The rich world faces chronic labour shortages, and various countries have underscored the challenge they face with a ‘baby bust’. With growing apprehension toward immigration, many have been promoting, with questionable success, schemes to increase birth rates. But there’s an under-utilised group with immense potential to overcome these hurdles: the silver generation—those aged 50 and above.
Better policies to include this older generation into the economy and workforce are crucial to addressing labour shortages and the effects of declining birth rates. With clear productivity gains and better health outcomes, this generation could be another type of demographic dividend for global economies.
Older workers already make up a large share of the workforce in many developed economies. They represent the largest share of new business owners in the US, and their workforce participation has significantly expanded in many major economies.
In the US, for example, the labour force participation rate for people aged 55-64 rose from around 55 per cent in 1990 to around 66 per cent in 2023, and in the EU, it increased from around 38 per cent in 2000 to 60 per cent in 2020. A host of studies show that older adults remain in or rejoin the workforce if they are given the right opportunities to do so.
Now, firms and governments must work together to better utilise the expertise of this cohort.
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Indian scenario
In India, where the proportion of people over 50 will increase from 10.5 per cent in 2022 to over 20 per cent by 2050, addressing the needs and contributions of older workers is becoming crucial, especially given rising healthcare costs. A study by The International Longevity Centre ranks India among the lowest in its Healthy Aging and Prevention Index, with around $16 spent per person on preventative healthcare for ageing. It is estimated that increasing spending on preventative healthcare by just 0.1 percentage points can unlock an additional 9 per cent of annual spending by people aged 60 and over.
Given that health conditions can prevent older people from working, the recent rollout of Ayushman Bharat to senior citizens is a good step toward improving access to healthcare. However, many Indians aged 60 and above continue to work not by choice, but due to lack of savings and limited support systems—which must also change.
To improve silver workforce participation, raising the retirement age alone is not sufficient. Such moves must be accompanied by policy actions to ensure that workers are better empowered and trained to contribute effectively. More importantly, policies should empower people to work longer, with flexibility to choose their own pace.
Inspiration from Singapore and Canada
Singapore offers a useful model for engaging the older workforce through targeted policies, focusing on financial security and retraining.
Under its Retirement and Re-Employment Act, firms must offer re-employment to workers up to the age of 68, provided they meet performance and health requirements. In parallel, it has mandated a minimum retirement age of 63, before which workers cannot be forced to retire by their employers. The country also provides an upskilling initiative, the SkillsFuture programme, which helps mid-career professionals aged 40 and above learn new skills to stay up to date with an ever-changing economy. The programme provides funding and tax credits to Singaporeans accessing these initiatives.
Replicating such policies may be challenging for India, given its scale, diversity, and multiple jurisdictions. But they do provide potential options for employers and local governments to think about strategies to engage older workers better.
Another route that India could explore is improving the flexibility of its Provident Fund (PF) so that workers can withdraw part of their pension while continuing to work. Canada’s flexible pension plan is instructive in this case. Through this plan, people over 60 can withdraw part of their pension to fund expenses and still contribute to their pension fund while working. This allows Canadians to treat retirement and work as a choice. The flexibility can also help workers transition gradually into retirement or freelance work, while supporting themselves effectively.
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Silver advantage in age of AI & climate change
The silver generation has the potential to work with organisations to drive productivity and mentor younger workers. In India, this already happens, with grandparents often taking on child-rearing, teaching, volunteering, and community leadership roles.
However, keeping older workers engaged in formal employment requires a rethink by firms. This will also involve coherent responses to other major macroeconomic disruptors, such as climate change and artificial intelligence.
While AI will automate routine processes, the older generation brings immense experience and a nuanced understanding in highly specialised fields. The possibilities are many— from devising frameworks and methods for approaching complex business challenges, to overseeing and designing intricate processes in manufacturing. With rising heat stress across the country, offering more remote working options or flexible hours could improve both engagement and reduce the carbon footprint.
Aside from explicit productivity gains, integrating older workers brings hidden benefits, primarily through reduced healthcare costs from improved physical and mental well-being. This is where policy responses to AI and climate change become critical, as they will determine the silver generation’s level of engagement. If these policies are well-calibrated, they could result in substantial savings for the healthcare system.
And there’s another intangible but essential reason to focus on this demographic: people want to feel useful, relevant, respected, and to find a purpose. This can be a challenge at times, given perceptions around ageing and older workers— including in India, where there is no policy around ageism to check stereotypes about older workers.
Like many of its wealthier counterparts, India will soon face an ageing population and labour shortages. The silver generation will slowly become one of the largest groups in the country. This is why coherent approaches to engaging them in the economy are needed now, along with a push to improve opportunities for existing workers. With proactive planning, the silver generation could indeed become another demographic dividend for India.
Vibhav Mariwala is a Senior Policy Advisor at WisdomCircle, an AgeTech platform that connects organisations across the globe with retired professionals for part-time and short-duration roles. Views are personal.
(Edited by Asavari Singh)