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The aging of the population in Western countries is a global megatrend that is transforming society and the economy worldwide. As people live longer, it presents challenges and opportunities for both governments and businesses.

The traditional family structure is changing dramatically. In countries such as Spain, declining fertility and an aging population are causing cousins and brothers-in-law to become rare figures. Demographic projections indicate that by the end of this century, the number of direct relatives of a person will fall by more than a third, from 21 to 12.5. This decline affects not only the composition of families, but also the support networks that have historically been critical for mutual care and assistance.

Meanwhile, more and more grandparents are dying alone, an alarming phenomenon known as “Kodokushi” in Japan. This term refers to the lonely deaths of elderly people, whose bodies may remain undiscovered for weeks or even months. This tragic phenomenon is a symptom of growing social disconnection and lack of family support networks. In Japan, some retirees even commit petty crimes in order to be deliberately incarcerated, as they prefer the safety of prison, where they are guaranteed food and medical care, to living alone in poverty.

These changes reflect a transition toward smaller, less interconnected families. The trend towards nuclear families and the increase in people living alone are eroding traditional family support networks. According to recent studies, the number of people living alone has increased dramatically, with Spain registering close to five and a half million people in this situation, almost twice as many as 20 years ago. This structural change poses not only emotional and psychological challenges, but also practical ones, such as caring for the elderly and maintaining quality of life for a rapidly aging population.

What is happening now?

The data collected by demographic surveys speak clearly: the trend toward increased longevity and consequent aging of the population is inevitable. According to the World Health Organization (WHO), between 2015 and 2050, the percentage of the planet’s inhabitants over the age of 60 will almost double from 12% to 22%. In Spain, the current demographic trend also reflects aging. According to the National Statistics Institute (INE), if the current trend continues, the percentage of people aged 65 and over in Spain will increase from 20.1% to 30% by 2030.

Population pyramids of Spain in the years 2022, 2052 and 2072, INE (2022)

This demographic trend is due to low fertility and improvements in medical care and technological advances, which have increased life expectancy. This phenomenon is not limited to advanced economies; even in developing countries such as China, Turkey, India and Brazil, longevity has increased significantly.

The Population Projections 2022-2072, developed by the National Institute of Statistics (INE), estimates that, if the trend continues, the percentage of the population aged 65 and over, which currently represents 20.1% of the population, will reach 30% in 2030.

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Population pyramids of Spain in the years 2022, 2052 and 2072, INE (2022)

Population aging poses challenges and opportunities for governments, both socially and economically. As more people age, health care expenditures increase. In addition, this aging trend is countered by a negative trend that impacts the working-age population. According to a study by the Bank of Spain on The impact of population aging on the evolution of the activity rate, this would rise by an additional 2.8 points in 2030, reaching 55% compared to 58% in the first quarter of 2024. If the support of net immigration flows were not taken into account, the drop would be 1.6 points higher.

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Population by age groups, Eurostat (2023)

On the other hand, new business opportunities arise from the aging population. Although retirement has traditionally been seen as marking the end of working life, more and more older people are willing and able to work beyond the age of 60. These “young seniors” represent an active population looking to contribute and spend money on goods and services that improve their quality of life.

Risks and threats to organizations, both public and private

The aging population brings with it a number of significant risks and threats to organizations:

