Baby boomers, born between 1946 and 1965, are retiring at a rate of approximately 10,000 per day in the U.S. and with them, economies are set to lose valuable experience. While this loss paves the way for the quicker promotion of older millennials, talent retention and training will become vital for businesses hoping to achieve growth.
According to JLL’s Chief Economist, Ryan Severino, a talent gap looms as the number of experienced workers contracts over the next nine to ten years. He terms the enusing impact on the labour force, a “baby boomer tsunami.”
“Competition for older workers is likely to intensify over time, and an acceleration in real wage growth for these workers is anticipated,” he added. “Older millennial workers will probably be promoted faster than prior generations and will be expected to handle senior-level responsibility at an earlier age.”
He noted that 65 percent of the total international patents from 2011-2014 were granted to researchers aged between 45 and 65. Severino also observed that across various industry categories, the median age of executives in the real estate sector is highest at 49 years. This compares with the average age of the legal services sector of 45.7 years and 44.9 years for the architecture and engineering industries. Severino cited as examples top executives like Disney chief executive officer Bob Iger (aged 66), Goldman Sachs CEO Lloyd Blankfein (62) and Apple CEO Tim Cook (56), among others.
Succession planning as well as talent development will be crucial for industries with older senior executives because an effective leader plays an important role in shaping future business growth, according to Severino. Notably, for listed entities, the board will be answerable to shareholders in the event that a leader is ineffective.
His comments come as General Electric announced that long-standing chairman and chief executive Jeffrey Immelt (61) is stepping down after a 16-year tenure. He will be replaced by John Flannery (54), a 30-year company veteran. The company’s shares soared following the news as Flannery’s appointment to the top job ended a six-year long succession planning program.
While many companies have typically looked overseas when faced with a talent shortage, much of the developed world is also encountering the same demographic problem. “There is a general net shortage of talent everywhere,” said Severino.
The latest UN World Population Ageing report reveals that between 2015 and 2030, the number of people aged 60 years or over is projected to grow by 56 percent, from 901 million to 1.4 billion. By 2050, the global population of those above 60 is expected to more than double its size in 2015, reaching nearly 2.1 billion.
By 2030, older persons are expected to account for more than 25 percent of the population of Europe and North America, 20 percent in Oceania, 17 percent in Asia, Latin America and the Caribbean, and six percent in Africa.
According to Severino, baby-boomer participation in the U.S. labour market alone is set to drop by 2.34 million people by 2026, equivalent to the city of Houston, or “30 JLL Incorporateds,” said Severino.
And, although routine jobs continue to be replaced by technology, non-routine jobs – those that require high-level of experience and intelligence – are much harder to replace. Despite the advent of technology, non-routine cognitive jobs have increased from 28,533,000 in 1983 to 58,667,000 in 2015, according to Severino.
While most developed economies have raised the retirement age, Severino believes that talented older professionals have likely saved enough and many do not need to return to work. As companies compete with others to attract workers amid the tight labour market, he stressed the increased importance of employee education and training, employee retention and employee satisfaction.
The WEF report noted that implementing reforms in the education system, to enable youth to meet future skills requirements, would not be enough. “Ageing countries won’t just need lifelong learning—they will need wholesale reskilling of existing workforces throughout their lifecycle,” according to the report.