The mass retirement of the Baby Boomer generation has long been a concern for many organizations. Articles have been written about the devastating effects their exodus from the workforce are predicted to have. In the US, for instance, in 2007 the Bureau of Labor Statistics (BLS) predicted 15.6M jobs would be added between 2006 and 2016 while the core of the workforce, workers aged 24-54, would increase only 2.5M during that same time period. The anticipated gap between workers and jobs is in large part due to the aging of the Boomers – during that same time period the number of workers 55 and older is predicted to increase almost 12M. This phenomenon is not limited to the US, in fact across the globe in countries like France, Spain, and Russia the percentage of workers in the labor force is expected to decrease between 2010 and 2050.
For years organizations feared these older workers would retire in great numbers and take with them their knowledge and skills, creating a huge labor shortage. However, the current financial crisis may have severely altered many of these individuals’ retirement plans. A recent US-based report, released by D.C.-based think tank the Center for Economic and Policy Research, estimates that Boomers between ages 45 and 54 have lost 45% of their median net worth leaving them with an average of only $80K for retirement. Older Boomers have not faired much better – those between 55 and 64 have lost 38% of their net worth, leaving them with an average of $140K. Moreover, many of the pension funds that Boomers have been counting on for retirement have been devastated by the recession, forcing employers to reconfigure payout options. Retiring at 65 may not be an option for the majority of Boomers who may discover they must work 5-10 or more years longer than planned.
While this is certainly not good news for Boomers, it can provide organizations with much needed relief from the looming aging workforce crisis. However, the increased supply of workers in the labor force, and the reductions in retirement rates, could have real impact on organizational hiring plans, and consequently Recruiting departments. The real questions remains – what will be the long term implications of this economy on Recruiting?
Here are some of our initial ideas on how these changes in retirement rates may impact recruiting – feel free to add your own:
- Lower than expected attrition rates among retirement age employees will result in lower hiring volumes.
- Long-term workforce plans will need to be revised based on new retirement rates.
- Increasing importance will be placed on internal mobility and knowledge transfer as Boomers stay in the workforce longer.
- More flexible hours – in some cases, Boomers may be working either full-time or part-time for the extra income, and options like that will increasingly be made available for them.
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