  1. Increased health and pension costs: With a higher proportion of older people, governments face increasing pressures on health and pension systems. Companies may also experience increases in health insurance and benefits costs for their older employees.
  2. Shrinking workforce: The reduction in the working-age population may lead to a shortage of talent and skills, which could hamper productivity and economic growth. Companies could face difficulties in finding qualified workers and remaining competitive.
  3. Technological and digital adaptation: Older people often face challenges in using new technologies. Organizations need to invest in training and technology adaptation to ensure that all employees can use the tools necessary for their work, which can be costly and time-consuming.
  4. Changing consumption patterns: The aging of the population may significantly alter consumption patterns, with increased demand for products and services related to health, wellness and leisure. Companies that do not adapt to these changes may lose market share.
  5. Increased dependency: A higher proportion of older people may increase the burden on social and family support systems. Public policies and companies must be prepared to provide care and support solutions, which may involve a restructuring of available resources and services.
  6. Risk of social isolation and disconnection: With the increase in older people living alone, there is an increased risk of social isolation and mental health problems. Organizations should consider policies and programs that promote the inclusion and well-being of their older employees.
  7. Challenges in managing generational diversity: With a more diverse workforce in terms of age, organizations must manage generational differences in terms of work expectations, work styles and communication. This requires careful planning and implementation of diversity management strategies.
  8. Financial sustainability of pension systems: As the population ages, the sustainability of pension systems may be compromised. Public policies must adapt to ensure that pension systems remain viable over the long term, which may involve difficult and politically sensitive reforms.

What can organizations do?

In the face of unequivocal data from national statistical institutes and global health organizations, companies cannot avoid the megatrend of population aging. Its effects on the present are evident and, increasingly, will impact the way we do business and develop strategies. Companies should consider the challenges related to this global trend in order to address them with proactive measures, and also take advantage of the opportunities that this experienced and engaged workforce offers.

On the one hand, organizations must adapt to the needs of an aging population. Products and services designed to improve the quality of life of older adults have great market potential, especially in sectors such as healthcare, technology, tourism and housing. Investing in innovation and development of products that are accessible, adapted and focused on longevity can generate competitive advantages.

On the other hand, it is essential to develop aging management practices that respond to different issues in a holistic and comprehensive manner. Some of the solutions proposed by the SERES foundation (Société Entreprise Responsable) in its report on the Aging of the population are divided into different areas of interest as follows:

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Before developing any type of practice, it is essential to weaken the unconscious biases that are activated when faced with an older person looking for a job, such as higher salary demands, outdated knowledge and a different hierarchy of priorities, among others. These prejudices do not recognize the unquestionable value of senior talent which, in line with the megatrend of an aging population, will become the predominant labor force in the Spanish market. It is necessary to generate a change of mentality that includes training, dialogue and awareness-raising actions, based on a strategy of diversity, equity and inclusion. Diversity of knowledge, experiences and attitudes, equity of opportunities contemplating individual differences, and inclusion of these differences in any work team.

Among the solutions that can be considered from a company’s point of view to face and anticipate this megatrend we include:

  • Workplace Flexibility: offering benefits that accommodate the changing needs of workers as they age such as vacation leave, family allowances and flexible hours. In addition, having flexible retirement access modules and financial counseling for your older employees in preparation for retirement is an advantage for the company as the transition to retirement must be planned and supported.
  • Occupational Health and Safety: Adapting work environments to ensure the safety and well-being of employees of all ages, promoting healthy practices and prevention campaigns, and developing action plans on accidents, occupational risk prevention and absenteeism.
  • Bridging the Digital Divide: Providing training and retraining opportunities to keep the skills of older workers up to date, fostering a culture of innovation and adaptation to address the insufficient digital skills of older people. In addition, knowledge retention and skills transfer between generations are essential for business continuity.
  • Human Resource Planning: Assess future staffing needs and plan for talent retention and attraction. Succession planning and replacement of employees as they retire, with a long-term vision for internal strategy development is imperative.

The transformation in family structure and the increase in people living alone underscore the urgent need for new support networks and inclusive policies to ensure the well-being of the elderly.

For organizations, both public and private, this reality demands strategic adaptation: from managing rising health and pension costs to integrating a diverse workforce and adapting technology.

Companies must anticipate changes in consumption patterns and capitalize on the opportunities offered by a growing market for products and services aimed at improving the quality of life of older adults.

At the same time, it is essential to weaken unconscious biases and foster a culture of inclusion, equity and diversity. Long-term planning in human resources and investment in innovation will be key to meeting the challenges and seizing the opportunities of an aging society, valuing and caring for its longest-lived members. Only through anticipation, innovation and inclusion can we build a sustainable and prosperous future in this new demographic context.

 


 

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