Aging Workforce Cost and Productivity Challenges of Ill Health in Singapore
Asia-Pacific (APAC) is the fastest aging region in the world, with an expected increase of 200 million elderly people (aged 65 and above) between now and 2030. This is contributed to by increasing life expectancy and a decline in fertility rates. As previously reported, the cumulative elderly healthcare expenditure in APAC from 2015 to 2030 is expected to reach over $20 trillion. In addition, societal aging will have serious implications on the workforce, which includes: A decrease in the working age population (aged between 15 and 64 years) across many key markets in APAC.
A shift in the age composition of the workforce with an increasing proportion of older employees, who are at higher risk of chronic diseases, such as diabetes, cancer, and heart disease.
To complicate matters, many Asian economies, such as China, Japan and Singapore, are struggling with declining labor productivity. Consistent with this, Mercer’s 2017 Global Talent Trends Study revealed that 93 percent of business leaders plan to make organizational changes within the next two years to drive increased productivity, agility, and customer engagement. In the development of such strategies, it would be prudent for organizations to consider the implications of an aging workforce.
Governments and organizations need to plan for a future where older employees, who are significantly more prone to health risks, represent an increasing proportion of the workforce. In countries where employer-provided healthcare is prominent, this presents a potential fiscal burden for companies from increased medical claims costs and loss of productivity.
However, research has shown that older workers present certain advantages such as greater firm-specific knowledge, and lower turnover rates. Therefore, if managed appropriately, diversity of age at work can have positive effects. This highlights the imperative for organizations to adapt to the current demographic trends by implementing strategies to capitalize and maximize the productivity of an older and potentially shrinking workforce.