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With the survey results presented in this White Paper, the Adecco Institute provides an extensive analysis of the degree of demographic fitness of companies in a time of ageing societies. The analyses are based on the Demographic Fitness Survey, which has tracked companies in 11 European companies since 2006, and enables evaluation of whether and how companies in these countries are prepared for the impact of demographic changes, as well as how they behave in a changing economic environment. The analyses cover companies from the five biggest European economies (the ‘EU Big Five’: France, Germany, Italy, Spain and the United Kingdom) and continue our research on the ageing workforce, focusing on how companies address changes in the age structure of the workforce. Long-term demographic change is a powerful and irrepressible force, and the future ageing of the European workforce is already an empirical fact. While dramatic changes in population and substantial ageing of the workforce in the coming decades are empirical facts, a large number of studies have shown that it is not anticipated to the same extent that this development will substantially reshape all aspects of our lives – our businesses, workplaces and health and education systems. Companies must recognize and address these changes, and the companies taking proactive action will have an advantage over those simply reacting. The Adecco Institute seeks to improve and further knowledge on preparedness for the ageing workforce.
The main outcome of the Demographic Fitness Survey is the Demographic Fitness Index (DFX), which assigns each firm a score on an index of 100–400 points, based on its performance in five areas of human resources (HR) activity, and also determines an aggregated country-wide score. Interviews were conducted with HR decisionmakers in 2,518 companies to identify their practices in the five areas of career management, lifelong learning, knowledge management, health management and diversity management. The survey was conducted in December 2008 and thus provides insight into how companies are handling the long-term issue of an ageing society in a an economic environment of high levels of insecurity. All observed countries have figures significantly below 200 out of a possible 400, indicating that they are far from ‘excellent’ in this regard. Although we were able to observe a slightly positive development from 2006 to 2007, now companies in all countries show a significant drop in their individual results compared to those of the previous year. On average European companies achieve a DFX of 172 points, which is a drop of 10 points compared to 2007. This is a dramatic development and a strong indicator that companies handle the long-term issue on the basis of short-term facts. The results for the individual countries further indicate that although all five indices drop significantly, the extent of this drop differs. The DFX indices in Spain and Italy dropped dramatically by 18 and 14 index points, respectively, compared to the previous year. For the United Kingdom and France, we also observe a substantially lower DFX index, whereas Germany has relatively stable figures. However, we expect Germany to lag somewhat behind in the drifting economy: overall labour market figures already showed alarming results at the end of 2008 in Spain, the United Kingdom and Italy, and now forecasts indicate a downturn in Germany as well. Nordic countries analyzed in a previous study perform much better with an average of 19 index points above the EU Big Five.
Within the five areas targeted by the DFX we also observe a clear decline, mainly in career management, life long learning and knowledge management compared to previous years, while the outcome of health and diversity management figures is relatively stable. This can be seen as a result of the fact that the overall awareness about the importance of demographic change as a main future challenge dropped significantly within just one year. Furthermore, the actual survey indicates a significant decline in the – already short – planning horizon of staffing needs and comes in line with a decline of the awareness of skill shortages. However, as skill shortages are in large part a long-term topic and strongly connected with the demographic challenge, the outcome is a double-edged sword. The economic crisis has a significant and dynamic impact on HR decisions, and this impact depends on how deep an economy is already in the crisis. In countries like Germany, relatively positive effects like higher priority to reduction overtime and postponement new hiring than to dismissals were observed, but the deeper a country is in the crisis, like for example Spain, the more negative effects like further cut of HR development activities dominate. In sum, European companies show an alarmingly strong dependency with respect to their efforts to actively manage the issues related to the long-term strategic topic of the ageing workforce. In view of the substantial decline in overall DFX scores in tandem with the beginning of the economic downturn, we wish to emphasize that this short-term orientation is highly problematic, not only in the light of the next upturn, which very likely will be characterized by an even stronger skill shortage. Rather than saving costs by cutting workforce development programmes, these activities should be retained and even extended – independent of cyclical changes. Demographic change and its challenges are not issues to be driven by business cycles. Instead, they are long-term strategic investments for companies. Only companies that keep this in mind and retain their activities will be prepared for the next upturn.
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