Adapting to an Aging World: Strategies for Empowering Older Workers in LMICs

The World Bank report highlights the need for policies enabling older workers, particularly in low- and middle-income countries, to remain active in the workforce, addressing barriers like ageism, skill gaps, and health limitations. Promoting productive longevity can enhance economic growth, reduce pension pressures, and improve intergenerational welfare.

The World Bank’s Social Protection and Jobs (SPJ) agenda explores the growing necessity of enabling older workers to remain active and productive in the workforce, especially in the context of low- and middle-income countries (L/MICs). Authored by Sara Johansson De Silva and Yang Huang, this report highlights the impending demographic shift where aging populations are set to increase significantly by 2050, with most older adults living in L/MICs. These nations face the risk of "getting old before getting rich," necessitating urgent reforms to sustain economic growth, enhance productivity, and ensure intergenerational welfare. The concept of "productive longevity" emphasizes extending working lives for mature workers, defined as those aged 55 and above, while addressing challenges like ageism, skill obsolescence, and limited access to health resources.

Unleashing the Potential of Older Workers

The report highlights the economic and social advantages of engaging older workers in the labor force. Mature workers can contribute significantly to GDP growth, alleviate pension pressures, and benefit their mental and physical health through continued economic activity. Contrary to fears that employing older individuals might limit opportunities for younger workers, evidence indicates that employment rates for various age groups are positively correlated. This means policies that promote the inclusion of older workers in the workforce can enhance overall economic resilience and productivity. However, the challenges are substantial, particularly in L/MICs, where informal employment dominates, and older individuals often continue working out of necessity due to inadequate pension systems and limited savings. In contrast, workers in wealthier nations often retire earlier, even when their productivity potential remains untapped.

Barriers to Productive Longevity

Older workers face numerous barriers that hinder their participation in the workforce. On the supply side, issues include regulatory restrictions like mandatory retirement ages, high labor income taxation, and declining health. Many older individuals lack access to training opportunities and are excluded from financial services due to systemic ageism. On the demand side, firms are often reluctant to hire older workers, perceiving them as less adaptable or productive. Wage systems based on seniority further inflate labor costs, discouraging employers from investing in mature employees. Matching inefficiencies also play a role, as public employment services often overlook the specific needs of older job seekers, and career guidance tailored to this demographic is scarce. These barriers highlight the need for comprehensive reforms to enable older workers to realize their economic potential.

Lifelong Learning and Health Investments Are Key

A cornerstone of productive longevity is the development of lifelong learning systems that allow workers to continuously upgrade their skills. However, such systems remain underdeveloped in many L/MICs. Older workers, particularly those in informal sectors, face limited opportunities to acquire new competencies, further exacerbating skill gaps. Promoting informal and workplace-based training methods can help address this issue, ensuring mature workers stay relevant in evolving job markets. Additionally, investments in health are critical. Addressing non-communicable diseases and mental health conditions can significantly enhance older workers' productivity and quality of life. Affordable care services, such as childcare and eldercare, are also vital. These services not only free up older individuals for paid employment but also improve their overall well-being and contribute to intergenerational support systems.

Policies and Partnerships for Productive Longevity

The report underscores the importance of collaborative efforts between public and private sectors to advance productive longevity. Governments must prioritize reforms that incentivize firms to hire and invest in older workers, such as tax breaks and flexible retirement options. Public campaigns can help combat ageist stereotypes, which often deter both employers and older workers from pursuing economic opportunities. Strengthening social safety nets is equally important to protect older individuals from vulnerabilities caused by health crises or economic shocks. The World Bank’s analysis also highlights the need to integrate aging considerations into broader development policies, such as digital inclusion and agricultural mechanization, which can yield significant productivity gains for older workers.

Quick Wins and Long-Term Strategies

For L/MICs, the path to productive longevity requires a mix of quick-win strategies and long-term planning. Immediate actions like revising retirement age policies, expanding access to health services, and launching awareness campaigns can create impactful changes. Community-based initiatives, such as programs that train older workers for informal entrepreneurship, hold promise in regions with high informality rates. Over the long term, countries must invest in building lifelong learning ecosystems and health infrastructure that support aging populations. Integrating mature workers into formal systems is crucial for creating sustainable livelihoods and ensuring their contributions to the economy are maximized.

The report concludes that productive longevity must be central to sustainable development strategies in aging societies. By enabling older workers to remain active, nations can leverage their skills and experience for broader societal benefit. This requires coordinated efforts to address supply and demand barriers, enhance skill development, and foster cultural shifts that value the contributions of older populations. The World Bank’s SPJ agenda plays a critical role in advancing these efforts, offering data-driven insights and promoting cross-sectoral collaboration to tackle the complex interplay between aging and labor markets. With the right policies and partnerships, countries can transform the challenges of aging into opportunities for economic growth and social progress.