Ageing Without Security: Why Developing Countries Must Rethink Jobs, Pensions and Skills

Developing countries face rapidly ageing workforces, with millions of older people remaining in insecure jobs because pensions, savings and social protection are inadequate. Governments, development partners and businesses can turn ageing into an economic opportunity by investing in lifelong skills, healthcare, flexible jobs, stronger pensions and age-friendly workplaces.

Population ageing is becoming an economic and development challenge for poorer countries much faster than many governments are prepared for. The World Bank report Productive Aging: Supporting Older Workers in Developing Countries, drawing on evidence from 56 developing countries, shows that millions of people continue working well beyond conventional retirement age. But longer working lives do not necessarily signal economic strength. Many older adults remain in difficult, informal and low-productivity jobs because pensions, savings and alternative sources of income are inadequate.

By 2050, one in six people worldwide is expected to be aged 65 or above. In developing countries, workers aged 45–64 are projected to increase from around 30% of the potential workforce in 2025 to 37% by 2050. Even Sub-Saharan Africa could see its population aged 65 and above increase from about 32 million in 2020 to roughly 100 million by mid-century.

When Working Longer Is a Sign of Vulnerability, Not Opportunity

The report finds that 62% of 65-year-olds in low-income countries are still working, compared with around 40% in middle- and high-income economies. About 45% of 75-year-olds in low-income countries also remain employed.

Much of this employment is insecure. Wage employment falls from 54% among younger workers to 30% among workers aged 55 and above. Older workers increasingly depend on self-employment, agriculture, informal businesses and low-skilled services. Informality exceeds 80% across age groups in low-income countries.

Education also shapes retirement choices. Around half of 75-year-old women with low education in low-income countries remain employed, compared with only 10% of those with secondary education. Better-educated workers are more likely to have formal jobs and pensions that allow earlier retirement.

For governments, this means high employment among older people should not automatically be considered a policy success. The key question is whether people are working because they want to remain productive or because poverty prevents them from retiring.

Age Alone Does Not Decide How Productive a Worker Can Be

The report challenges the assumption that productivity automatically collapses with age. Differences between younger and older workers are strongly connected to education, skills, health and the type of job performed.

Experience, institutional knowledge, judgement and teamwork can allow older employees to remain valuable to businesses. Yet training opportunities decline with age, while only around one-third of formal-sector firms in developing economies provide worker training.

For private companies, this creates both risks and opportunities. Businesses can invest in lifelong learning, digital skills, ergonomic equipment, flexible working hours, adapted technologies and mixed-age teams. Such measures can help retain experienced employees and reduce recruitment and replacement costs.

The report cites workplace redesign at BMW's Dingolfing plant as an example, where ergonomic improvements and work reorganisation produced a 7% productivity increase while improving product quality and reducing absenteeism.

Why Women, Informal Workers and Poor Households Need Greater Protection

Women face another largely invisible burden. Even when older women leave paid employment, many continue providing childcare, eldercare, cooking and other household services. Their total workload may therefore remain high while their income falls.

Pension coverage is another major weakness. Contributory pension systems generally depend on formal employment, leaving millions of informal workers without adequate retirement protection. Savings are also insufficient. Around 33% of adults in low-income countries and 44% in lower-middle-income economies save money, but only 11% and 12%, respectively, save specifically for old age.

Governments therefore need to combine pension reform with financial inclusion, stronger property rights, savings mechanisms and targeted income support. Affordable childcare and eldercare, alongside better transport and basic infrastructure, could reduce unpaid workloads, particularly for older women.

For international development partners, ageing should consequently be integrated into programmes covering jobs, gender, healthcare, financial inclusion, social protection, skills and infrastructure rather than treated only as a pension issue.

Three Types of Older Workers Need Three Different Solutions

The report divides older workers into three groups, providing governments with a practical policy framework.

"Long-workers" are older people who continue in difficult, low-productivity jobs because they have few alternatives. They need preventive healthcare, lifelong education, vocational and digital skills, better working conditions and productivity-enhancing support.

"High-skilled early retirees" are productive people who could continue contributing but leave employment because pension rules, mandatory retirement, workplace practices or social expectations encourage early exit. Governments can review these regulations while businesses offer flexible schedules, retraining and age-inclusive employment.

The third group has effectively "worked too long." These are often lower-skilled people in poorer health who remain employed because they cannot afford retirement. They need stronger pensions, targeted transfers, access to accumulated assets and relief from heavy unpaid care responsibilities, not policies simply forcing them to work longer.

The broader recommendation is clear: productive ageing should be about increasing choice, productivity and security, rather than mechanically raising retirement ages. Developing countries still have time to prepare. Investments in education, preventive healthcare, lifelong skills, savings, social protection and age-friendly workplaces can determine whether ageing becomes a drag on economic growth or an opportunity to retain valuable experience while ensuring that vulnerable older people can retire with dignity.