200 in 2022/2023 and £18,600 in 2021/2022).

Tackling the health challenges of an ageing workforce

While longer life expectancy has enabled many older workers to extend their working lives, healthy life expectancy is not rising at the same rate. Although tackling economic activity due to ill health is a priority for the current government – their “Get Britain Working White Paper” introduced eight “Inactivity Trailblazers’ aimed at integrating work, health and skills support - the primary focus has been on younger workers, leading to concerns that older workers could be left behind.

An ageing population means caring rights are needed

An ageing population means that a greater proportion of the working population is likely to be providing informal care in future years. It is thought that there are approximately 5.8 million unpaid carers in the UK and it is projected that 990,000 more people will be providing informal care by 2035 – an increase of 10.6% compared to 2024.

From April 2024, employees have had a statutory right to one week’s unpaid leave to care for a dependant. However, given the short duration of the leave and the fact that it is unpaid (unless enhanced by the employer) its practical impact for many of those with caring responsibilities is likely to be limited.

Flexibility for older workers

Last year, a report by the 50Plus Choices Employer Taskforce encouraged employers and policymakers to focus on flexible working in order to recruit and retain older workers. It found that nearly 75% of over-50s wanted flexibility in their work, with many having caring responsibilities. Since April 2024, employees have been able to make a statutory request for flexible working from the first day of employment, with employers required to respond within two months. The government is expected to further strengthen this right by, amongst other things, requiring any refusal of a flexible working request to be “reasonable”. However, we await further details of how this will work in practice.

How employers can respond to the ageing workforce

Despite a significant increase in the number of older workers in recent decades, many employers admit they are unprepared to meet the challenges and harness the opportunities of this demographic shift. Interestingly, the Future of Work Hub’s recent report found that the majority of respondents did not consider the impact of ageing workforces as having a significant impact on workforce planning and HR strategy last year and few ranked ageing workforces as being the most important workforce demographic impact to strategically prepare for in 2025. This is a strong indicator that businesses do not yet feel, or possibly appreciate, the significant implications of ageing workforces on businesses.

Yet older workforces are already a reality - one in three workers are over 50 and the average employee in the UK is in their 40s. Organisations need to act to adjust to this demographic transition in order to improve the way they recruit, support and retain older workers.

Good practice age management

Good practice age management entails adopting a collection of practices and procedures that combat age barriers and promote age diversity. A mixed-age workforce can enable employers to build organisational resilience by harnessing the full range of available skills. However, if not managed correctly intergenerational frictions can undermine productivity. Researchers from LSE found that  productivity gaps for younger employees with older managers could be effectively closed by three key inclusive actions:

• Creating a culture that develops and promotes workers based on merit rather than age and makes it easy for them to ‘fit in’.
• Recruiting and developing managers who are skilled at leading diverse teams of employees across different generations.
• Demonstrating a commitment to hiring and retaining a generationally diverse workforce.

Employers can also take steps to make their workplaces more appealing to older workers. We have written about this in detail, but this could include providing health care benefits, wellbeing initiatives and financial planning benefits, introducing reverse mentoring schemes, as well as adequately training managers on how to successfully implement relevant DEI policies.

Understanding organisational data

Conducting data gathering exercises enables organisations to gain a comprehensive understanding of their workforce demographics, and this was listed as a priority action for businesses in the Future of Work Hub’s most recent report. Leveraging data allows for informed decision-making, improved workforce planning and the development of targeted training programmes that address specific needs.

More specifically, conducting an age assessment audit can help organisations understand the age demographics of their workforce, assess any age bias or barriers affecting older workers, and then take steps to prepare their workplace and people for the future world of work. Data can be reviewed alongside existing policies, initiatives and benefits to identify particular ageing workforce challenges and develop specific plans to address them.

Conclusion

Despite the predictable nature of age demographic shifts, they have the potential to radically disrupt the future of work. Being able to adapt to an increasingly ageing workforce will not only bring opportunities for workers but also enable employers to flourish in an increasingly competitive and global market. While the business case for an age-diverse workforce is mounting, employers need to navigate a host of new and increasingly complex challenges in planning how to manage and support older workers successfully.

If you would like to find out more about the impact of megatrends such as changing demographics, global dynamics and politics and technology on the world of work and key implications for business, please visit our Future of Work Hub website.

Our second article in this series considers the challenges and opportunities of an ageing workforce across several countries in the Asia Pacific region – you can read this here.