A new report from the World Economic Forum (WEF) and Marsh warns that age-related workplace barriers could cost Organisation for Economic Co-operation and Development (OECD) economies nearly $500 billion in cumulative productivity losses by 2040. The finding comes as ageing populations grow far faster than the working-age workforce, exacerbating structural challenges.
OECD economies refer to the 38 member countries that are highly developed, democratic, high-income nations operating on free-market principles. The report attributes the losses to under- and unemployment of adults aged 55 and older relative to younger workers, driven by longer unemployment spells and structural barriers that push many older adults out of the labour force entirely.
Demographic Pressure Intensifies
By 2040, the global population aged 65 and over will grow by more than 50 per cent, increasing from 856 million to 1.3 billion, according to the analysis. In contrast, the working-age population aged 25 to 64 will grow by just 13 per cent. This widening gap places immense pressure on economies reliant on a shrinking pool of younger workers.
The report provides country-specific projections for cumulative GDP losses between 2025 and 2040 due to extended unemployment among workers aged 55 and older. The United States faces the highest estimated loss at $113 billion, followed by France at $106 billion. Other significant impacts include the United Kingdom ($25,590 million), Netherlands ($26,250 million), Brazil ($105,810 million), Canada ($7,530 million), and Japan ($5,870 million).
Health Costs and Hidden Unemployment
Beyond GDP losses, the report links ageism to adverse health outcomes. Research suggests that ageism is associated with 17 million incidences of disease in the United States alone. In 2018, ageism added at least $63 billion in extra health costs in the US, with studies also showing links to depression, physical illness, and reduced access to healthcare.
The WEF notes that the problem is worsened because many discouraged older workers exit the workforce entirely rather than appearing in unemployment data. The report states, "These figures are just the tip of the iceberg. Many people who feel disadvantaged due to ageism simply choose to exit the workforce and do not appear in the unemployment figures."
Benefits of Multigenerational Teams
The report highlights alternatives to ageist practices, emphasizing that multigenerational teams "fuel growth and productivity through higher levels of creativity and innovation." Experienced employees can mentor younger colleagues while gaining digital skills in return, creating a mutually beneficial environment.
Policy examples from several countries demonstrate the potential for change. South Korea achieved a record 70 per cent employment rate for adults aged 55 to 64. Japan has seen employment levels for workers over 65 increase for 20 consecutive years. In Europe, Sweden's flexible pension system allows individuals to take between 25 per cent and 100 per cent of their pension while continuing to work.
Conclusion and Recommendations
The report concludes, "Tackling ageism can boost productivity, provide health and wealth benefits to individuals and reduce financial reliance on governments. It also provides an opportunity for employers to access under-used skills and experiences of a valuable - and growing - cohort of society."
The findings underscore the urgent need for policy reforms and workplace changes to harness the potential of older workers, mitigate economic losses, and promote inclusive growth.
