The workforce is aging fast, and stakeholders — companies, governments, and others — have a narrow window of time to adapt. So says the World Economic Forum, which Wednesday issued an 80-page report outlining strategic options to address how stakeholders can strengthen financial sustainability, quality of retirement, and health-care provisioning in a rapidly aging world.
The report emphasizes that companies and governments must work cooperatively for meaningful action to occur — a dubious scenario in today’s light, with the two sides rarely in agreement on how health care and retirement should be paid for. For CFOs, however, the concern is whether retirement and health-care funding should be a priority right now.
After all, despite a tone of urgency in the report, it discusses demographic changes in terms of decades, not years. For example, it includes a chart showing that the percentage of gross domestic product devoted to retirement and health care will grow from 7% to 13% — between 2000 and 2050.
Indeed, even John Betts — a partner at consulting firm Mercer, a WEF member that helped create the document — concedes to CFO.com that any corporate actions to address the aging workforce won’t necessarily bear fruit for some time. “There is an issue about hard-nosed CFOs saying, ‘How’s it going to affect my profits next year?’” he says. “Probably the answer at the moment is that, well, it won’t.”
That’s the kind of attitude that must undergo a fundamental shift, the report argues — and not only because of the specter of runaway costs. Just as important, the WEF says, is an opportunity to counter the dour fact that many people will have to work later into life as retirement grows less financially attainable. The challenge will be to turn that reality into something very positive for the bottom line. “There is potential to create a ‘new age of age,’ in which growing old is no longer synonymous with declining health, [but rather] experience is valued as much as youth, the ‘silver economy’ is vibrant, and the ‘wellderly’ are active and valued in society.”
That’s an ambitious goal. But the report, which was two years in the making, has plenty of suggestions for how stakeholder can help facilitate the paradigm shift.
Employers, for example, should put less focus on approaching health care tactically with programs that address health issues as they arise, and begin thinking strategically by promoting healthy behaviors. For example, they should provide practical incentives for employees to engage in physical activity, subsidize healthy eating options in workplace dining facilities and vending machines, and ensure that working practices and environments are conducive to long-term health.
Many employers, of course, have taken steps in those directions, although the report clearly implies that more should be done.
In any case, employers want to know what kind of return such investments will produce. In a Web conference yesterday, Mercer partner Christine Owen claimed that on average, wellness initiatives will produce an eventual return of at least three or four to one; that is, $3 to $4 worth of increased productivity and reduced health-care costs for each dollar spent. The return is even greater in emerging countries, where less-cynical employees with limited access to health care may be more willing to participate in wellness programs, she added.