How to adapt labour markets to changing demographics

Originally when I started writing a blog for the Employment in Focus series, it was supposed to be about an outlook for 2025 and employment policy responses. However, with so many uncertainties currently on the horizon, it might be better to focus on something which we know for sure: societies across the globe are ageing. The implications of this demographic shift are profound, touching every aspect of economies, labour markets, and societies. 

While ageing is often viewed as a reality of developed nations only, it is actually a global phenomenon with far-reaching consequences for all societies. By 2030, the global population aged 60 and over is projected to reach 1.4 billion, while the number of children under 10 is expected to be approximately 1.35 billion. Furthermore, it is projected that by 2030, nearly three-quarters of the world's older population will reside in developing countries. 

At the same time, youth unemployment is a pressing challenge, with young people struggling to find stable, decent jobs around the world, particularly in developing countries. Even though global youth unemployment rates are at a historic low, 13% of youth remain unemployed, and 20% are classified as NEETs (Not in Education, Employment, or Training). In ageing societies, the main concern is not unemployment among older workers but rather economic inactivity and age discrimination. Recent data shows that as a result, one in five older adults in the EU is at risk of poverty or social exclusion, and many older workers struggle to remain in the workforce due to biases. Ageing also becomes very visible in rural areas in developing countries, a fact that puts agricultural production at risk with far reaching consequences for food security worldwide.

© Unsplash/ Yogendra Singh

The challenges faced by both young and older workers are deeply connected. Ageism – the fact that people base decisions on wrong, age-discriminating perceptions - affects both groups, with young workers seen as inexperienced and older workers perceived as unable to keep up with modern demands amongst other prejudices. This leads to untapped potentials, economic inefficiencies, growing social inequality and often a false competition between young and old. 

Addressing these challenges requires a holistic policy approach guided by intergenerational solidarity, the idea that all generations, young and old can support each other economically and socially.  

What elements would intergenerational employment policy frameworks contain?

One important element would be investing in skills for young and older people. For years, governments have focused on investing in youth education and training, yet older workers also need to be re-skilled and up-skilled to be able to contribute their potential to economic growth and wellbeing of individuals and societies. 

However, such investment will pay off only if there are decent jobs created. Otherwise, these efforts can lead to frustration, in the worst cases even to social unrest, as we have seen in many countries during the Arab Spring and thereafter. We need to remember that policies (including macro policies, sectoral policies, trade policies, investment policies etc.) are neither employment neutral, nor age neutral i.e they have very different implications for the type of jobs created and the impact they have on different age groups. 

Policies are neither employment neutral, nor age neutral i.e. they have very different implications for the type of jobs created and the impact they have on different age groups. 

What is also an important element of comprehensive and age-sensitive employment policy frameworks is social protection. Older workers should have the right to continue working if they wish, but they should not be forced to do so due to inadequate pensions or rising poverty. Likewise, young people need protection when entering the labour market, ensuring they are not trapped in precarious, informal jobs that leave them vulnerable in the future.

When more people participate in labour markets and have a decent job, those people contribute to social protection systems and lower dependency ratios. Labour force participation is highly impacted by employment policies, including well-designed labour market policies. Participation rates vary especially within young and old populations, and we need to learn from successful countries how they succeed in increasing labour force participation amongst those groups through such policies. Sweden, for example, has a labour force participation rate for old people (55-64 years old) of above 80 per cent (the world average is around 60 per cent) and the Netherlands have a youth labour force participation rate (15-24 years old) also above 80 per cent (the world average is just above 40 per cent). Interestingly, in countries where labour force participation rates are above the world average for young people, they are often also above the world average for older people (Figure 2), and when one increases, the other one increases as well. 

In addition, employers play a crucial role in fostering age-friendly workplaces. Studies show that mixed-age teams enhance productivity and mentorship programs benefit both younger and older employees. Recognizing the value of each age group while embracing innovation can lead to stronger, more resilient businesses and productivity increases.

Ageing societies are not a challenge to be feared - they are a reality to be managed. Governments, businesses, and social partners must work together to develop comprehensive employment frameworks that integrate policies for both young and old. Only by addressing the needs of all age groups can we create resilient, inclusive labour markets that allow every generation to contribute meaningfully to society. It is time to build labour markets that work for all - young and old alike.

*The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of ILO.