Keeping Older Workers

Posted on September 16, 2007 by John Hunter

We’re Not Finnished With You Yet

Abloy and many other Finnish companies are suddenly treating older employees like a precious resource. Instead of nudging them into early retirement, they’re coaxing gray-hairs to work longer with better health benefits, extra weeks of paid vacation, and more. But these companies aren’t just feeling charitable. Finland’s workforce is aging faster than any other country’s–40% of Finns will reach retirement age during the next 15 years. Nearly a quarter of Abloy’s 820 workers, for instance, are already over age 55. And companies now recognize that seasoned hands are an important source of knowledge and productivity.

This is becoming the reality nearly everywhere. The best hope is that companies learn respect for employees and want to keep employees because they truly value them. But failing that watch what happens over the next couple of decades as demographic trends mean that companies have little choice but listen to the desires of older workers.

Some finnish companies have done an about-face on retirement policies. Swedish-Finnish bank Nordea, which spent a decade restructuring and pushing older workers to retire early, reversed course starting in 2003. It has launched training, mentoring, and health-care initiatives and is all but begging them to stay.

Finland, Japan and a few others may lead the way but the western industrialized world is quickly aging. It seems pretty straight forward that the aging workforce is going to be needed. And companies are going to have to adapt (that is my prediction anyway). I have always thought it is crazy that we work full time and then stop all together. It makes much more sense to me for there to be a gradual easing of the workload. The biggest complication I think is companies that don’t want to be flexible. I think that desire to be inflexible will be overwhelmed by the demographics. There is also an issue of psychology – people don’t like to earn less.

I have a feeling that it may well be necessary for most to earn less at 70 than at 40 (many just can’t produce the same value they once could). There are some additional benefits that experience will bring but how everything balances out will decide what is justified. This will play out in the marketplace, but I think in addition to companies not comprising to make part time jobs work many employees insist on maintaining salaries – which might not be reasonable. I am happy to have the marketplace make the decision on salaries.

Another part of the reason this seems likely to me is people just don’t save what they need to in order to retire – so many need to keep working (as companies will need experienced workers).

Related: Saving for Retirement – Working Longer – Our Only Hope: Retiring Later

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