The Hidden Economic Cost of Ageing Workers: Why Digital Skills Could Decide Future Growth

An OECD study finds that workforce ageing does not automatically reduce productivity, but skills gaps, rapid technological change and limited job mobility can create challenges in certain industries. Investing in lifelong learning, digital training, flexible employment and cooperation between younger and older workers can help economies turn ageing populations into a source of sustainable growth.

An ageing workforce does not necessarily weaken economic productivity, but its impact depends on industry characteristics, technological requirements and employment policies, according to a 2026 study by the Organisation for Economic Co-operation and Development (OECD), conducted through its Economics Department. The research, titled Workforce Ageing and Productivity: An Analysis by Industry Characteristics, examines industry-level data from 32 OECD countries between 2008 and 2023. It challenges the widespread belief that older workers automatically reduce economic efficiency, finding instead that demographic ageing creates both challenges and opportunities depending on how governments and businesses respond.

The findings come as advanced economies face two major challenges: rapidly ageing populations and slowing productivity growth. Across OECD countries, the share of workers aged 55 and above has increased significantly, driven by longer life expectancy, declining birth rates and greater participation of older people in employment. At the same time, productivity growth has weakened, raising concerns about economic competitiveness. However, the researchers found no statistically significant direct relationship between workforce ageing and productivity growth on average, suggesting that demographic change alone cannot explain declining economic performance.

Ageing Workforce Creates Different Challenges Across Industries

The study reveals that workforce ageing affects industries differently. Agriculture and real estate generally employ larger proportions of older workers, while information technology, hospitality and food services tend to have younger workforces. These differences reflect changing career preferences, technological demands and employment opportunities.

Industries requiring advanced technical knowledge, strong cognitive abilities and frequent technological adaptation face greater productivity challenges as their workforces age. Older employees often possess valuable experience but may struggle to keep pace with rapidly changing digital tools when opportunities for training are limited.

OECD adult skills assessments reveal differences in literacy, problem-solving and digital capabilities across age groups. Workers aged 55–59 and 60–64 recorded lower average scores in certain cognitive assessments than younger employees. However, the findings do not suggest that older workers are inherently less productive. Instead, they highlight the importance of continuous learning and adapting skills throughout working life.

Digital Skills Gap Threatens Productivity in Technology-Driven Industries

Technology-intensive industries face particular difficulties when employees lack the skills required to use new systems effectively. The OECD finds that a one-percentage-point increase in the annualised growth rate of older workers' employment share is associated with approximately 0.6 percentage points lower productivity growth in highly skill-intensive industries and 0.4 percentage points lower growth in ICT-intensive industries.

These findings suggest that businesses investing in digital infrastructure, automation and advanced software may struggle to achieve expected productivity improvements without appropriate workforce training.

The research also identifies limited job mobility as an important challenge. Older workers are generally less likely to change employers, occupations or geographical locations because of financial uncertainty, seniority-related benefits, housing costs and concerns about finding suitable employment.

Such restrictions can prevent experienced employees from moving into positions where their skills would generate greater economic value. Industries experiencing substantial skills mismatches show weaker productivity outcomes as their workforces age, highlighting the need for better career guidance, retraining and flexible employment arrangements.

Experienced Workers Bring Valuable Benefits to Businesses

Despite these challenges, the research identifies important economic advantages associated with older employees. Experienced workers often possess extensive practical knowledge, established customer relationships, professional networks and management expertise that can improve business performance.

Industries experiencing strong labour demand and those with greater age diversity demonstrate more favourable productivity outcomes. The findings suggest that workplaces combining younger employees' technological knowledge with older workers' practical experience can achieve stronger results.

Small businesses may particularly benefit from retaining experienced employees because their knowledge of customers, suppliers and daily operations can be difficult to replace. Older workers can support business continuity, mentor younger colleagues and strengthen organisational stability.

The research therefore challenges employment practices that undervalue older workers and highlights the economic benefits of cooperation between generations.

Governments Must Invest in Skills, Mobility and Healthy Ageing

The OECD recommends four broad policy priorities: lifelong learning, improved job mobility, age-inclusive workplaces and healthier working lives.

Governments should expand adult education programmes, improve access to digital training and recognise skills acquired through professional experience. Removing unnecessary barriers to changing jobs, reducing workplace discrimination and supporting geographical mobility could help older employees find more productive employment opportunities.

Businesses should introduce flexible working arrangements, encourage knowledge-sharing between generations and ensure that training opportunities remain available throughout employees' careers.

The study also emphasises the importance of preventive healthcare, safer workplaces and measures that help people remain healthy and productive as they grow older.

Ultimately, the OECD concludes that workforce ageing is not an unavoidable economic burden. Its consequences depend on how effectively governments and businesses adapt to demographic change. By combining experience with technological skills, improving employment flexibility and investing in lifelong learning, advanced economies can turn longer working lives into an opportunity for sustainable productivity growth.