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European companies today deal with so many short-term challenges and longer-term trends that it is hard for them to know which to tackle first, let alone how best to do this. A few of these undercurrents will be so powerful that many firms will be compelled to address them simply to survive over the next few decades. Long term demographic change is one such force. Across the European Union (EU), population ageing will be spectacular and will fundamentally reshape our continent, communities, lives, attitudes, work, health and education systems, as well as our prospects in ways we can only start to grasp. Older people are already the only growing segment of the population in Europe. In the next ten years, for the first time ever, the majority of people in Europe’s five biggest economies will be over 40 years old (in Germany and Italy they will be 60% of all inhabitants). We will see the number of people aged 50-65 rise considerably and those aged 20-40 decline1. Change will be even more dramatic in the long term. By 2050 the EU working age populace will be one fifth below today’s and, according to Eurostat, the proportion of Euro-25 population aged over sixty five will double to 30%2. This is not to say that demographic change is purely “bad news” or that it will have an identical impact across all economic sectors, but it will imply change, new rules and fresh challenges.
The Adecco Institute has created a “demographic fitness index” (DFX) to measure firms’ readiness for this onset of an aging workforce in Europe. The 2006 DFX is based on a survey of 2,500 companies of all sizes and sectors in the five biggest European economies, with firms scored on an index of 100 to 400 points. Using the individual company results we also calculate country indices. Overall, European companies averaged just 183 index points and two-thirds of them scored 200 or less, thus indicating great room to improve their readiness for change. Our survey found that, while European firms are starting to recognize demographic change as one of their biggest challenges after globalization, most have not yet analyzed their employee age structure fully, and still see personnel planning as a short term event. Companies on average plan their overall staff needs barely one year ahead. More vitally, although firms will increasingly need to attract, develop and retain older workers, most are not well prepared for doing so across the five key areas of lifelong learning, career management, healthcare, knowledge management, and age diversity management.
- Firms offer an insufficient range of career management tools and few employees make use even of those available, especially workers aged over 45.
- Healthcare is ripe for improvement. Few firms go beyond the basic compulsory programs (like check ups), to offer longer-term health tools like stress reduction, lifestyle and dietary advice.
- While an overwhelming majority of firms respect the legal requirements on age diversity, and formally treat all age groups equally, most do little to promote a dynamic culture of mutual esteem, mentorship and skill transfers.
- Although firms often have basic knowledge management tools in place, and understand the technical expertise needed in the workplace, surprisingly most do not know who their experts are (i.e. who has expertise in what).
- While companies offer continuous education tools and around half of employees use these, it is mostly standard workplace based training focused on qualifications rather than individualized programs or softer skills.
Our white paper makes a number of practical recommendations to European companies that are keen to tackle the issue of workforce ageing. Demographic fitness is not rocket science. All the measures and tools across the five areas are within reach for most companies – regardless of size, sector or focus – as long as they have the will to adopt them, the discipline to prioritize around a few areas, and the drive to take small yet decisive steps to ensure progress. We point out that demographic fitness is not about “feel good” ideas, but rather about hard economics. The pay off from action can be substantial. Better DFX scores could add up to 20% to a firm’s competitiveness, innovation and productivity; hence paying attention to the issues can translate directly into business success. The Institute will publish its DFX index periodically, giving firms and policymakers a tool to measure European progress on demographic fitness.
1 International Labor Organization (ILO), Labostat database, October 2006.
2 Eurostat press release 29 September 2006. The highest proportion will be in Italy and Germany.
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